Ribbonize is an e-commerce business which sells ribbons to other small businesses and consumers in the luxury gifting, crafting, clothing, baking and decor industries. This project is an attempt to find three experiments which might help Ribbonize scale faster in the near future.

The business

Let's start with some context about the business first. Ribbonize sells premium quality ribbons online, which are much lower priced than anything else available online (of the same quality). The prices are about 10-20% higher than what is available in the wholesale markets. These markets are only available in Mumbai and Delhi and to a smaller extent in some other metros.

The ultimate aim of Ribbonize is to grow past ribbons and to provide all luxury packaging material to the same customers. - Ribbons & Bows, Wrapping Papers, Boxes & Containers, Gift Tags and other accessories.

Some numbers about the business:

Years in Operation = 3

Last Year Revenue = 1 Crore

AOV = 2000

Total Customers (Lifetime) = 4000

Repeat Customers = 1600 (Approx 40%)

LTV = ~8000

Gross Margin = ~55%

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Which stage is the business in?

The business was born out of a family business which has been selling ribbons offline since 1932. Covid hit the offline business hard and that's when the branch-off to online happened. This is why, even though the numbers are small, I've considered this business past the PMF stage because we know that the products and the market fit already exists in the offline world. Plus we've had many repeat customers and while bragging doesn't happen as much (small businesses generally don't like to advertise their vendors and sources of material) but the responses and feedback we get has been great.

The product

We divide ribbons into mainly two categories based on ribbon type. There are the cheaper ribbons which are widely available everywhere (Mainly lower quality Satin and Organza ribbons) which make up about 70-75% of the ribbons market. The other category consists of more premium ribbons which include higher quality satin, grosgrain, stitched, wired, zari etc. The margins are much lower in the first category and they're also available everywhere, which makes it difficult to compete as an online business. We concentrate on the latter category.

Ribbons are mainly sold offline in the wholesale markets. The only ones sold online are for D2C customers on places like amazon and 1-2 other competitors online, but their prices are atleast 5-10 times what is sold in the markets and on our website. We are the only ones currently who sell online and deliver everywhere in India, but are priced comparable to the wholesale markets.

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The customer

In our opinion, the best way to create customer segments in the ribbon industry is by use case. There are mainly 3 types of customers:

• Customers who use ribbons on clothing and related items like pants, dresses, shirts, shoes, hats etc.
• Customers who use ribbons for packaging - mainly corporate gifting companies, smaller packaging companies, bakers, other companies for their own personalized packaging etc.
• Customers who use ribbons for decoration or crafting purposes.

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The first category is the biggest but also the most price conscious and generally go for the cheaper satin and organza ribbons. The quality of the ribbons is not their most important criteria. Also, they're more old-school businesses and hence, the adoption curve to move to online purchasing is much higher. The third category cares about the quality and are willing to pay the price for it, but the market is pretty small - the smallest of the three by far.

We focus on the second category, which is substantial and also cares about the quality of the ribbon more than the others. For them, the price is not the most important criteria. They care more about quality, the speed of delivery, the service they get and the variety available.

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An interesting thing to note about these customers is that while they're actually small businesses, they don't behave in the traditional way that you would expect B2B to behave. They are normally small 5-20 employee companies where the owner or the second in charge makes the purchasing/vendor decisions. More than 95% of our customers are women and more than 60% of our customers use an iPhone or a Macbook to make their purchase.

These are basically higher income powerful women buying from us and we have to treat them like B2C customers while selling to them. They expect from us everything they get from a Zara or a Myntra while buying online.

ICP

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The Market

If we only consider the gifting market, that market in India is currently 12000 crore (From many sources in different ways, but they all approximately come to the same numbers) which includes ribbons and bows, containers, boxes, gift wrapping papers and other accessories. Like I said earlier, our long term objective is to get into all of these for the same consumers.

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TAM (Gift Packaging Materials) = 12,000 Crore
TAM (Ribbons used in Gifting) = 20% = 2400 Crore

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For SAM/SOM, I'd like to use some on-the-ground numbers that we have access to because of being in the industry for 90+ years. Our offline store, which sells only premium ribbons currently does around 3-4 crore revenue from that one store. In our wholesale market. there are 4 stores which basically deal in this premium ribbons category (two of which are partners with us). Total sale of these 4 stores together is in excess of 15-20 crore.

There are about 10 of these wholesale markets in the country, conservatively. Conunting other smaller markets, I believe that the SAM for us is in excess of 200 crore. And the SOM (only ribbons used in gifting and packaging) is around 80-100 crore.

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Acquisition Channels

Till today, we have only used Instagram for acquiring customers. Currently, we have a little over 38k followers. We grew it organically in the beginning and then used paid promotions via Meta and Instagram. But again for the last year or so, we've stopped promotions because the CAC became too high.

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The other way we've been acquiring customers lately if through Google Search. We haven't spent money on it and we've been very lucky. We're ranked first (or second after amazon/sponsored) on google for keywords like "ribbons", "buy ribbons", "ribbons india" and "buy ribbons online". Why I said we've been lucky is because we haven't done anything to make this happen. No articles, no changes in websites or keywords, nothing. Which means we don't really know how to replicate it for other keywords.

We need to work on acquiring more customers because our entire business is dependent on creating more awareness. Once a potential customer orders the first time, they're most probably going to repeat if they need ribbons again. We're the most affordable premium ribbons available online (by far).

For this project, I'm going to outline 3 experiments we're going to try in the coming weeks/months to improve our acquisition process. The channels I've chosen are a combination of the following:

1. Cheap, because we're bootstrapped and even though having a CAC of 500-600 seems plausible against an LTV of above 8000, it just seems a little high for us especially because initially our CAC was 100 and then 150-200. Suddenly last year it became 500+ and so we stopped.
2. Less effort, because we're a team of only 4 people (besides the warehouse staff)
3. Flexibility is important, and even though it wasn't our most important criteria, in all the three experiments, it's actually taken care of.
   

Experiments

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Organic Search

In the ribbons industry, I think most organic searches will be by "use case". There are very few who are going to search with our brand name or a competitor's because we're all very small and basically unbranded for now.

So the search keywords are going to be:

• Ribbons - 75k Searches
• Satin Ribbons - 25k Searches
• Ribbons India - 10k searches
• Other few keywords - All less than 10k searches

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All of the above mentioned keywords, we're top 2 except for "Satin Ribbons". We would like to change this because we actually have a "right to win" in Satin Ribbons. We have the best quality satin ribbons available in the market today. Not only that, anyone who has even a comparable quality is more expensive than us. We're pretty sure anyone who buys satin ribbons from us would be a repeat customer for the same.

Like I said earlier, I don't know how to get this done or how the other keywords ranked top but this is why it's an experiment. We're going to get more articles posted online and on the website about satin ribbons, maybe use the term a little more on the website and try other ways of getting this done - maybe look at paid google ads for the same too.

Paid Promotions (Instagram)

This we've already tried before, but we've scared to actually go through with it on a bigger scale. Our LTV is around 8000, so I think we should be ok to go till 800 atleast for our CAC. That would be around 10% CAC to LTV ratio, which seems pretty healthy.

What we did earlier was smaller promotions, only lasting 2-3 days and with only 400-500 per post per day. We've made many creatives for ads which showcase our "value for moneyness", "variety of ribbons - more than 3000 SKUs" and the premium quality of our ribbons. But we haven't given it a fair shot in my opinion because we've been a little scared of the increasing CAC. I think that needs to change.

Our experiment with this is going to be to find the 2 or 3 creatives that fit the above mentioned ICPs the best and address the issues they face and then really give it some time to establish itself. To give it some numbers, I think we'll allocate 2000 per post/reel per day and give it around 15-20 at least through Meta and let Meta use its algorithm to find us customers which are similar to our followers.

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Referral Program

In the past, we've been hesitant about this because the feedback we got from some customers is that they don't like sharing their vendors with other companies because they're basically competitors in some sense.

That being said, we also realise that a lot of the smaller companies and people in this gifting industry are like a community and actually like helping each other out. So maybe if we could generate a "community" feeling within our customers and give them enough incentive to refer us to their friends from the industry, it could actually work.

For this experiment, we're going to try giving the customers 20% off on their next order if they refer someone who buys from us. The buyer they referred also gets 20% off their first order. But we understand that just giving a discount doesn't mean they will refer us or be interested in the referral. We need to generate a "community feeling".

Firstly, we will only do this with repeat customers. When a repeat customer orders again, our normal notification flow contains three emails - One with order confirmation and invoice, second with tracking details and third with order delivered notification. In the third email after the order is delivered, is when will bring up the referral. We will give them a discount code that will be unique to them and which can only be used by someone placing their first order. Once that is done (and we know its definitely been used be a new customer) we will send another code to the referee for their own discount on the next order. Both codes will be "maximum one time use". We'll also give them a sharable link to the website with the discount code already filled in for the new customer. (Just tried this on Shopify to make sure it was possible).

All the new user needs to do is click on the link and start shopping.

They can do this multiple times for multiple first time customers. And every repeat customer will get this with their "delivered email". Hopefully it'll at least end up with a few referrals which might end up being cheaper than our CAC from paid ads.

Conclusion

So yes, that's about it. These are the three experiments we'll be trying and I guess we'll know how well they turn out in the next few weeks. I know these aren't very detailed but for me, this project was more about getting more targetted within the business and the communication and exactly what we want to go after. Hopefully it's a success!

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