Data Led Growth project | Licious

This data is not actual company data.

The data is taken from Publicly available data, News reports, Data.ai. Reference of all data is available in the Appendix

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Problem Statement: Need to increase the AOV from the current Rs 600 to 700

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Overview:

The market for premium meats is saturated. While there is substantial headroom with 40million households still not using online meat stores, new customer acquisition has stagnated and customer acquisition has become harder. Licious is looking at Physical stores to drive the customer number. However, there is more revenue which can be got from the existing platform. Therefore the need to raise the AOV for the existing customers on the App

The levers for AOV: free delivery for higher values(already in place), tiered discounts, subscription model, upsell at checkout, cash back/Coupons.

The current AOV is at 600 but the Infiniti subscribers have an AOV of 800. Therefore increasing the number of Infiniti subscribers can lead to an increase in AOV.

The Infiniti program showed retention rates of 90% with 60 transactions per year and an AOV of 800. There is a business objective to increase the subscribers from 1.5 lakh to 2.5 lakh. IF we can increase the number of subscribers to the Infiniti program we can increase the AOV.

Hypothesis

We can offer a free trial of the subscription to select regular users to increase Infiniti subscribers and get more users to subscribe to increase the overall AOV

If regular customer can be converted to Infiniti subscribers then the AOV can be increased to Rs 700 because Infiniti users have a higher AOV.

Goal

Get more subscribers to pay for Infiniti subscription to eventually lead to higher AOV via free trial for a month for higher frequency customers.

There is a business objective to increase the subscribers from 1.5 lakh to 2.5 lakh. IF we can increase the number of subscribers to the Infiniti program we can increase the AOV.

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Success metrics

The experiment will run for 2 months.

Best Case Scenario: Increase in Infiniti sign-up up by 15% at the end of the offer period

Health Metric: AOV of Infiniti customers remains more than Rs 800

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Experiment Design

Increase number of Infiniti subscribers by offering a free trial on all android devices for customers who order at least 2- 3 times every month.

The insight from data

1. all customers who have tried Infiniti tend to continue the subscription month on month due to the convenience and perceived benefits.

2. People who join Infiniti tend to make more purchases per month. (from 2 to the 5-6 times per month)

Analysis of Current data (Dummy Data)

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The drop in Infiniti conversions for the 2-3 orders has caused the AOV in May to drop. Therefore we need to improve the conversions to Infiniti membership in this cohort to drive the AOV up.

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External Reference:

First Cry ran a similar experiment for frequent users of their app which led to a 10% jump in Club subscriptions for them.

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Experiment:

Offer a one month free trial for users who order more than 2 times a month. At the end of the month Customers should pay to renew for the future for the experiment to be successful.

These are existing customers and a free membership will remind them that they will have exciting benefits in their next order promoting them to come back sooner for the month and post the trial seeing the convenience they continue the subscription to order on a higher frequency

Find below the new flow for the Checkout Screen

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Control: Same Checkout flow

Variation A: the free Subscription is added to cart as above

Variation B: the subscription needs to be added

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Audience and sample size

Only customer who have order 2-3 orders in a month and don't have an Infiniti subscription will be shown this offer during checkout

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Sample Size

At 4% conversion and expecting a 50% increase in subscriptions

Control: 1300

Variation A: 1300

Variation B: 1300

Duration 1st August to 30th Sept.

Implementation:

Assumption is Licious has all the tools available to run this test and A/A test was consistent

Post Experiment (Assumption made)

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From the data it is clear that Variation B has performed better than Variation A

From the data it can be assumed that since the membership was added to cart by default people were unaware and did not engage or increase their order frequency.

However, in variation B where there was an added layer of adding to cart, which led to a drop in initial sign up of free membership trial the people, but, customers who signed up ended up utilising their membership and had a higher perception of value and were more agreeable to continuing their subscription(70% vs the 30% Infiniti subscription). Also the AOV of the B group was lower than the control group but higher than Var A making this a better option for launch.

If we use the experiment to real world situation

The experiment will lead to increase in revenue, however, without the experiment the total revenue would have been higher as seen in the lower table.

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Release Decision

The experiment proves that trial does lead to higher signups for Infiniti with a 10x increase in subscribers

However;

Revenue Impact:

Any subscription will lead to short term pain for long term benefits, it would be useful to see how the number run for an additional period of time to see if the new subscribers remain and help move up the revenue numbers by increased AOV and enough additional customers being added to the subscription M-0-M

AOV impact

Currently the AOV of 700 is a point of concern, while it is still higher than non Infiniti customer it needs to be at least at par with Infiniti users for us to consider launching this to the larger population to not impact out bottomline. There is a need to understand the long term behaviour of the customers to see if the will continue to subscribe or drop off in subsequent months.

We will have to look at data to identify if there is an increase in Frequency of orders, delta in the AOV by segments and also SKUs ordered. We also need to check the AOV for when customer given the trial pays for Infiniti

The segments will be based on

1. Frequency of orders 2 orders and 3 order per month
2. Geography T1, T2, T3
3. Historical behaviour

based on the data generated we will take a call on which geographies to release it to and which segments would give us the highest uptick. The experiment will be extended by a month in the process to see the long term impact on numbers.

Stakeholder management

Communication Plan

Step 1: Manager hypothesis and Experiment plan

Step 2: after feedback from manager Share the detailed data and specs to the team. Complete the document with timelines and responsibility matrix

Step 3: Coordinate with teams as required on timelines and hold weekly meetings to gauge progress with tech data and marketing teams

Step 4: Share outcome of the experiment with all relevant teams

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APPENDIX:

Licious has seen a stagnation of Revenue. With the number of users plateauing and monthly revenue being stuck at 60- 70crs/month where the leadership is looking for a 150cr/mo Revenue.

Licious had seen its monthly revenue stagnate in the Rs 62-68 crore range during the first few months of FY24

The total addressable market (TAM) for meat companies is around 30 million households and Licious has tapped only 4 million so far.

Licious currently has an AOV of around Rs 600, up from Rs 500 from 3-4 years ago, Gupta told Moneycontrol.

With an intention to grow, Licious plans to focus on the top 20 cities in India, including Kolkata and Chennai, where it is yet to build a loyal customer base. 

Monthly revenue of Rs 70-72 crore, up from Rs 60 crore on a YoY basis

Monthly cash burn down to around Rs 12 crore fromRs 22-26 crore on aYoY basis

Gross margin impoved from -5% to 30%

Wastages reduced from 6% to 3.5% on a Yoy basis

Targeting to reach 30 mn households from current 4 mn base

Licious also recently introduced a subscription called ‘Infiniti’ that offers buyers benefits like free delivery and cashbacks on purchases. The firm now has 1.5 lakh subscribers who drive 40% of its revenue. The company aims to expand the subscription to 2.5 lakh users by the end of FY25.

Chicken makes up 60-65% of sales

For comparison, the firm has over 4 lakh monthly transacting users. Infiniti users also show the highest monthly retention rates of over 90%, compared with 30% for ‘light’ users, and do more than 60 transactions per year with an average order value of Rs 800, compared with 25-30 transactions per year done by more casual users.

Read more at:
https://economictimes.indiatimes.com/tech/startups/licious-turning-omnichannel-with-five-stores-in-bengaluru-by-june/articleshow/109734041.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst​

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