Charming Charlie, the retailer teenagers and young adults once adored for its great selection of affordable jewelry merchandised by color, was a shell of its former self in 2022. With its nearly 400 stores closed and amidst an uncertain economy, changing consumer spending habits, and competition from online retailers at an all-time high, in large part due to a global pandemic, Charming Charlie was down, but it was not ready to tap out.
Rather than surrender to these external pressures, Charming Charlie chose to adapt and move their business online. They partnered with an ecommerce and marketing service provider and brought the same merchandising prowess they used to great success in their stores to the world of online shopping. And with over 7 million brand-loyal customers across the US, they saw before them an opportunity to revitalize the brand and reconnect with their passionate customers, this time digitally.
But transforming a physical retail business into an online retail business is highly challenging, as many brick-and-mortar retailers find out when they launch their first ecommerce store. Even today, with off-the-shelf ecommerce software as robust and affordable as it is, this transformation is no walk in the park. Charming Charlie, with all their retail expertise, struggled to understand the world of online marketing and struggled to shed an organizational structure and financial model that worked for in-store retail but wasn’t translating to their new online model.
They were losing money, and time was running out to turn things around.
As chance would have it, our team at Material was connected with the Charming Charlie team in late 2022, almost a year into their ecommerce journey. With our experience running online marketplaces, like Shoptiques, for over a decade, as well as being good tech partners to hundreds of retailers across the US, the team at Charming Charlie saw in us a potential partner that was scrappy, learned quickly, and was as adaptable as they needed to be themselves.
We moved quickly. We poured over their finances and marketing analytics and cut anything we deemed nonessential. In mid-January 2023, we launched their new, beautiful ecommerce website on Shopify, completed in less than 30 days (more on this later). We turned off all of their marketing channels. Google Ads, off. Facebook ads, off. Emails, no more. We had to establish a baseline. Slowly, we turned things back on, but just a trickle at first. We monitored each channel, treating each dollar spent as our own money. These were tough decisions, as they always are, but you have to trust the process, have some faith, and be rigorous in identifying signals that something is working or not.
Revenue shrunk year-over-year in our first whole month of running Charming Charlie’s ecommerce. But while revenue was down, expenses were way down. It was a win that bought us more time. Rinse and repeat, month over month we carefully increased marketing budgets as we saw a positive return on ad spend.
By the end of 2023, Charming Charlie was a very different business.
Revenue was up 17% over 2022. Paid ad spend was down 28%. And website conversion rate was up 29%.
In the first half of 2024, we continued to make the business leaner and more efficient. Our small team was now running all operations for the brand and focusing only on the best-performing paid media channels. With our strategy on the website and paid media starting to work, we turned our sights to merchandising.
We started to see real results. Revenue was up 50% over H1 2023 in the first half of 2024, and the business turned a healthy profit.
So, how did our small team turn around a business on the brink of closing down and transform it into a profitable ecommerce business? I’m going to lay out everything below.
The four pillars of our strategy are:
- Website
- Paid media
- Merchandising
We knew Charming Charlie had excellent brand recognition, so our strategy centered around reconnecting with their loyal fans and communicating our commitment to Charming Charlie’s core value proposition (great selection, accessibility, affordability, and unique merchandising).
Website
Having a great website is key to a successful ecommerce strategy, and Shopify has the best ecommerce tech in the biz. Being the scrappy team we are, we bought a beautiful off-the-shelf Shopify theme and had our design team customize it to showcase the Charming Charlie brand. Beyond simply having a beautiful website, Shopify comes with an amazing checkout flow, best-in-class performance and reliability, and an ecosystem of partners and apps to integrate with.
Our experience running Shoptiques has taught us the importance of having great data for all our products. We invest heavily in making sure our product listings all have the basics–great titles, descriptions, photos, tags, etc.–as well as rich categories and metadata–things like sleeve length, neckline, and other attributes of the products. We spent significant time here getting the Charming Charlie catalog tagged and labeled correctly and setting up tools to keep the catalog updated as new products are added.
From the get-go, we knew we needed to offer a robust color filtering system on the website; after all, Charming Charlie is known for their merchandising by color. With the product catalog carefully labeled, we could offer this filter to site visitors, as well as other filters like size, product type, price, and more.
It was important to us that website visitors looking for a blue short-sleeve mini dress with a crew neck could find that with just a few clicks.
Once we had the website in a place we were happy with, we turned our attention to building website traffic.
Paid media
When we took over, Charming Charlie was not in a financial position where they could lose money on advertising in the short term. And so, with paid media, our goal from the beginning was to run profitable ad campaigns. We turned off all the existing campaigns and brought their spending down to essentially zero.
Then, we started with Facebook ads, slowly incrementing the budget. At first, we only changed the budget every couple of weeks as the FB ads algorithm learned our content and dialed in the audience targeting, then more frequently.
Once Facebook ads were back up and running, we restarted Google ads, starting with Google’s Performance Max campaign. As we did with Facebook, we monitored spending and return on ad spend (ROAS) every day, only increasing the budget slightly when appropriate.
Paring down Charming Charlie’s paid media strategy gave us a very clear view of ROI, and only once we saw a positive return did we decide to double down on it.
Remember those 7 million customers? We quickly learned this was not quite the ecommerce gift we thought it was. The list was in bad shape, with only a fraction of these subscribers engaging with emails, yet all of them were still being emailed, sometimes multiple times per week!
Our first initiative was to enlist our friends at Klaviyo, the excellent email marketing platform, to help us clean this list and think through a reactivation strategy.
It’s not free to send marketing campaigns, and if your emails are consistently being thrown straight into the digital trash can, you’re wasting money. We cut this list way down and immediately saved thousands of dollars in marketing spend that could be better used elsewhere. Better yet, when you’re sending to engaged subscribers, spam complaints go down, your deliverability goes up, and the overall health of your email program will be improved. It’s a win-win and something we’ve witnessed firsthand with other ecommerce properties that have one tenth the size of Charming Charlie’s email list, yet they still manage to get the same or better ROI per email sent, all while spending a fraction of the dollars.
Once we identified our list of active subscribers, we brought in our design team to create beautiful, on-brand emails that would actually get clicks. We then restarted sending emails, first weekly and then more frequently.
Merchandising
The fourth and final pillar of our strategy was merchandising. What products your store carries and how they’re presented to customers is one of the most fundamental decisions retailers make and is critical to differentiating your offering in the market.
We looked at merchandising last because we knew we’d need to learn Charming Charlie’s business before we could make any sort of informed decisions about what products they should or should not be carrying. And this just takes time.
With Charming Charlie, it was generally assumed that the same product mix that sold well in stores would also be the best mix to sell online. However, coming into the business with fresh eyes helped us question this assumption.
Several months into running the show, we had enough data in Shopify to begin analyzing what was selling well and what wasn’t. And, well, the data surprised us.
Looking at sales by product category, we saw accessories like jewelry were selling fine, afterall, Charming Charlie was the king of accessories. But we also noticed that clothing was doing much better for us than we expected.
So in the Fall and Winter of 2023, we stocked up on more sweaters and tops. These did really well for us, and helped us have a record holiday season. Moving into Spring 2024, we increased our assortment of affordable, trendy dresses. This category did so well for us that at one point in May, they accounted for over 70% of sales.
We’ve repeated this process of shifting our product assortment, often dramatically, based on the season to great success.
Wrapping things up
Running an ecommerce marketplace is not rocket science. It takes conviction and some focus. Keep your spending low until something works. Try new things but don’t commit until you have a very strong signal something is working. When you find something that works, whether it’s email, paid media, or website merchandising, you continue investing in it, making it better, slowly, and strategically. Making big drastic changes is almost always the wrong approach. There’s often more room for growth by executing a single marketing tactic well, particularly when operating in the sub $10M revenue range.
Charming Charlie came to Material down but not out. They knew where they needed to go, but needed the right partner to help them get there. Within 18 months, we helped them transform their failing ecommerce business into a healthy, money-making business, with solid financials and a bright future full of opportunities to grow and serve their customers.
