Clothing retail startup “Sunny Co Clothing,” founded by two college seniors at the University of Arizona, figured creating a swimsuit giveaway would be the best way to get the word out there about their new brand.
By reposting their photo with a specific hashtag, social media users would be entitled to a “free” swimsuit in exchange for their post — in addition to the company donating $1 to the Alzheimer’s Foundation for each one.
Overnight, their Instagram following jumped from 7,000 to 784,000. More than 346,000 people took up their offer, forcing them to cap the promotion at 50,000 units.
Let’s do the math: 50,000 units x $12 = $600,000.
No, that’s not a typo. The campaign grossed over $600,000 in 24 hours.
It was so unexpectedly popular they had to issue almost $73,000 in refunds because they couldn’t meet demand.
This spawned a slewofarticles calling the campaign a failure. One writer even thought that it belonged in the same category as the infamous Fyre Festival.
But if these publications had just paused to think, they might’ve realized they were missing the big picture.
Inventory issues aside, the real story was that two college students generated more revenue in one day than many businesses do in a year. And they did it with effectively $0 in ad spend.
They’re not losing any money — they’re making it
Of the thousands of people posting all over the internet about this matter — the majority of them failed to give the site a visit and realize you still had to pay handling charges, although the item itself is technically “free.” While this is certainly a gray area of marketing ethics, it’s nothing new.
The folks over at Loretti Watches have been running their entire business on this model for over a year. Pay a small shipping and handling fee, and get the product for “free.” In fact, many of the top clients we produce scroll-stopping creative and strategy for at VAXA Digital follow this same business model.
What most consumers don’t realize is that these products are manufactured so cheap they can be produced and shipped for less than the shipping “cost” they’re charged. This is especially true in the clothing industry, where items (such as bathing suits) can be easily manufactured overseas for nothing more than a few dollars. This absurdly high margin is then used to cover advertising, overhead, and wasted product at the end of a season/trend.
In this specific example, Sunny Co Clothing charged their customers a $13 shipping fee after applying their promo code to reduce their $70 bathing suit down to $0. From a marketing psychology perspective, the consumer feels as if they’ve gotten such a discount that this nominal charge is normal and worth it.
From that amount, subtract $5 to manufacturer and fulfill the item, $6 to actually ship it, $1 for the Alzheimer’s donation, and they’re left with $1–2 of net profit for every suit sold — which brings me to my next point: how many did they actually sell?
Truth is, there’s a lot to learn from their campaign, so let’s mine some nuggets of wisdom.
In this article, I’m going to break down key lessons you can apply to your own marketing strategies. Then, I’ll provide a template you can use to recreate their success.
Nothing Sunny Co did was revolutionary — it was simply well executed. And if you follow the principles they used, you too can become an overnight sensation.
How Much Was Profit?
First, let’s take a closer look at the numbers.
Unless you manufacture your own goods, the only way you can promise a swimsuit for $12 is by buying in bulk to keep costs low.
In light of this, it’s likely Sunny Co sourced their product from an overseas supplier.
I did a quick search on Alibaba and found a similar swimsuit that costs $6.10/unit (when ordering over 100).
Let’s assume they were able to negotiate down to $3/unit, given they ordered 50,000 pieces.
In 2017, you could ship a seven-ounce package across the U.S. for about $3 via USPS First Class.
Factor in $0.50 for packaging/branding and $0.70 for payment processing fees and that brings total costs to $7.20.
Estimated profit = $12 - $7.20 = $4.80/unit.
We know they ended up issuing roughly $73,000 in refunds. But assuming they could tell the future and adequately planned their supply chain, they would’ve raked in over $240,000 in profit in 24 hours.
Wow.
Why It Worked
Three key factors:
1.“Free” turns heads
Want to command attention?
Offer something for free.
Caveat: as we saw above, Sunny Co used the word “free” fairly liberally. In any other context, $12 shipping for a single swimsuit is outrageous.
Nevertheless, it’s likely many customers realized this and still wanted in, especially when compared alongside a $64.99 retail price.
The real takeaway here is that people love the idea of “free,” even if it’s merely framed as such.
2. Urgency sells
If “free” grabs the audience’s attention, limited time offers give them no choice but to respond.
Sunny Co took advantage of this by restricting their campaign to 24 hours, which persuaded their audience to jump on board right away.
There’s nothing worse than missing out on a chance to grab something for free because you waited too long to act.
3. Relevant content converts
This campaign went viral for a reason.
Points 1 and 2 are critical, but they would’ve fallen flat if the Instagram image wasn’t appealing to their audience.
That wasn’t an issue for the Sunny Co team, because they chose an image that: Looked like an Instagram post their target audience would typically make (not a spammy ad). Incorporated their target audience’s interests (warm weather and swimming pools). Used colors associated with excitement (ie. red).
These elements ensured their campaign got noticed.
Template: How to Make $600,000 in 24 Hours
Here’s how you can recreate Sunny Co’s success.
Step 1: Source a product on Alibaba.
Find a product you can: White label and rebrand. Charge the unit cost + shipping cost + desired profit as “shipping.”
To figure out the second part, first, determine your total costs.
For example, these blue light blocking glasses cost $1.80 per unit. You can ship them anywhere across the U.S. for roughly $3 via USPS First Class. That puts your total cost at $4.80.
Next, determine the maximum amount a customer would pay for shipping on the item.
If you sell the benefits properly (ie. blue light blocking glasses prevent headaches), I think you could persuade an audience to pay up to $8 for “shipping.”
That leaves you with $8-$4.80=$3.20 in profit.
Step 2: Order samples. Inspect for quality and reliability.
This step is a must and will save you from the terror of issuing mass refunds due to quality complaints down the road.
Pay attention to the supplier’s reviews regarding fulfillment times. Make sure they can handle large order volumes in a timely manner.
Step 3: Set up a Shopify store. Create an eye-catching image for social media.
As we discussed earlier, it’s important that your image doesn’t look like an ad and is relevant to your audience’s interests.
I strongly suggest including a human being in your image. After all, humans relate best to other humans. Step 4: Set up a time-limited repost campaign. Ask everyone you know to post about it, or buy shout-outs from large themed accounts.
Your campaign should look something like this:
“For the next X hours, everyone who reposts this image on Instagram and tags us in the post will get a free [product]. Must be following us to be eligible.”
Sunny Co ran their campaign for 24 hours. You can run yours for however long you want.
Just keep in mind: shorter campaigns create more urgency, which yields better results.
If you have an existing following or an active social circle you can leverage, you may be able to pull this off with $0 ad spend.
If not, DM themed accounts on Instagram and buy at least $500 worth of ads. Step 5: Go viral and profit.
There are a lot of variable components here, like how good your branding is, how appealing your product is, and how attractive your images are.
So it goes without saying your results will vary.
But as Sunny Co demonstrated, knowing your audience stacks the odds in your favor. Hit on all the right points with your branding and messaging and there’s no reason you can’t experience a similar level of success.
Understanding the Framework
At the end of the day, the key is understanding the power of the “free for a limited time” model.
In the brick and mortar days, companies used this method to get visitors to their store. Their goal was to get customers to also buy other items while they were there, which is how they made money.
In today’s global economy, however, it’s now possible to make money directly off the product you’re “giving away,” because many products can be sourced from overseas for pennies on the dollar.
The entire Internet just advertised for them — and still is
Most of us have heard the adage, “No publicity is bad publicity.” While there are some cases this certainly isn’t true (looking at you, United Airlines), that’s not the case with this situation.
Within 24 hours of starting the contest, thousands of major Instagram/Twitter influencers were posting about this — whether paid shout-outs or simply memes making fun of everyone else posting.
Before long, hundreds of major news accounts began covering the story, and hundreds of thousands of comments were being left about the giveaway — both good and bad. Regardless, this company was certainly now in the spotlight of both consumers and other massive brands (and maybe even the FTC), meaning ridiculous amounts of traffic were being sent their way.
Regarding the potential FTC attention, the one area Sunny Co Clothing poorly executed was delivering a clear and consistent set of terms and conditions for the contest, as some screenshots suggest they changed their terms multiple times during the giveaway process:
Take a look at Rule #3, stating “…we reserve the right to cap the promotion if deemed necessary.” Given this was not clearly stated at the beginning of the contest, this could certainly raise some questions from the feds, especially after the FTC’s recent announcement to crack down on unethical social media advertising practices.
Targeted demographic data and followers will be invaluable
Potential fines aside, it’s clear that the real win here for Sunny Co Clothing wasn’t in the relatively small amount of money they made, but rather the data they collected from a highly targeted niche of women interested in buying clothing online — specifically swimsuits.
Considering that the going rate in 2017 for targeted email lists is between $200–400 CPM (cost per mille, or thousand impressions), with even 50,000 email addresses collected they’re looking another $10,000 minimum for every business they sell those to. When dealing with large retail brands, such as Victoria’s Secret, this cost is something marketing teams are willing to pay at the drop of a hat.
Now, what about that massive Instagram following? While “shout outs” and influencer marketing promos have been around for a few years now, they’ve certainly become popular with massive brands more recently — raking in some massive cashflows for those in charge of these accounts.
Given that the going rate for an “influencer” page to create a post promoting someone else’s product or service is about $1 per 1,000 followers (based on my experience in the industry), the folks over at Sunny Co Clothing are looking at a minimum of $700 for EVERY single promoted post. Even if they only posted one a day, that could equate to over $250,000 a year.
Worst-case scenario, even if Sunny Co Clothing somehow goes under as a result of this stunt, there’s nothing stopping them from selling their Instagram account on the “black market” (given it’s against Instagram’s terms of service) for an outrageous amount of money. Knowing their engagement and number of active followers, they would easily be able to pull in anywhere from $30–50k for an account of that size.
In the end — was it a win?
While they’ve yet to stand the true test of time and begin fulfilling these orders, Sunny Co Clothing certainly has the potential to pull off a massive “W” as a result of this scenario. Even if they were to be hit with massive FTC fines and forced to close their “doors,” they’re set up now with a large number of cash-positive exit strategies resulting from their massive social media following.
The major takeaway here is that viral marketing and growth hacking social media is certainly not dead — you just need a bit of strategy and good luck. Even with major follower-building tools such as Instagress recently shut down, digital marketers are still left with plenty of opportunities to grow their brands’ followings.
With that said, don’t be surprised if you see a large number of strategy copycats popping up over the coming weeks, such as this towel company (who were smart enough to cap the number of giveaway items at least):
In the Wild Wild West of Instagram, it’s not surprising they even stole their photo:
As mentioned earlier, this marketing strategy is nothing new, and certainly presents opportunities for retailers with cheaply produced goods to creatively target new consumers. However, bear in mind that a good number of people will now realize that pair of “luxury” sunglasses you normally sell for $79 only costs you a few bucks to produce.
No comments:
Post a Comment