How the Try Before You Buy Approach Transforms Shopping — Benjamin Davis | The Value in Giving Online Shoppers a Trial Period, How the "Try Before You Buy" Model Impacts Conversion Rates, How Brands can handle their Return Volume Strategically (#289)

In this podcast episode, we talk about why your "Buy Now" button might be broken and why you should let your shoppers try before they buy. Our featured guest on the show is Benjamin Davis, Founder and CEO of TryNow.com


Topics discussed in this episode:

• How "try before you buy" impacts the ecommerce world
• What's the value in giving online shoppers a trial period for ordered products
• How does the "try before you buy" model impact conversion rates
• What measures are implemented to remind shoppers about their trial periods
  
  

Links & Resources

Website: https://www.trynow.com/
Shopify App Store: https://apps.shopify.com/trynow
LinkedIn: https://www.linkedin.com/in/benjamin-davis-1010a821/
X/Twitter: https://twitter.com/trynowusa


Get access to more free resources by visiting the podcast episode page at
t.ly/V-tqW


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Transcript

Claus Lauter [00:00:00]:
Welcome to episode two eight nine of the ecommerce Coffee Break podcast. Today we're going to find out why your buy now button is broken and why you should let your shoppers try before they buy. Joining me on the show today is Benjamin Davis, founder and CEO of Trynow.com. So let's dive right into it.

Voice over [00:00:18]:
This is the ecommerce Coffee Break.

Voice over [00:00:23]:
A.

Voice over [00:00:24]:
Top rated shop Shopify growth podcast dedicated to Shopify merchants and business owners looking to grow their online stores. Learn how to survive in the fast changing e commerce world with your host, Claus Lauter, and get marketing advice you can't find on Google.

Claus Lauter [00:00:43]:
Welcome to the hello and welcome to another episode of Coffee Break podcast. Today we want to talk about a topic that should be in every merchant's mind, actually, because it's quite a bit of a different approach, and actually, the approach online shopping should be, and people have completely lost out of track. So we want to talk about why you should let shoppers try before they buy and what kind of difference that can make in your business. So with me on the show today as a guest, I have Benjamin Davis. He's the founder and CEO of Trynow.com. That's the leading try before you buy platform for Shopify brands. And that gives a bit away the topic, but stick with me here. Ben, before he started try now, was the co founder of Saint Heaven, an apparel brand on Shopify.

Claus Lauter [00:01:27]:
So he has a huge background in what actually the world looks like from a merchant's perspective. So let's welcome him to the show. Hi, Benjamin. How are you today?

Benjamin Davis [00:01:34]:
Hi. Great. Thanks for having me on pause.

Claus Lauter [00:01:36]:
Let's dive right into it. The approach that you have is actually the approach that we had as shoppers for hundreds of years, and then e commerce came. Tell me a little bit about the history. Tell me about the background and how you got started.

Benjamin Davis [00:01:48]:
The history of try before you buy goes back for centuries. As you mentioned, it's always been how we bought Jr. Watkins back in 1868, started selling toothpaste and personal care products, and started using the concept of a risk free money back guarantee. And he actually drew a line on the bottle and said, as long as you don't go below this line, you can return it. Money back guarantee. There was the first kind of attempt. It's sort of a try before you buy, like model. Back in the age of kind of door to door home sales, when I was running a brand, we had this exceptionally soft fabric, and it's one of those products that was just best experienced in person.

Benjamin Davis [00:02:24]:
And the truth is that most products, anything that is really discretionary is best experience in person. But in this case, we had really soft fabric that was fairly high price point. So I figured, well, we should just allow shoppers to touch and feel it, because once they do, they love it. But how do we reduce the barrier? And the example that we always kind of go back to is the analog of the brick and mortar experience. And let's say you walked into a store and the sales shop says, hey, claus, before you go into the fitting room, just give me your credit card. I'll charge you for $212.33. But if you don't like it, no worries, just go to the front, get a refund. You would never do that, but that's how our online store operates.

Benjamin Davis [00:03:02]:
And so there's just a lot of added risk in that purchase flow. And e commerce has a bunch of solutions for that. UGC helps derisk the purchase. Reviews help derisk the purchase. Money back guarantees help derisk the purchase. Great photography, sizing charts. All of that is aimed to derisk that purchase. I think the most successful attempt has been free shipping and easy returns, which was once really innovative and really powerful back in 2008 910.

Benjamin Davis [00:03:31]:
Now, some iteration of that is table stakes. So you can think about try before you buy as the next iteration of try before you buy or of free shipping and free returns, just much more powerful. That's kind of what we do and what we power. For Shopify brands, I think you mentioned.

Claus Lauter [00:03:47]:
A very important thing. There's a lot of products out there that you want to test. I can think about candles, perfume, apparel. Obviously, you want to make sure that it fits nicely in all of that. And as we are used, going to a brick and mortar crypto store and trying it out anyway, it's just logical to bring this to the online world. Now, diving a little bit deeper into that. You said free shipping, easy returns. That was the thing that people did.

Claus Lauter [00:04:12]:
Now for, let's say, let's last ten years or something like that. But it comes with some downsides. Tell me about the downsides for the merchant.

Benjamin Davis [00:04:20]:
Like any big category shift, there is a lot of benefit driven in the first few years of that category shift. So brands that offered free shipping and easy returns in 2008, nine and ten, they grew tremendously as a result. But as you fast forward to 1617 and 18, brands were compelled to offer some sort of free shipping threshold and some sort of easy returns to compete. And so once you're kind of compelled to do that in order to compete, you're not generating any additional value, you're just kind of getting back to the status quo. And so that's kind of where we're at right now. Return rates are always on the rise. They're on the rise as brands grow, but they're also just on the rise as consumers become more comfortable and adjusted to this new normal of online shopping. And so when that happens, and if return rates go up but you can't increase gross aov, you can't unlock conversion rates, then you have nothing to combat it other than saying, we need to reduce return rates.

Benjamin Davis [00:05:23]:
We need to penalize shoppers with a restocking fee or some sort of kind of solution or sort of blunt tool. Like, you know, I think some advice that our series A investor and board member, mo, he gave me advice years ago that his father gave him and said if he can't solve the problem, then you've got to change the problem. I think that that sort of advice is so apropos to return rates because you can't solve this problem. Shoppers are just getting more accustomed to buying things online. So if you can't do that, you got to change the problem. Why are shoppers returning? Are they successful with their transaction? Are they not? Are they ordering the right things in the first place? So it's a very broad problem that we kind of address.

Claus Lauter [00:06:06]:
In the beginning, you mentioned that if you would go in the brick and mortar store, you want to go to the changing room, and they charge you $200 upfront just to do that. That wouldn't work. Now, the same situation applies right now in an online shop. Basically, even with free shipping and easy returns, you pay first and then you get the product. Now, your solution turns that upside down. Tell me how it works, how it looks for the shopper.

Benjamin Davis [00:06:30]:
So shoppers can fill their cart with items to try. Brands can cap that. So we work with brands across apparel, beauty, fragrances, home goods, footwear, jewelry. So bunch of different categories. But typically, when a shopper goes into any store, whether they're buying stationery and notebooks or they're buying fragrance, trying, trying and buying fragrances or apparel, they're trying more than one. You're typically assessing two, three, four, or five items. And so we allow shoppers to bring the store to their door by filling their cart with items to try and only paying for what they keep. Now, in the case of consumable goods, they put samples with the full size product.

Benjamin Davis [00:07:09]:
In the case of products that are resellable, then obviously no samples such as apparel. We then track that package as it makes its way to the shopper's house, and once it's delivered to the shopper, begins the trial. The trial period is adjustable. We typically start brands with ten days, but they can adjust it anywhere from seven days up to 14 or 30 days. And then we're integrated with the brand's return flows, such as loop returns, happy returns, or others to know what the shopper keeps and what the shopper returns. So from a brand's perspective, launching a try before you buy program is just as easy as selling a buy now item. We just tag that order with the try now tag so they can differentiate.

Claus Lauter [00:07:49]:
I like the point that you basically are very flexible when it comes to delaying the payment to give the shopper enough time to try it out. Because depending on what kind of product is, they might need more than a day to figure out if it's the right match for them. Now, let's talk a little bit about conversion rates. A good online store nowadays has a conversion rate, I don't know, two, three, maybe 4%, somewhere in that range. They invested a lot of time and money into conversion rate optimization, testing buttons and so on and so forth. But I can imagine with try now that looks completely different. Do you have numbers on that? Do you have examples on how that makes a difference?

Benjamin Davis [00:08:25]:
Yeah. Let me talk conceptually about conversion rates, and then we can talk about specifics into the numbers. Like you mentioned, a great conversion rate, 3%. And you get a great conversion rate. And you get up to 3% by a b testing. So that's a best practice button. Colors, budding copies, PDP placements, driving the right traffic and qualified traffic to your site. Fast load times, things like that.

Benjamin Davis [00:08:48]:
All super important best practices. But if you have a 3% conversion rate, you have 97% of shoppers that are on your site that aren't converting, a portion of which are unqualified. They're unaddressable. Let's not even focus on them. But there's a very big portion of them that are addressable, that are high quality. They're just not willing to pay in order to try your product. And if you compare that conversion rate to an in store brick and mortar store, about 50% of the people that walk into a store buy something from that store now, try now is not going to get a brand to 50% online conversion rate. But what we will do is increase conversion rate significantly within that Trynow funnel.

Benjamin Davis [00:09:26]:
So for some brands, going live with TryNow in a very big way, right away is a little too much. So we actually recommend a phase rollout approach where brands start small with targeted entry points. We actually try to keep TryNow as a percentage of the store's overall order value to 5% or less. And so it allows brands to start gathering shopper feedback, seeing how the program resonates with shoppers, and then we can expand from there. Always easy to add entry points into the program, but it ensures that the merchant is in control. And when you do that, you also have very defined entry points. So a shopper clicks on that entry point, whether it's a URL in paid ads or email marketing or influencer marketing, or a product page entry point on the product page. And when they enter through that entry point, the shopper is making a conscious decision to try before they buy.

Benjamin Davis [00:10:17]:
And they enter into this try only experience that converts at exceptionally high rates. So when you compare those try now funnels with the rest of your site, you'll see conversion rate lists that vary anywhere from 50% to 500% depending on the brand and depending on the strategy. But we can keep it targeted to a small portion of your business and then expand gradually. Our philosophy on conversion rate optimization is that CRO is a best practice for ensuring that the shopping experience is seamless. It's clear it's fast, buttons are in the right places, the copy is easily digested, but there is a master switch and that is just allowing people to try. When we think about customer centricity, which is like at the heart of everything we do, and we interview shoppers and we ask them, why are they not converting? Because they don't know the product. They don't know if it's worth the price. They don't know if it's going to fit them.

Benjamin Davis [00:11:17]:
And so you can a b test all day long. You can provide discounts to try to incentivize the purchase. But if you boil it down to the first principle and you ask why a bunch of times as to why shoppers aren't converting, it's because of a fundamental uncertainty around the purchase, and uncertainty and risk are two sides of the same coin. So what we're focused on is just derisking that transaction for the shopper as much as possible, which allows brands to convert traffic without using discounts or other tactics.

Claus Lauter [00:11:51]:
Hey Claus, here, just a quick one. If you like the content of this episode, subscribe to the weekly newsletter at newsletter ecommercecoffeebreak.com. I score and create 50 news sources so you don't have to saving your hours of research. Grow your revenue with ecommerce news, marketing strategies, tools, podcast interviews and more, all in a quick three minute read. So head over to newsletter ecommercecoffeebreak.com to subscribe as at 100% free. Also you will find the link in the show notes. And now back to the show now. I like the approach.

Claus Lauter [00:12:20]:
One thing that comes to my mind is once the shopper has received the product and basically the trial period starts ticking, obviously you need to be in close contact to remind them. Is there any kind of notification system in there to make sure that they're not sort of just forget about it?

Benjamin Davis [00:12:37]:
Yeah, absolutely. So we have email notifications and sms notifications when the order is placed, when the order is delivered, a reminder email two days before the trial ends, and then at the end of the trial date. And then we also send them a receipt. And that ensures that shoppers don't forget about it. But it also ensures that shoppers have clear notifications throughout the funnel and in those comms. We actually collect shopper feedback. So if they respond to a text or an email or respond to a survey, we collect some really valuable data from shoppers that informs the program and its optimization of their try before you buy strategy, but also helps their product and merchandising team with sizing, charge or product packaging, or the formulation of any of their products or whatever that might be. And so in addition to allowing shoppers to drive products and drive conversions, we also connect brands more deeply with those shoppers.

Benjamin Davis [00:13:38]:
So as that unfiltered shopper feedback comes through, we'll actually populate it in our merchant portal so that merchants can see that feedback directly.

Claus Lauter [00:13:48]:
When we started today, you talked about your own brands that you had with a very soft fabric. Are there any specific industries, niche products where you have experience or. We have case studies, success stories that you can tell me about where it worked? Very well.

Benjamin Davis [00:14:04]:
Yeah, we work across industries. We got our start in apparel and then kind of moved into luxury apparel. And so any brand that's in apparel is definitely benefits by converting the living room into the fitting room. But then we also started moving into fragrances and beauty, footwear, jewelry, home bedding, other categories. I'd say a good case study is Elwood. Ellwood is a great basics company, elevated basics company. And when we first started working with them, tees wore the largest part of their business, and they're known for really high quality t shirts and that tended to be the entry point for shoppers. So new customer acquisition came through.

Benjamin Davis [00:14:48]:
A black, a white or a gray t shirt that was a huge portion of their business. They then started releasing more products. So crew neck sweatshirts, hoodies, sweatshirts, bottoms, sweatpants, sweat shorts, and then started moving in some more style pieces. And typically brands think about try before you buy as a new customer acquisition play, which it certainly is helps drive new customer acquisition. It can be used in marketing, but it's just as powerful for retention and driving kind of cross sell. And so Elwood drove believe it was 1.3 million incremental trying out revenue with their program in their first year. And it was largely on kind of new customer acquisition through tease. But they then built out flows, email and sms flow to flows to existing customers to try new colorways of the products that they've ordered, and also new products and styles.

Benjamin Davis [00:15:41]:
And so that shopper may have come through an entry point around tees, but now try before you buy is getting them to come back and try more products. We see that dynamic with a lot of apparel companies where typically there's either a hero product or a set of hero products. So maybe tops make a much bigger portion than bottoms or vice versa. But if a shopper could actually experience everything that that brand had to offer, it would actually be a lot more diverse. Sales would be a lot more diversified. And so when we look across our brands, whether it's apparel, footwear, jewelry, the common denominator that is most correlated with lifetime value is first purchase order size. So the more products we get into the shopper's home the first time, the faster they come back, the more they purchase over that lifetime. That's even true if the shopper only keeps one item that first time, because that shopper now knows that this brand has, maybe they only wanted to spend 50, $75 that first order just to get a taster.

Benjamin Davis [00:16:43]:
But they now saw all the other products, many of the other products that the brand has to offer. And so they are now coming back to try those new products. And if you got a great product, they'll keep that product.

Claus Lauter [00:16:55]:
What I want to find out more from the operational side of things, how do you avoid that somebody orders the whole shop, or how you can manage the products in the back end, so that there are sort of limitations. And the second part of my question would be, how do you make sure that when they just return a part of the order, how does that work in the back end? As a merchant, how can I deal with that?

Benjamin Davis [00:17:19]:
We have cart limits that brands can set. So you can set a cart max depends on the vertical. But many of our apparel brands will have an eight item cart max. So shoppers can fill their cart with a bunch of items, but it's capped at eight. Now, if that shopper tried to cancel their card or run away with the goods, we ensure that we're able to capture for the funds and so the brand is never out the money. So we kind of obfuscate that risk away from the brand so that they can focus on driving the best possible customer experience, but not added risk to the brand. From a return perspective, shoppers will often return partially, so they'll keep some, they'll return some. Same way as if you walked into a store and you tried some products, you may keep, buy some and leave some.

Benjamin Davis [00:18:06]:
And so if you walked into a store and you had a tried six items in a fitting room, kept three, you left three in the fitting room. We would call that the equivalent of a 50% return rate online. Online you typically say, wow, 50% return rate cost, that's terrible. But that's actually a phenomenal sales. Three units, which paid far, offsets any of the incremental shipping costs or stocking costs associated with it. So that's what we manage kind of the return side. Now, from a fulfillment side, it's all the same. On the return side, a brand will accept those returns and the only change is that there will be more units returned.

Benjamin Davis [00:18:44]:
So a brand will want to make sure that they're able to restock those units within a fairly timely manner. And if they use a three pl, then they should definitely be set. If they run fulfillments themselves, they'll just want to make sure that they're able to handle the increased return volume. So one of the things we do to ensure that brands can handle the return volume is those phase rollouts. So in the beginning, by keeping trying out of 5% of your business, you're not going to feel that impact. Even if you have a huge return rate increase on just 5% of your business, the overall impact on your business is going to be minimal. And so as brands have confidence, both in the customer experience, how shoppers are resonating with the program, the incrementality, the conversion rate lifts, and on the upside, they could then expand it at their own pace so they can go slowly with it, or if they're ready for a lot more volume, they can go more quickly with it.

Claus Lauter [00:19:35]:
I understand that you worked very closely together directly with Shopify to create a shopify app. I think there's a lot of things going on in the backend, in the APIs with getting the logic right. Tell me a little bit about the app. What's the onboarding process? How does that look like?

Benjamin Davis [00:19:51]:
Yeah, the company has been around for four years. Up until now we've been working with Shopify brands, but not within a native Shopify app. So what that meant is onboarding was fairly involved. It would take us about a one to two weeks to get a brand live. Now with the Shopify app, onboarding can be ten minutes. I can install and go live on most themes in about three minutes myself, so we can get brands live quite quickly. We've been working with Shopify for about two and a half years with their product and engineering team and we were selected as their launch and design partners on new functionality that allows us to have try before you buy native within both the theme and the checkout. So it provides tooling for merchants to target specific shoppers and hide.

Benjamin Davis [00:20:36]:
Try now from some show, try now to others, which enables is like kind of the architecture that enables the phase rollouts to give merchants control while still giving a great experience to segments of shoppers before they expand it more broadly. So installation is smooth and our team gets very involved in helping brand go live.

Claus Lauter [00:20:57]:
Awesome. I think it also shows the complexity of getting back to the roots. Walking into a store, bringing this to the online world was not an easy task. Quite a bit of development work to get that right. Tell me a little bit about the pricing structure. How do you charge for this?

Benjamin Davis [00:21:12]:
Yeah, so when I was running a brand, every software vendor told me, here's your price sign on the dotted line. It's either monthly SaaS or more typically annual contract. And for entrepreneurial endeavors, things change too quickly to sign contracts in my opinion. And so we are focused on creating the best possible experience for shoppers and we focus on being the most customer centric vendor we possibly can. So we structure everything accordingly. From a pricing model, it's order to order. Brands could leave us at any time. They're not seeing growth for the program, they don't need to stay with us and we just charge a success fee.

Benjamin Davis [00:21:53]:
So it's 2.99% of the net order value after returns, plus $0.99 in order. And so that ensures that if a shopper orders three items and returns all three items, we don't charge that 2.99% on that order value because the merchant didn't make money there, no implementation fee and we've got a free trial as well. So brands can try us before they buy us.

Claus Lauter [00:22:16]:
Sounds like a no brainer to me to try it out, which fits very nice into the topic. Before we come to the end of our coffee break today, is there anything that you want to share with our listeners that we haven't covered yet?

Benjamin Davis [00:22:28]:
Customer centricity. And when we look at our kind of portfolio of brands and who drives the best growth through difficult times, great times, sort of consistency, they all index very high on customer centricity. And these are brands that are always making a decision that's best for their customer, even if in the meantime, it might not feel like it's best for the brand. And so there's a lot of philosophical alignment between us and those companies that truly believe deep down that what's best for the customer is best for the merchant. In the long run, it may impact this month negatively, but in the long run it's better. And I think a good example would be the conversation around restocking fees. As sales have, as demand has slowed slightly in the market, a lot of brands and returns to increase, a lot of brands have been feeling some pressure. It's totally understandable to charge restocking fees and it might be the right decision for your business.

Benjamin Davis [00:23:24]:
So I'm not here to say restocking fees aren't good more broadly, but I do think it's a good opportunity to say what is most customer centric and what's fair to your customers. And I think if you look at returns, there are some returns that are partial returns, there are some returns that are by zeros. Shopper returned everything that they ordered. In the case of a shopper that's ordering some and keeping some, and you charge a, call it $10 restocking fee to someone who just ordered and kept some and became a customer, I think that that is unfair to that customer. And when you survey those customers, they too feel like that's unfair. And when we've seen restocking fees come into play, the conversation has almost always been, we launched restocking fee and it didn't impact conversion rates. Well, the truth is that that restocking fee is buried in your faqs and only a small portion of shoppers read those faqs. And if that restocking fee was within the checkout, and it was very clear and there was an acknowledgment box, I'm sure it would impact conversion rate.

Benjamin Davis [00:24:25]:
So the thing that we see when we look at LTV cohorts is that at 612 and 18 month cohorts, once that stocking fee has been released, we almost always see an impact on LTV. That's like a good example around data can't always inform the decision because it oftentimes doesn't have like a longitudinal, forward thinking look. And so that's my general commentary on kind of restocking fees, and I suppose a bit of a contrarian take.

Claus Lauter [00:24:56]:
I think you're on point there, and I 100% agree with what you just said. I think it's more important to get a new, happy customer who comes back than having something deep in your terms and conditions, and having a surprised and grumpy customer who will never come back. And whatever you lose on the restocking fee, as you said, once they have ordered, and even if there's only a partial return, you probably make money at the back end. So that should be actually a no brainer on that side.

Benjamin Davis [00:25:23]:
So Tony, the CEO of Hammett, a great handbag company, and he is a very customer centric leader, did a conversation of restocking fees. And when they did the math, they basically said, what if we throw a $10 restocking fee in there? Well, if you have a 20% return rate times a $10 restocking fee on average, that's $2 in order. And so the question is to recover those $2 in order. Do you penalize your shoppers and consumers who took a chance on your product and might come back, or do you negotiate more aggressively with FedEx and ups? Do you negotiate more aggressively with your software vendors to shave some dollars off of your fees? Do you negotiate more aggressively with your three pls and your manufacturers to see where you can get some dollars? And the reality is, if you're looking to save $2 in order, there's a lot of ways to do that. The fastest way to that, the easiest way to do that is to charge a restocking fee and penalize your customers. But there are 20 other options to recover the same dollars. And it might be $0.15 there, $0.30 there, $0.50 there, but in aggregate, ultimately it can arrive at $2. So anyways, why don't I leave with that story from Tony, a very customer centric leader?

Claus Lauter [00:26:37]:
Yeah, I think that was a very good example, and I hope that a lot of our listeners can relate to that. Where can they find you on the interwebs?

Benjamin Davis [00:26:45]:
Yeah, well, you can go to trynow.com and see our website. You can reach out to us on our website as well. And we're very active on LinkedIn, so we're posting kind of our thoughts on e commerce and kind of the tribe before you buy market more broadly so you can look me up at Benjamin Davis on LinkedIn.

Claus Lauter [00:27:02]:
Cool. I will put the links in the show notes and you just want click away. Benjamin, thanks so much for your time today. I think it's a brilliant concept that you have there. I think it will change e commerce as we have known it so far, a lot in the future. I think a lot of merchants will go hopefully that route and make it easier for shoppers to build up trust, to try out, and to become happy shoppers. Thanks so much for your time today.

Benjamin Davis [00:27:25]:
Thanks for having me. And Claus.

Claus Lauter [00:27:28]:
Hey Claus here. Thanks for joining me on another episode of the ecommerce Coffee Break podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast, simply like comment and subscribe in the app you're using to listen to the podcast and even better if you could leave a rating. Thanks again and I'll catch you in the next episode. Have a good one.