Samir Balwani 0:03
Hi, I'm Samir Balwani, host of Chief Advertiser and founder of QRY, join me as I talk to industry leaders about their strategies, challenges and successes in managing their advertising and marketing. On our episode today, I have Kareem. He's a CEO at Veiled. I'm really excited to meet diamond here. I met him at a conference a little bit ago. He was on a panel with me, and it was one of those situations where some of the stuff he was saying just I was like, yes, yes, yes. And so it was, it was just a matter of time before I got you here. So thank you so much for joining me, Kareem.
Kareem Elgendy 0:40
Oh, it's my pleasure. Thanks for having me.
Samir Balwani 0:42
So let's get started and tell kind of the listeners. Who are you? Where you were, kind of give us the background,
Kareem Elgendy 0:48
yeah. So my name is Kareem. I'm actually kind of an outsider to e-commerce. I used to be an architect, and I was doing creative work on the side, which led to marketing, which led to advertising. And I started doing Facebook ads and performance marketing back in like 2013 and one of my, one of the the clients I was consulting, is the company that I'm working at now, which is veiled. They're called we were at the time, we were working on just getting the business off the ground, and maybe a year later, they they asked me to be the CEO, which is the role that I continue to hold today. We're we're doing eight figures in revenue annually. We're 100% direct to consumer, with most of our business being in the US, and we're opening our first retail store in in the summer.
Samir Balwani 1:51
Congratulations. Retail Store is a big deal. I love that you guys are 100% direct to consumer, and mostly because it is a double edged sword, right? Like, the best part about being 100% DTC is you get real time feedback real fast. You know exactly what's what to do, how to can I manage against it? But having a wholesale network means more distribution, more brand awareness and as well as, like, real time product feedback when you're talking to somebody, right? And so I know you spend a lot of time thinking about your product, how it impacts your marketing, and you've created a system in which how you do it from a DDC perspective. So can you talk to me about the connection between merchandising and marketing and your perspective on that?
Kareem Elgendy 2:43
Yeah. So the way I like to think about it is, imagine you had the hat store in Times Square, and people walk in and they think they're going to be buying a bunch of different hats, but all you have in stock are blue cowboy hats, so all of these specific and maybe a color that doesn't really go along with that style. And so obviously your conversion rate is not going to be that high, even though you're in Times Square and you have infinite free traffic. Or, you know, take that perfectly stocked store in reverse and but, but you put it in the middle of the woods somewhere, oh, there's, like, zero, you know, foot traffic. You'll also not have a high conversion rate, even though you have the perfect store. But maybe people actually go and seek out your store in the middle of the woods, since there's
Samir Balwani 3:33
you might have, like, a little bit better of a having, I mean, that's like, such a perfect example of just even that around how important product is, people will seek you in the woods if you have the right product.
Kareem Elgendy 3:48
So that's something that, like, really stuck with me because, you know, at some point, so there's three, there's kind of like a 300 beast that runs Ave, so the two founders and myself, and I'm responsible for, like, growth and finance and those things. One of the partners is responsible for the operations. We operate our own fulfillment center. And the third partner, she's the creative and like the spirit and like the soul of the brand. So everything beautiful about the brand comes, you know, from her. So because I'm the numbers guy early on, you know, be like, hey, like, how much should we order of this product? And I'm like, Well, gee, I don't know. Maybe I should look into that. And so, you know, start, when you start diving into those, those metrics and like, try to come up with, like, you know, some kind of, like, sound recommendation, you start to get into merchandising analytics pretty naturally, except, like, I really wanted to figure out, and I wanted it to also sync up with upper funnel. So that's that was the beginning of like, trying to find the connection between those two things.
Samir Balwani 4:59
Yeah, it's really interesting, because when we were on the panel, you said something that really resonated with me, and it was a lot of times marketing kind of gets blamed for a product problem. And, you know, being a media agency, we we hear this a lot of like, why can't we scale what can't we why can't we do this? Or, like, why are we kind of stuck where we're at? And then, you know, the moment a new product drops and the numbers look great, it's Wow. Look at what we're able to do. Hey, market. Why can't you scale us more? Why can't we grow more? So like, we're kind of always in this situation. But I love that you take the view of the product matters. And it really is a unique perspective that I don't think a lot of people really understand the impact of.
Kareem Elgendy 5:48
Yeah, and just to show a little bit more light on that, like we would have a lot of periods where suddenly performance is not great versus the reference period. Maybe that's like the prior year, or a similar kind of promo, but we just felt like things were off, right? And, you know, you kind of go at a at a surface level, through all, like, the basic metrics that all of us look at, you know, conversion rate, spend, whatever, and you're like, Okay, well, there's nothing immediately jumping out at me as as to be the issue. But then, you know, you know, you stumble across, like the collections pages and like, all of your top products are out of stock, right? So, so an example of, like, this kind of optimization, and by the way, I mean, we have, like, probably 20,000 skew variants at this point. We are a fashion brand, and we have a lot of styles and colors, and so if you're if you have a lower SKU count, it's probably harder for you to or it might not be as critical to derive these sorts of insights, I guess as like, the SKU count goes down. But like you know, we sell head scarves. Our target audience is Muslim women, and the black scarf sells three times the rate of the white scarf. So when the black scarf is out of stock, I wouldn't be surprised that you know, my, my MER, my ROAs or whatever, is taking a significant hit, because you know, that is the highest selling product that we have in in the store. So as as time went on, we started to really never not know what's wrong with performance. Right? We We messed up a few times where we experimented with price and other things which which really did impact the product market fit. But beyond that, it was always either pretty obvious, like, you know, something wrong with the product. We've had issues where we've narrowed it down to, you know, the audience, how we invested in audiences, and how we construct our audiences, and things like that. But after we sort of what became more robust in how we look at merchandising analytics, the number of times in the last, you know, two years, let's say that there was ever a situation like, ever that we didn't know what was going wrong with performance was basically zero, like, there. There is not a single open ended question right now for us that has remained since we started to become more, you know, more on top of merchandising analytics. So,
Samir Balwani 8:33
yeah, that's really interesting. I think it's a really valuable perspective for people to have and to really understand that. Like, to understand the impact on marketing, you have to go beyond marketing. Like, don't just stop at, oh, it must be my audience. It must be my creative It must be my landing page. There are other elements of it that you do need to take into account and kind of manage against. One of the things that you just said that was really interesting to me, of like, when your black scarf is sold out, which sells at three extra return of the white, you expect to see a dip, and you expect to kind of see it. And I can already hear other marketers in my head going, Well, why wouldn't you just promote the white? Obviously, you're not advertising the white. You're just not pushing it hard enough. And so I know you and I have a perspective on this, but like, have you tried that? Well, you
Kareem Elgendy 9:20
can definitely and you should, like, you should compensate. You have to roll with the punches, like you're never going to have the perfect hat store all the time. Yeah. But that is, you know, you're working against the grain at that point, because when everything is in stock, the natural demand is organized in such a way. And you know, we're talking about one product versus another, but when you're talking about a full index with 1000s of products, optimizing all of them in aggregate, that has a massive impact on your ROI, your advertising ROI, so and it could be like 60% 70. Cent or more. So you could probably, you know, if someone's not doing this today, if they started to do it somewhat effectively, they could probably expect to double their MER,
Samir Balwani 10:09
yeah. I mean, I think it is interesting, though, because optimizing your product on the advertising side is really different than expecting that product to be sold like the ad that is shown is not always the product that is then being purchased. And I think that that's like an important perspective to keep in mind and to kind of manage against,
Kareem Elgendy 10:33
especially with like catalog and dynamic ads today, or being like the number one, you know, the best performing strain of like, you know, in terms of ad sets. You know, you're those that the creative ads, like the really creative, you know, creatives that you publish that tell a story about a product or whatever and put a poem through like a specific funnel, they're not getting anywhere near as much visibility as, like, your dynamic as, which are really just basically your product, right? Like, yeah, you can customize them and add some flavor and whatnot. But so really, it really is all about your entire catalog, if you think about it. And so you have to optimize that.
Samir Balwani 11:19
Yeah, yeah, that's really interesting. So you know, when you are looking at your catalog and you said, you know, you want people to be optimizing for for performance on that, how do you determine one product is impacting your performance or marketing? How do you actually choose the products to promote and manage against, and I guess, talk us through just that process for you.
Kareem Elgendy 11:41
Yeah, um, so what we've so, yeah, so, I mean, basically, we want to analyze, you know, in any given period of time. So I'm forecasting, you know, say, for autumn winter next year. I'm gonna look at the best reference period that I could look at. It's not always, you know, autumn winter to autumn winter. It could be like a full year look back, you know, depending you really have to, like, be in tune with how your team goes about the design process. And you also might want to experiment comparing different reference periods and seeing kind of like, what makes most sense. And then once you've, once you kind of figured out what your reference is, what you're looking to specifically measure is how many units were sold per day. And I look at, you know, units sold per day while in stock. What that gives me is, you know, when I, when I apply that across the whole catalog is, I can then see, like, you know, the share of the category, sales, velocity, given product. So, you know, for the scarves, like, within scarves, you know, what share of scarves should I, you know, purchase of which specific, you know, SKU, so, you know, and you do that by style. You can also, you can also, then apply, like, if I look at a specific collection and I'm trying to understand, say, my customer size, it's probably more, probably more truthful to get how you're, you know, what your what your customers sizes are across categories, right? And rather than like, you know, let the data be biased based on like, a specific kind of like, a style just happens to perform really well. So a lot of like mediums are being sold, or whatever. So we try to kind of look at, you know, we're looking at size, we're looking at it like, agnostic of everything else. When we're looking at color, we're trying to look at it as much as we can, meaningfully agnostic of everything else, right? You hold those ratios and you and you kind of just multiply them across. So like, you know, the most popular styles multiplied that those ratios, like, in terms of their share of the pie multiplied by the share of the pie for that size, etc, etc. And then you actually can generate a full graph po that's optimized by style, color and size, at least. That's how we do it. There's probably infinite ways to do this, but yeah, that's kind of how we go about it. And when we correct four units sold per day in stock, sometimes the data will suggest that we need to expand further an entire category or a product, because it will say, you know, basically what will end up happening is, you know, suppose you had sold only 10 units in a in a in, you know, 10 days, but it was only in stock for half of that period. So you probably could have sold 20 units instead. So that will increase like the ratio of of that specific item within its like index. Yes. And so, for example, we sell these, like traditional long dresses, they were 1.5% of units. So all units sold in one period, the data suggested that we should be selling them at 5% we ended up doing that in the subsequent period like we ordered, which is a big jump, like, we allocated, you know,
Samir Balwani 15:23
10s of 1000s more dollars. It's more than double, right? Like, this is more than double. So, yeah, it's
Kareem Elgendy 15:27
like more than triple. And when we actually adjusted those ratios, we sold almost exactly at that new ratio that the system had identified in the past, so that that's a huge that that, you know, our MER also went up, right, not just from that collection, but from, like, all the optimizations that we're doing. But, and the, the funny thing about our business is, as we've been doing this, our MER has, has been going up every year, whereas, like a lot of people I speak to, they're, they're facing the app, you know, they're experiencing like the opposite. So the only thing we are doing differently, and the one thing I'm finding we are consistently doing differently than most people, is, is really on the merchandising analytics and how we tie it into, like, traffic and all that, which we get into more on the upward funnel side, but, you know? And then maybe the other thing is, like we were a little bit more centralized, whereas, like, you know, some of our peers, like, they have a merchandiser who doesn't really interact with, like the analytics team who doesn't interact with, like, design, whatever, we're a little bit more centralized. So we're able to do these things, even though it's like, more of a burden on the people responsible for, you know, those kinds of, you know, analysis. Yeah, it's interesting,
Samir Balwani 16:41
because I always say, like, ahead of E comm is a unicorn, because they've got to understand merchandising, marketing, development data and really have a good understanding of almost running their own business. Because it really is. It is its own business underneath, and it requires a lot of things to align to be very successful, right? And, and so you need to be able to speak all of the languages. You know, it is really interesting, because I think I love whenever you and I talk, you have this framework from which you think about things, and you always kind of follow that. So, can you walk us through just your framework for metrics and how you look, because there's, there's a lot of data in our world, and there does not need to be as much as there is, because it can be overwhelming at times. So as a CEO having that holistic view, how do you kind of just break it down into something you can actually do something with?
Kareem Elgendy 17:40
Oh, yeah. So I probably do this more for my own selfish benefit of like, not losing my mind every day and trying to keep track of everything and know everything that's happening. My goal is really to identify problems and solve them, because I've already, you know, hopefully I've already set a plan in place. You know, at least one figures, like, that's the goal. Like, you have a plan you should be hitting certain metrics. So you're assuming you've already set your goals. You know what your revenue should be, all of that, right? If you're not there, then, like, you have other challenges. But like, if you are there, and you kind of know where you should be, and it's not just like, you're rolling the dice every day, then you can, then you can look at it structurally, right? So the first thing is basically figuring out like, and we've had both like we've had, we've been, we're 100% bootstrapped. We're not funded so, but we've, you know, we've worked with that and whatnot. So there have been periods where, like, the mandate has been more like growth with little profitability or none, versus like no. We need to be, like, super profitable. So you kind of, like, start there, and you set your goals and whatever, and you look at, like, your top line revenue and everything, and you can look at your profitability, which is a little annoying with Shopify, but, you know, that's another conversation. So once you kind of have that, if you're off target, well, what is off? Is it, you know? Is it? Are all the metrics off, like your conversion rate, your traffic, in your traffic, and your CPM and so on and so forth, or, or is it, like, just isolated to conversion rate, right? So, if it's isolated to conversion rate, um, your traffic was great, like, you drove enough traffic and everything, um, then you're kind of thinking two things, right? Because conversion rate, when it's isolated, it's basically product market fit. It can be, you know, it's, in that moment. It's in the last day or two, or whatever it is that you're looking at, but it's still like for that day or whatever, the demand just wasn't there. Now, is it the market, or is it the product? So if it's the market, it's implying more upper funnel. So you're gonna maybe want to check if there's been changes to the audiences. Is there been changes in the way this. And has been allocated. That's something that we we ran into once where, like, literally this, this exact scenario, conversion rate was off and and it's like, okay, well, we brought enough traffic, we brought more traffic, but like, performance just wasn't there. It turns out that Facebook had updated its the way you do campaign optimization, and basically it started to allocate more budget automatically towards colder audiences. And so we had to bring back a side card to force it to focus more on the warmer audiences, which is kind of what works with our business. And literally, the performance reversed, like the very next day, like we were back up to where we should be, like, almost exactly, and that was the only difference, right? But, like, say it wasn't upper funnel, say, like, my advertisers, like, No, we've changed. Nothing, absolutely nothing has changed. Everything is great. Then I'll start to look at, you know, our stock outs, like, in terms of our inventory, like, are we, you know, what's that? What's out of stock, like, how should we perform, etc. We're still not at the level where, like, I have a theoretical, like, based on what's in stock, what my performance should be. That's pretty, like, advanced, that'll be awesome, yeah, but, um, but more so just like, common sense, like looking at, like, top selling products, what's in, what's not, having discussions with the team, etc, and then it's like, okay, you know, you know your your best sellers are just, like, out of stock. Maybe you had a few really good past weeks or months, and you over performed, and now, like, you're naturally just gonna, you couldn't get your stock here in time, right? So that's okay too. Like we're actually running into that issue right now. Like I was telling you before the call, we're up 85% year over year, and I expect that. I know our performance has been amazing, but I'm really worried about, like, the next couple months, I don't know if my shipment will will come here in time for, you know, spring summer, so that we can maintain this, like, growth, I fully expect that we are going to be low on stock and the performance is not going to be there, or not be able to maintain, maintain this. But then I can go to my team, and I can also like so we do this thing where if we know that the inventory is not there, we will reduce and reduce the traffic coming to the site, just to kind of keep the M, E, R at par. And we just see this phenomenon like play out. I don't have the best explanation for it, except for it kind of does make sense to me, especially when I go back to the example of like the hat store, like you probably want less people in your store when you have less product. I think that just kind of makes sense. But it seems like, and I think this is why, like, with the with the way the catalog ads work, and all these things with the algorithm, it seems that when we're kind of low on stock, as we reduce the traffic, we're able to maintain our MER, like, a certain sweet spot, and then, as, like, you know, demand, you know, product, product is there, promotion, whatever. And we're, you know, demand is there, then we will just, like, bring the traffic up, because there's that, all that demand. Yeah, that's interesting. Anyway, that's
Samir Balwani 23:19
there. No, I love that. I love that perspective around things, because you definitely have this, like, step by step view of things that I think is unique to people. Like on the media side, will you know we've got our indicators at CPM, click through, rate, CPC, conversion rate, CPA, right? Like, I want to know all of these are working. If it's CPM, that's the issue, then it's an audience targeting. Let's take a look at audience targeting. If click through rates the problem, it might be audience targeting, but it probably is creative. So let's take a look at creative and offer, right? Like so it kind of helps us diagnose where, where to look at things. And then, you know, marketing and growth is a resource allocation game, right? Like you are making that decision between, do I invest in new inventory? Do I invest in marketing? Well, it doesn't make sense to invest in marketing if I don't have the inventory. And now I can kind of balance that on our end. It's a resource allocation around, do I spend this next hour wasting my time looking at audiences? Well, that's not really going to move the needle. I should look at my creative or I should look at my landing experience, right? Like, where is where is where am I going to see the best impact? And so I think your perspective and your framework by which you say, Okay, I create this spreadsheet, and I look at these KPIs, and I then, at any given day, know, all right, this is red. I need to focus my time and energy here. We need to figure out what's going on here. Is it a blip? Is it a trend? Right? Like that, that framework from which you think around things is really important. I know we're coming up on time, and so I wanted to be conscious of that. But Kareem, I really want to thank you so much for joining us today. And where can people learn more about you and check you out
Kareem Elgendy 24:56
on LinkedIn. Kareem Elgendy, and you can also reach out. To me, kareem@veiled.com
Samir Balwani 25:03
Cool. I'll include that all in the show notes too. So thank you so much, Kareem. Really appreciate it.
Outro 25:10
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