Growth does not equal success! Like many E-commerce, Kitchentime struggled to see their actual profitability. A holistic approach on value based budget allocation, bidding and reporting increased Kitchentime Groups Gross Profit After Advertising Spend (GP) by 220%.
Kitchentime’s main objective is to Grow Bottom Line Profit while increasing its market share in core markets. In order to achieve the overall objective we need to make sure to allocate our budgets and place our bids on real business value rather than top line revenue. With a product portfolio of more than 40.000 products, multiple markets, multiple currencies, multiple different packaging costs, varying logistics costs and varying customer service costs we had to find a solution where we can calculate each order's total profit in real time.
With the help of Kuvio.io we were able to calculate each transaction's profit in real time which enables us to feed this information to advertising platforms (google ads, facebook, microsoft ads) so that the bid algorithms can react to the signals in real time. With the help of a holistic reporting dashboard in Google Data Studio we are able to follow how real business KPI:s such as GP1, GP2, GM1%, GM2 develop over time, vary across channels and activities, vary across markets and other important dimensions. The reporting part of value based marketing is as important as the bidding itself, since it enables us to allocate budgets more efficiently and it also enables more advanced incrementality testing.
Normally increased market share comes with lower short term profitability, since businesses buy market share at any cost. By allocating your marketing budgets on the right activities and bidding on real business value, Kitchentime was able to do both with short and long term profitability.