THE YES Case Study

Harvard Business School Case analysis

Group members: Nataliia Sorokovskaia (M11121025), Anastasia Ponomarenko (M11021833)

1. What do the early results indicate about product/market fit? What excites you and what worries you?

As result of the Performance Marketing Test in 2020, we can see the following results of THE YES
product/market fit:

 The output of the app is quite high that means that app works efficiently: within 30,000 users downloaded
the app, 10% of users had put items in their checkout card and the conversion rates from activity to
transitions were 4%, that’s is very good feature for a start-up (as usually online shop’s conversion rate is 2-
3%). But it is still not enough to compete with e-commerce lead platforms like Amazon that allows the same
online shops to increase their conversion rate to 15%. It means THE YES should work more on its own
recognition and look for more cooperation opportunities with famous clothes and accessories brands.
 The focus target audience is “fashion followers”: according to 2020 analysis results, the average order value
was $225 that is an average budget for the “fashion followers” purchase order.
 The target audience age is mid-30s to 40s: according to 2020 analysis results, sales were primarily being
driven by women in their mid-30-40s.
 Top selling products are middle-luxury brands : according to the 2020 analysis results, top selling items are
related to middle-luxury range of brands: Zara, Everlane, Madewell, Frame.

Based on the 2020 Performance Marketing Test results described above, there are some things make us
worries about the future development of THE YES business:

 The list of THE YES Brand Partnerships consist of a lot of clothes and accessories brands that target different
categories of customers: there are top-luxury brands like PRADA and Alexander Wang, in the same time you
can find middle-range clothes brands like Zara or Miu Miu; there are famous world brands, and in the same
time a lot of local (unrecognizable for international fashion market) brands, that makes customers very
confused about what is the main idea and the target audience for the app. In the same time, according to
the 2020 Performance Marketing Test, it was obviously that the average order value within THE YES app was
$225, that means the focus target audience are the customers that are interested in middle-range luxury
brands like Zara. So, we think that THE YES should decide on what target audience they are focused, and
update the Brand Partnerships list according to the preferences of these categories of the customers.
 THE YES should work more on recognitions of its brand and attract more customers. In 2020 there were only
30,000 of users downloaded this app, that is not a such a high index for online-shopping platform during
COVID-19 period. In the same time, as THE YES apps earns money after the transaction done (brands are
charged 25% of the retail price commission only upon a completed transition between a customer and THE
YES), so THE YES managers should be also interested in motivating customers to make more purchases
through their website. It is possible to do only with good marketing campaign and unique interface that gives
the customers the benefits that are not allowed by other e-commerce platforms. Using AI-technologies, THE
YES already settled a developed interface that allow customer to save a lot of time for shopping. However,
without good and quality marketing campaign only a small part of potential customers knows about THE YES
app.

There was also a finding that excited us and in the same time can be a challenge for THE YES future business
development:

 As we have learned from the article, the target age of the customers fixed by THE YES managers was 25-40-
year-old women, that have a direct impact on the structure of the clothes brands into THE YES Brand
Partnerships list: majority of brands are specialize on the clothes for young women. However, according to
the 2020 Performance Marketing Test results, the largest sales were made by the women customers their
mid-30-40s, that are looking for more “mature” brands like Petit Bateau, Boden, Jigsaw, NYDJ and so on. It
 also can be a reason of not high conversion rate of THE YES app, when customers like the app and its
functions, but just cannot find the matching clothes, because THE YES did not include the brands that are
interesting for this age-range category of women into their Brand Partnerships list. So, for future successful
development THE YES should focus on the recognizable brands that make clothes not only for young but also
for more mature women.

2. Based on their similarities and differences, how would you further optimize the app to better appeal to
Fashionistas? To Fashion Followers? Is it possible and/or desirable to try to satisfy both? Why or why not?
If yes, how? If no, which one would you prioritize?

We do not see any problems into satisfying both types of shoppers – “fashionista” and “fashion followers”, but
in the same time, in will be more rational and efficient for THE YES managers to focus on “fashion followers” as
target audience of their app.

The first reason is THE YES possess itself as a modern fashion app, that uses AI technology to curate a feed
of fashion product recommendations based on a user's individual preferences. Upon downloading the app, users are
asked a series of questions to determine their aesthetic preferences. These include questions about preferred
brands, colors, styles, and sizes. Users can also vote "yes" or "no" to signify whether they like a product being
shown. The platform's algorithms tailor recommendations based on this information. The main feature of this
application over other e-commerce platforms is that the platform allows the client to select those brands and those
items by the client’s preferences and in the price segment indicated by the clients. In the same time, THE YES using
AI technologies, analyze the preferences and search queries of the customers and tries to select those brands that
probably might be of interest to the customer in the future, thereby giving the customer more ideas, inspiration and
understanding of the fashion industry. This task is more feasible and demanded in the segment of “fashion
followers”, as “fashion followers” are no so familiar with fashion trends as “fashionista”, in the same time “fashion
followers” have more limited budget than “fashionista”, so they usually spend much more time for looking for an
item that they like and can afford. Therefore, THE YES application will be much more in demand by “fashion
followers” category of customers.

The second reason is there are a lot of different platforms, that can be used by “fashionista” – official
brand websites, e-commerce platforms, brand’s apps – so for this category of customers THE YES app does not have
such a unique benefit and feature. As we learnt from the article, “fashionista” know exactly what they want (what
brand, what color, what size, what item and so on), the do not care about price a lot, the only thing they care is a
uniqueness and originality of the clothes. There is no need for require a complex mathematical calculation using AI
technologies to solve this issue, it is enough to go to the official website of favorite brand and select “New Arrivals”
category into the website menu. That’s why we do not think that “fashionista” should be the main target audience
for THE YES app. “Fashionista” know what they want and will not care about the advices that THE YES provided to
them.

In the same time, as “fashionista” accounts 20% of all THE YES’s users, it will be irrational to just ignore this
part of target audience. So as solution, we advise THE YES to continue developing their app with focus on “fashion
follower” target audience: add more middle-range brands into their app’s scope (not only luxury brands), add more
analysis of the customer’s preferences by analyzing the search queries, visiting websites, likes and shares into social
medias like Instagram, Facebook. In the same time, we think, it will be a good idea for THE YES to create a separate
platform for “fashionista” within the same app (like V.I.P. accounts), where customers can just follow the newest
items of their favorite/preferred brands. It will be also a good idea to cooperate with top clothes and accessories
brands and to create some special offers for V.I.P clients, that are not available for usual “fashion followers”, that will
not only create a sense of the product uniqueness, but also allow top-brands to save the cost for the product’s
promotion within non-target customers or the customers that cannot afford to buy such expensive products.

3. Should Bornstein and Aggarwal invest in improving the algorithm’s performance to improve customer
satisfaction before they begin pouring money into paid media? Why or why not?

As we understand from the article, Julie Bornstein is a kind of perfectionist person, so she really worries that if
they start to invest paid media too early, when the algorithms do not work perfect, the customers will have bad
experience with THE YES app and probably will not come back to use it. She also worries about negative comments
and feedback left by the customers into the social media resources that should promote the brand name.

In the same time, THE YES faced the problems of lack clients’ information to train their algorithms more efficient.
We also understand from the article, that at this moment THE YES app is not so known in online fashion industry
(30,000 users in 2020 is not a such big quantity for online app), so THE YES business also faced a brand recognition
issue.

In this situation, we agree with Aggarwal point of view, that “what gets customers back is not that you have the
perfect product, but the fact that you are really improving it”. It means, there are no sense to wait for “perfect
technologies” before investing into brand’s promotion into paid media. On the contrary, the investing into paid
media will attract more customers to download and use THE YES app, that gives more data to train the AI-algorithms
pf this app.

In addition, today there are a lot of methods of online-promoting through social nets, so if THE YES managers are
afraid to invest too much at the stage, when the algorithms do not work as well as needed, they can start with
cooperation with some famous fashion influencers, that do not need to be paid regularly, but in the same time have
a large audience, so can attract a large number of customers at once. It will be also a good idea to cooperate with
brands that are in THE YES Brand Partnerships list and ask the brands to put THE YES promotion on their websites or
fans pages. It should not be so expensive since the brands themselves are interested in promoting the online
platforms where they sell their products.

Talking about negative comments, there will be unhappy customers with negative comments in any popular
business. The question is how you work with these negative feedbacks. Successful businesses understand that even
negative comments are the source of promotion. It is how people’s brain works: we remember the brands that are
more recalled in our mind, no matter if the memories and experience are bad or good. In the same time, negative
feedbacks sometimes give a real picture of the disadvantages and problems that brand has, so analyzing these
comments, THE YES managers can re-set their AI-algorithms more efficiently.

To conclude, we think that there is no sense to invest into the algorithm’s performance first to improve
customer satisfaction before starting to pour money into paid media. The both processes should run simultaneously,
as they are connected to each other: investments into paid media will attract more customers to the app, that give
more data for the algorithms training and that helps to improve the app performance. In the same time, better
performance of THE YES app will attract even more customers and motivate the customers to make larger
purchases.

4. How should the early results in Exhibits 13 and 14 inform THE YES`s digital media spend strategy?

The business objectives of the organization, the target audience, and performance statistics should all be
taken into consideration when deciding how much money THE YES will spend on digital marketing. The firm
might take the following actions to improve its strategy for spending on digital media:

a) Establish business objectives: THE YES should establish its business objectives before creating a plan
for its use of digital media. These objectives could include raising sales, expanding the clientele, or
raising brand recognition.
b) Identify the target audience: THE YES has to know who its audience is and how they behave, what
they like, and how they consume media. The firm may use this information to determine which
digital media outlets will best help them reach its target market.
c) assess performance data to determine which digital media channels are most successful with
generating conversions and revenue. THE YES should assess performance data from its current
digital media campaigns. This research can assist the business in finding chances to increase ROI and
budget allocation.
d) Try out various channels: THE YES should test out several digital media platforms to see which ones
are most successful at connecting with its target audience and generating conversions. The business
may, for instance, try advertising campaigns on social networking sites, search engines, or other
online ad networks.
 e) Optimize budget distribution: THE YES should optimize its budget distribution to concentrate on the
channels that are most helpful in reaching its business objectives based on the study of performance
data and experimentation with various channels. In order to optimize ROI, the organization should
also regularly assess performance and modify its budget allocation as necessary.
f) Continuously evaluate and improve: THE YES should evaluate the success of its digital media efforts
on a regular basis and improve its strategy in light of the findings. By doing this, the business can
maintain its competitiveness in the dynamic world of digital media and experience long-term
growth.

5. Which of the following monetization/incremental revenue strategies should Bornstein and Aggarwal
pursue? Why? What are the benefits and risks of each?

 Advertising on the app:

This is a typical method of earning money via mobile applications. The software makes money by charging
users to view advertisements. This technique has the advantage of being simple to adopt and having a rapid
income turnaround. The drawback is that it can ruin the user experience and discourage people from using
the app.

 Brand Partner-supported loyalty program:

In order to implement this approach, businesses must work with companies to provide incentives and
rewards to app users that interact with their brands. This tactic has the advantage of being able to foster
partnerships with companies and raise user engagement. It might be challenging to entice brand partners
and to develop a program that is appealing enough to draw them in.

 Influencer program:
In order to market the app to their following, this technique requires collaborating with influencers. This
tactic has the advantage of being able to increase brand recognition and draw in new customers. Finding the
correct influencers to work with and making sure they are effectively and authentically promoting the app
may be challenging.

 Peer-to-peer sharing program:

Users are encouraged to recommend the software to their friends and family using this tactic. This tactic has
the advantage of allowing the software to spread fast through word of mouth. It might be challenging to
design a program that motivates consumers while still being economical for the business.

 White label platform for brands and/or for influencers:

This tactic is providing a version of the app that can be branded and personalized by influencers or
marketers. The advantage of this approach is that it may assist establish connections with companies and
influencers while generating income from licensing fees. However, creating a white label platform that is
adaptable enough to meet the needs of various brands and influencers can be challenging.

 Lead generation for Brands:

In order to give brands with leads or potential consumers, this technique requires working with them. This
tactic has the advantage of generating income rapidly and fostering partnerships with brands. However, it
can be challenging to guarantee that the leads produced are of a high caliber and that that both the app and
the brand benefit from the connection.

Overall, Bornstein and Aggarwal's best monetization plan will depend on their unique objectives, the
features of their app, and their target market. It may be helpful to try several tactics to see which ones are
most successful in bringing in money and fostering connections with customers, companies, and influencers.

6. How would you assess the potential impact of THE YES`s unique combination of human/machine
intelligence one the future of retail?
The unique human/machine intelligence of THE YES has the potential to transform retail in a number of ways
in the future. First, THE YES can provide its clients highly customized experiences by utilizing machine
learning algorithms and natural language processing. The purchasing experience can be improved and
consumer loyalty can rise as a result of this level of personalization.

Second, clients may enjoy both the ease of online purchasing and the personalized touch of in-store
shopping thanks to THE YES's blend of human stylists and artificial intelligence. This hybrid strategy may set
THE YES apart from other online merchants and make it stand out in a congested industry. Thirdly, THE YES's
technology can lessen the negative effects of retail on the environment by utilizing data to optimize
inventory and cut waste. THE YES may eliminate superfluous inventory and lessen the effect of retail on the
environment by anticipating client demand and buying just what is required.

Overall, THE YES's innovative use of human and machine intelligence has the potential to completely change
the retail sector by offering highly customized experiences, fusing convenience with a personal touch, and
lowering waste. It is expected that more businesses will investigate comparable strategies as technology
develops in order to improve the shopping experience for customers.

Is this game-changing or merely evolutionary change for e-commerce? Why?

The human/machine intelligence mix used by THE YES has the potential to revolutionize the e-commerce
sector. This is because it marks a considerable break from conventional e-commerce methods and has the
potential to change consumers' buying experiences in a number of ways.

First of all, traditional e-commerce models, which often give a more generic purchasing experience, are
significantly displaced by THE YES's use of machine learning algorithms and natural language processing to
create more individualized shopping experiences. This degree of personalisation may boost client loyalty and
encourage repeat business. Second, THE YES has the ability to stand out from other online merchants
because to its hybrid strategy that combines human stylists and artificial intelligence. This strategy combines
the ease of internet buying with the personalized experience of an in-store transaction, which may be a big
appeal for customers. Third, THE YES's technology-driven approach to waste reduction and inventory
management has the potential to lessen the impact of e-commerce on the environment, which is a growing
concern for consumers.

When combined, these developments have the power to revolutionize the e-commerce sector by giving
consumers access to more individualized, practical, and environmentally friendly buying options. This degree
of innovation is a game-changing shift that has the ability to upend the whole sector, not just an
evolutionary one.

Having said that, it is important to remember that the e-commerce sector is continually developing and that
new technologies are constantly being introduced. Therefore, even though THE YES's strategy may change
the game right now, it's possible that as other businesses adopt similar strategies, it will eventually become
the standard. But for the time being, THE YES's distinctive blend of human and machine intelligence marks a
significant departure from conventional e-commerce models and has the potential to revolutionize the
sector.

Does this provide a sustainable advantage versus other e-commerce platforms? Why or why not?

For a number of reasons, THE YES's integration of human and machine intelligence has the potential to offer
a durable edge over other e-commerce platforms.

First, THE YES's individualized shopping journeys may foster client loyalty, which is crucial for preserving a
competitive edge. THE YES may create a devoted client base that is more likely to use the platform for
further transactions by offering customers a highly personalized shopping experience that takes into
consideration their tastes and wants. Second, THE YES's hybrid strategy, which combines artificial
intelligence and human stylists, is a novel idea that might distinguish it from other online merchants. By
providing a buying experience that is convenient and tailored, this strategy may provide a competitive edge.
Third, THE YES's technology-driven approach to waste minimization and inventory management may result
in cost savings and increased sustainability, giving it a competitive edge over other e-commerce platforms.
THE YES can run more effectively and sustainably than other e-commerce platforms that do not have as
sophisticated technology by leveraging data to improve inventory and eliminate waste.

In conclusion, THE YES's integration of human and artificial intelligence has the potential to provide it a
sustained edge over other e-commerce platforms by fostering consumer loyalty, producing a distinctive
shopping experience, and enhancing efficiency and sustainability. Although the e-commerce sector is
constantly changing, it is important to keep in mind that THE YES's position in the market might be
threatened by similar innovations made by other businesses. Consequently, while THE YES's strategy may
provide the organization a long-term edge for the time being, but to stay ahead of the competition the
business must keep inventing and adapting.