Bose Pivots to E-commerce in 2018
Bose has retail DNA
Bose used its retail DNA to build a robust e-commerce offering
Bose controls its retail partner selection
Bose strategically expanded its online acquisition strategy profitably
Bose invests in social media for acquisition
Summary
Bose Pivots to E-commerce in 2018
DTC investments by big brands are still going strong post-COVID; in this piece, I will highlight how Bose leveraged unprecedented growth in e-commerce during COVID-19 to establish its DTC channel as a powerful growth driver.
Bose closed all their retail stores in 2020, but leading up to this, they increased investment in e-commerce. Before COVID, these investments began to compound, and Bose grew their organic traffic substantially.
When COVID hit, Bose was already positioned, which meant when COVID accelerated e-commerce trends – they benefited overwhelmingly by going DTC. Since COVID, Bose.com has experienced above-average traffic trends, and its website has matured to compete directly with its retail partners.
In 2024, Bose will be selling directly to millions of customers and is experiencing better margins online than brands relying solely on retailers. If you are considering a Bose purchase, as a customer, you would be remiss not to go to Bose.com to get a lower price. This was a new and strategic move to compete for sales of its products.
Figure 1 Bose is capitalizing on its brand; most of their visits are coming directly, and less than 2% of its total traffic is from paid searches. These numbers are from SEMRush, and I believe the Paid Social numbers are a little low—complex data to get.
This means that during holidays when Bose gets millions of impressions across retailers’ websites, customers who search for Bose.com get a more competitive offer by going DTC. Without the decision to lead on price, Bose would not be in a strategic position to profit more than ever from the market.
So, how did Bose do this?
Bose has retail DNA
Bose had 119 retail outlets across the US, a lot in upscale malls and neighborhoods. In the same year, Bose closed all US outlets – they doubled down online. Bose publicly stated they were closing retail stores to nail the online channel.
This is one of the critical elements Bose has – focus. Their leadership team was determined to make Bose.com a leading retailer for their products. They knew it could work from their stores and understood the benefits of the retail-to-customer connection.
If you look at Bose’s e-commerce leadership – they have a depth of talent, as do the folks who work for them.
Bose used its retail DNA to build a robust e-commerce offering.
Bose picked Shopify and created a site that can compete with Amazon (and not have to pay many developers). Shopify is exploding because the platform is structurally cheaper and more feature-rich than its competition. While costs are likely to rise faster than inflation on Shopify – you can run advanced websites with so many fewer technical people.
Figure 2 Talk to us now! Instead of running away from the customer service model, Bose is likely using it to drive better conversions and executive-level insights about customers.
Bose did not skimp on creative or CX – they used the extra resources not spent on more complex platforms to make a sweet site. Their website, pricing, and CX are prerequisites for their DTC business. They had to put physical fulfillment in place and devise ways to deal with things like returns.
The catchall phrase I would use to describe Bose’s website is that they are phenomenal merchandisers and onsite marketers. They are killing it with their features, merchandising, and offerings so that when customers are Googling around (price comparison, etc), they capture them.
Figure 3, “Only a few left!” is just one of the many product page features emphasizing CVR best practices.
DTC can pull sales from retailers if it leads on pricing, matches operations (free returns, similar shipping), and coordinates marketing strategies across digital channels. Bose is taking advantage of the fact that it’s customers will research purchases and during this phase they can still be captured.
Figure 4 By going to Bose.com, customers can save more than buying from a retailer, even if the retailer is running a sale. Bose.com matches the retailer’s sales. Bose also gets an email before they even make a purchase.
Bose controls its retail partner selection.
Bose holds out a unique selection for itself and even creates exclusives. This is critical to “training” existing and new customers to check out Bose.com for the newest or best.
Figure 5 Bose fanatics must go to Bose.com to see the full array of color options, many exclusive to Bose.com.
Bose strategically expanded its online acquisition strategy profitably
The question for Bose.com in 2020 was this:
How do we grow the traffic to our new store as cheaply as possible?
Their answer was brilliant. Bose took stock of their assets, the biggest of which was the popularity of their brand. Their customers search millions of times a month for their different products and to research their brand. Bose went out and began spending heavily on Google ads on all their branded search.
Figure 6 Bose has grown its DTC offering to 2M monthly visits on 90% branded, paid, and organic search.
This netted them the most significant increase in traffic for the spend and allowed them to direct customers to the experiences they wanted. Bose did not need to branch out of their customer base to get established, and as their flywheel developed, it pulled in new customers with no additional effort. Bose still hasn’t progressed to trying to grow the total audio market; they are just eating off their brand – that’s how viable this strategy was for them.
Bose invests in social media for acquisition.
Bose uses textbook best practices for acquiring new customers on social media. They get testimonials and UGC and then aggressively market the videos on social media. While they are treating Google with caution, focusing spending on the brand, they are growing their acquisition strategy on social media where their CAC is likely low.
Figure 7 Bose constantly runs new video ads, each with several variations.
Bose doesn’t want to compete in Google with traditional text-based ads; they spend mostly on the brands in Google and PLAs. Similarly, they are not rushing to dump money into Amazon DSP; if you search Bose on Amazon – you are more likely to see a competitor’s ad than their own. That’s brand confidence and profit focus.
Figure 8 Bose uses video testimonials on Instagram and Facebook to drive acquisition.
Summary
Bose’s investments from 2018 to 2023 were strategic and measured. During this period, Bose moved incrementally to establish their new sales channel but experienced explosive growth. They could do this by focusing on their core, offering first, and marketing second. Bose’s brand cache was strong enough that by following best practices and digitizing their business, they grew without sacrificing short-term profitability. Bose did not grow headcount in the last 5 years, and while they are not publicly traded – they appear to be thriving without engaging in risky bets.