This is a profitability case focused on identifying why marketing spending efficiency declined despite revenue growth. The candidate must recognize that 95% of marketing budget on low-margin shirts (65% margin vs 80-85% for other products) combined with Facebook's unprofitable unit economics (-€10 per customer) is the core issue. The solution requires both optimizing marketing channel allocation and shifting product mix focus.
Our client is an Italian online apparel store called 7SHIRTS. The company sells casual pants, polo shirts, sweaters but it is famous for its unique trendy patterned shirts. The value proposition is to have the perfect shirt for each day of the week. The company has experienced a strong growth in the last two years but the profitability has declined in the last year.
The CEO has hired us to understand the reason of the decline and to receive suggestions on how to improve profitability.