Should a fashion store in Saudi Arabia spend on ads or retention?

Compare cost per new customer against cost per repeat order. If the first is more than three times the second — and it usually is — the next unit of budget belongs in retention, whatever the growth plan says.

Ads or retention, decided with a number

This is not an argument against advertising. It is an argument for advertising to fill a bucket that holds water, because acquisition into a store nobody returns to is a subscription to a treadmill.

Winning a customer costs money and selling to them again costs almost nothing, and most budgets are spent as though the reverse were true. For a fashion store in Saudi Arabia, the answer turns on one thing in particular: Fashion carries the highest return rate in retail — sizing is guesswork on a screen — so the margin has to survive a third of the order coming back.

What is different about Saudi Arabia

Saudi Arabia is the largest ecommerce market in the region by some distance, and the most phone-dominated.

Cash on delivery remains common in Saudi Arabia, which changes the economics of every refused delivery.

What is different about a fashion store

Discounting to grow trains people to wait for the discount. It works once.

Where a mobile app comes into it

Repeat rates in fashion are strong once a customer trusts the sizing, which is exactly the behaviour an app is built for.