#028 : Alin Vlad @ Otter Distribution

#028 : This week on Chill, Daniel Höhnke, Overdose’s MD in Berlin, chats with Alin Vlad, CMO at Otter Distribution, covering growth, omnichannel commerce, the evolution of marketing in Covid, and what we’ll see in 2021.

Otter Distribution first appeared in the Romanian retail market in 1997 selling footwear, leather goods, and accessories. Over the years, Otter has become Romania’s preeminent shoe retailer with 65 stores nationally under four brands: Tezyo, Salamander, Aldo, and Gryxx. Today, the group operates in three major channels: retail, online, and distribution.

Alin Vlad joined Otter in October 2019. He was with the company during those dogged days and months of 2020 when the world succumbed to a global pandemic. It’s been tough for a shoe retailing group that has held a traditional space in the Romanian marketplace for generations and relied heavily on its store presence and older customer base.

Fortunately, the owners have a progressive view, and when Covid hit, they were already in the midst of a transformation to keep the business up with modern times; a modernisation process that involved engaging with a younger customer and becoming an omnichannel retailer.

A year or so on, the online channel has proven to be a life raft for the predominantly brick-and-mortar business, so it’s no surprise there are big plans for further ecommerce expansion.

We discuss these plans with Alin, who is the company’s CMO.

Alin tells us it was in his early career when he discovered his passion for marketing. One of his first roles was as customer support for a Danish antivirus company. “I didn’t know it was called marketing back then. So, I was a community manager. I like to understand the customer, to feel their pains and needs and so on and respond to that.” He progressed to the company’s marketing department where he had a great mentor, and where he began to really specialise in marketing.

Then, he moved to Defender, a large antivirus company where he specialised in social media marketing.

Further down the track, his original mentor from the Danish antivirus firm founded a new company, and Alin became his first employee, opening the business’s Romanian office. “That was a very interesting experience because it was a startup. No budgets, making everything from nothing—in Romania there’s a saying, ‘making a horse from a mosquito’. I loved that period, to be honest. It was one of my favourite periods in my profession.”

There, they worked from a coworking space in the city and connected with many in the startup scene. He says he learned the power of connections and the power of the community itself—something he’s taken with him ever since.

After four years, he switched to working for a bigger company in the same industry, a German personal VPN provider called CyberGhost. There, he had the experience of working with big budgets and hyper-growth. “We increased from a couple of million in revenue to tens of millions. So that was a lesson in handling budgets and having hiring sprees and finding the right people in a short time. It was crazy from that perspective.”

Then, after almost 10 years in privacy security, he switched industries. “I went into ecommerce. Why? I don’t know yet. But it’s more fulfilling than I expected, to be honest.”

He landed the role of CMO at Otter to be part of the modernisation phase of the traditional shoe retailer, but, shortly after arriving, he became an integral part of the survival phase.

Covid hit Romania hard just like in any other country. Store closures meant that towards the end of 2020, in-store sales were around 50% of the previous year, and despite an upsurge in the ecommerce channel, it didn’t compensate for the in-store sales drop. Government assistance was provided when stores were closed but ended as soon as stores could open again—yet sales remained down.

“So overall the company has less revenue than last year,” says Alin. “We’re trying to cope with that but still we are not in a bad situation. We are more careful with our spending overall, investing in what matters, trying to maximise the potential of the ecommerce part. We’re trying to play as smart as we can.”

While online has increased its portion of group sales (the ratio of online went from around 20% to around 35%), Alin expects it will grow in the future as they invest more and expand their ecommerce. The ultimate outcome is to increase both online and offline.

Otter is a brand with traditional values, going back to the end of the communist period. There’s a large, loyal customer base who only buy their shoes from Otter. They revere the fact the shoes are Romanian-made—that they are buying quality while sustaining the local economy.

Until a few years ago, the customer was primarily men 40 years and over, and the product offering was solely classic shoes for men. (It’s no surprise men are not the biggest shoe buyers: statistically, 20% or 30% of all purchases are by men and the rest are by women.)

The narrowness of the brand demographic and offering was stymieing growth, so the challenge ahead lay in maintaining existing brand values and keeping the current customer satisfied while moving into new territory and engaging a wider customer base.

They went through a rebranding process: Otter became the name of the group, and the stores were renamed from Otter to Tezyo. The strategy of the Tezyo brand was to target women as well as men. New brands were added to the group: Salamander and Aldo, with Otter holding the franchise and sole distribution rights for the two well-known international brands.

The group grew to 70 stores (around 40 are Tezyo, the remainder are Salamander and Aldo) in small towns and big cities all around the country.

Engaging a younger customer, who often perceives Otter as a shoemaker for men, is an ongoing challenge faced by Otter in its reinvention. “It’s very hard to change their mind,” Alin says. “But it’s something our internal commercial department has done a great job with because we still kept the old shoe style, but have some fancy new trends adapting it. We’re trying to fulfill both targets. All the targets, in fact.”

On one hand, Alin and his team are looking towards the likes of TikTok and Instagram to engage the younger customer, while on the other, it’s about keeping the existing values high. “The data is saying that the 40 plus customers are the most loyal ones. So, we cannot ignore them. We still keep them and try to communicate that we’re still the same Otter. It’s still there, but a bit different.”

A large component of the Otter group of businesses is the franchises Aldo and Salamander. They are single-brand stores which Alin says requires a different marketing strategy to their multi-brand Tezyo stores.

“Under a one-brand store, you focus more on the branding part and trying to position that shoe brand in a way.” In the case of Aldo, they follow a lot of the direction given by the Canadian owners.

“While the multi-brand store is harder,” he says. “It’s very hard to build awareness around the Tezyo brand because it’s not a shoe. There’s no shoe brand with Tezyo—unlike with Aldo, the shoe is tangible, you see it, and you see the brand; it’s Aldo.”

Alin sees the advantages that come from Aldo’s strong brand representation, so he’s been applying that strategy to Tezyo by marketing the shoe brand rather than the store brand itself. This means more focus on the private label (60% of the shoes sold at Tezyo are their own brands: Otter, Flavia Passini, Epica, and others).

The customer conversation becomes about the brand, not the store. “The people are not talking about Tezyo having very nice shoes. They’re saying ‘I love this new Flavia Passini. I’m buying Flavia Passini because I’m loving this shoe brand because they are very comfortable. They have a good price, quality, and so on.’ So, they are finding the values themselves.”

Alin is a believer that you cannot force your way into the mind of the customer. Positioning a brand or a product starts with the customers. “You can amplify. You can get feedback from the customer, like the attributes they associate with the brand—quality, comfort, etc. You can only amplify that. You don’t invent a new attribute like trendy, when Otter is a classic shoe, and try to push that on to the customers while the customer doesn’t resonate with it at all.”

To identify the attributes the customer value, they use a review system and tag clouds segmenting the reviews coming to, for example, the Flavia Passini brand. Then, those attributes people talk about are used in website copy or, say, a TV commercial.

Alin made some sweeping changes when he joined Otter. He says the main channel being used was Remarket. “They had four Remarketing platforms, but there were almost no new acquisition platforms. I cut them off. That was the first thing I did.”

Instead, they started paid advertising with Facebook and Instagram catalogue sales advertising and had phenomenal results. Google Dynamic Ads were subsequently added, leading to another boost in sales. Recently, they’ve added another service, Glami.ro, which Alin says is an affiliate platform providing new customers and new sales at a very low CPA and cost per sale.

Alin explains he chose to focus on paid advertising because it is the ‘the low hanging fruit,’ but his preferred approach is organic marketing. “So next year for us will be all about organic. I think there’s only so much you can grow in paid and usually outbound and inbound marketing work best when you combine them, rather than use one exclusively.”

A lot is happening for Otter in 2021, and beyond. They’re shifting gears: working with Overdose and implementing the following changes:

• Switching platforms from Magento to Shopify Plus
• Changes to the tool stack (including moving from local Romanian providers to international services)
• Focusing on email marketing automation and personalization
• Focusing on SEO
• A new large-scale content marketing project
• International expansion of the ecommerce channel

Alin reiterates the coming year will be about organic marketing, with less focus on paid. “The paid will just be the machine that will provide resources to invest in the rest of the channels.”

After a year of being at Otter, Alin says it’s all starting to make sense. “Now, I have clarity around what ecommerce means and how we should have a success story in ecommerce,” he says. “Let’s see how it goes.”