7 strategies for preparing your eCommerce business for a possible recession
There is no denying that eCommerce and retail have undergone significant changes in recent years. When the 2020 epidemic struck, consumer behavior shifted dramatically.
People began to work from their homes. They shunned eating establishments, pubs, cinemas, and gyms. Consumers shifted from in-store to internet buying. They select lunch delivery and curbside pickup. Without a doubt, eCommerce enabled many individuals to survive the outbreak.
And many eCommerce firms saw this as a chance to expand. While other physical retailers who did not prioritize their online presence have to adapt their business models and strategies in order to compete.
But now we want to speak about a probable recession that everyone is talking about and how it would affect online retail.
“The property developer must adjust to market changes by widening their usual marketing region, searching beyond their regular geographic area, and locating locations where consumers are still contemplating buying. To prosper in a down market, you must be inventive, resourceful, and open to new ideas. It’s time to reassess the marketing playbook every now and then and welcome the changes.”
In this post, we will explain what today’s recession truly means, how it might influence your eCommerce business, and how to come out on top.
What is a recession?
If you did your homework, you definitely came across a lot of opposing articles on whether or not a recession is approaching. Whereas one piece may claim that a recession is not even on the horizon, another would claim that it has already come or will arrive in the near future.
Many experts have been talking about it since 2020, when the EU’s GDP fell to -13.5% in a matter of months and jobless rates soared to 7.8%. Even if both of these characteristics have now improved and have met European Union requirements, economists and company owners continue to monitor market and global developments.
Whether the recession has arrived or is just around the corner, you should be aware of how it may influence your eCommerce business.
Is there currently a recession?
According to the Sprout’s Social 2021 index, nine out of ten customers will buy from businesses they follow on social media. Furthermore, 86% stated they would prefer that brand over a competition. Approximately 85% of buyers stated they would buy from that brand more frequently. As customers get more comfortable making purchases on social media, brands will have to battle for attention more than ever before.
Despite the fact that companies employ social listening and monitoring technologies, they haven’t fully realized the value of the data they’re collecting. The statistics they collect should be clearly translated into a social media plan that shows a comprehension of what potential clients want and need.
Use the resources available to you to not just listen but also respond. Social media monitoring tools can assist you in fine-tuning current goods, adding new, or resolving client issues.
How a recession might influence your eCommerce business
Recessions don’t affect everyone the same way. Harry Truman, the 33rd president of the United States, once said: “If your neighbor gets laid off, it’s a recession. If you get laid off, it’s a depression.” The same may be said for how a recession affects medium and large eCommerce businesses.
While recessions can affect businesses differently, depending on their size and type, we still witness some similar difficulties.
Knowing how a recession can affect your eCommerce business will help you to prevent it from going out of business during the next recession. Because forewarned is forearmed.
The following are some of the most significant consequences of the recession on eCommerce businesses:
- Sales are down. Consumers reduce their spending, resulting in fewer revenue for your company.
- Retailers face fierce competition. When consumer spending falls dramatically, competition rises owing to the large number of eCommerce firms operating in the same market and striving to sustain sales.
- The price rises. Prices may rise as a result of price changes made by suppliers and retailers to compensate for sales declines and inflationary pressures.
- There will be less ‘buy now, pay later’ buying. Borrowing money might be difficult with increasing interest rates and stricter lending standards.
These are the difficulties that your business may face. Face them sooner rather than later, since they are inevitable. You must continue to operate your eCommerce business. The only remaining question is, “How?”
How to Protect Your eCommerce Business During a Recession
If you want to recession-proof your eCommerce business, here are 7 different strategies to consider.
1. Concentrate on the Customer’s Lifetime Value
Concentrate on client lifetime value is critical for a successful eCommerce company. Returning clients are more valuable than new ones since they spend 67% more. You must be aware of the importance of returning customers to your eCommerce business at this point.
Increasing client retention rates by roughly 5% can boost profitability by 25% to 95%.
Determine the most profitable customer segment for your eCommerce company.
Determine who your most profitable customers are using the Recency, Frequency, and Monetary model, and then target them with behavior-based upsells or high-value subscriptions.
Add a free sample to customers’ shopping carts as a bonus when they make a purchase. Free samples have been shown to increase sales by up to 2000%.
Participate in social media.
Even before the pandemic, consumers were heavily reliant on social media. And now they spend the majority of the day glued to one channel or another. As a result, social media is the most effective channel for eCommerce businesses to connect with customers.
Begin with the channels where your customers spend the majority of their time. Here are 7 social media tips to help you become more appealing to your customers:
- Make short educational videos.
- Share your client experiences.
- Engage your customers.
- Hold contests or giveaways.
- Encourage your customers to tag their purchases.
- Make use of hashtags
- In your posts, include high-quality visuals.
Create a reward system.
68% of millennials are unwilling to make a purchase from a company that has a good incentive program. This demonstrates the significance of reward programs for eCommerce enterprises.
Here are four types of incentive programs:
- Reward system based on points
- Paid incentive program
- Value-based incentive program
- Program of tier rewards
- You should focus on emphasizing the benefits of your loyalty program. For example, underline how your customers may utilize their points in certain ways.
Remember! Your customers should be able to simply join the program, and it should be straightforward to grasp.
Solicit feedback from your consumers.
With client feedback, you will be able to develop your eCommerce business while also increasing customer lifetime value.
When should you contact your consumer for feedback? Avoid inquiries that are too invasive.
Here are five approaches for gathering client feedback:
- Transactional emails
- Email polls
- Social media polls
- Website pop-up
For example, you may set up an exit pop-up when a consumer leaves your website after making a purchase or send them a transactional email after they have received the merchandise.
2. Analyze demand for your products
Before introducing new items or increasing the stock of old ones, you should always consider whether or not there is a market for them.
Examine the competitors in your industry.
You should consider anybody who is in the same location, offers comparable goods or services, and targets the same demographic.
Using a Competitor Monitoring tool, you can stay competitive and check how your product price compares to your competitors. Compare your product’s prices to those of your rivals to see which ones are the most competitive.
Highlight your eCommerce company’s best-selling goods.
You may provide additional screen time to goods that have gotten great marks from your clients. Highlighting these goods at the top of your landing pages will increase visitor trust, increasing the likelihood that they will purchase these products.
3. Optimize and filter product data streams for your eCommerce business.
Optimizing your data stream will make your listings more relevant to the searches of your clients. You should include as much relevant information as possible.
You can use feed management tools to:
- Create dynamic data rules and expressions to scale-up the optimization and filtering of your product feeds.
- Add keywords and eye-catching qualities to product titles and descriptions.
- Remove out-of-stock items and non-compliant language from your feed.
- By running Dynamic Google Text Ads for your eCommerce items, you may claim additional SERP real estate.
4. Sell out slow-selling products
Remove any things that aren’t selling well and are taking up shelf space in your eCommerce store. You will most likely just recoup the wholesale cost, but money in the bank is always preferable than dust on the shelf.
Here are four ways for swiftly selling out slow-selling products:
- Offer substantial discounts ranging from 35% to 70% off your merchandise.
- Include a slow-selling product at a substantial discount while purchasing a more costly one to promote two distinct commodities at the same time.
- Add product badges to slow-selling goods and place them on the site. This manner, you will increase the visibility of these things.
- If the sales of your slow-selling goods can be raised by a certain season or event, implement a promotion that will set you apart from your opponent.
5. Concentrate on price optimization
As previously said, during a recession, people reduce their spending. As a result, you will need to come up with new ideas for providing more value to clients straight away in order to differentiate yourself from your competition.
Effective pricing strategies may raise earnings and sales faster than other growth strategies. eCommerce enterprises may improve earnings by 11.1% for every 1% increase in pricing.
Even when revenue is down and sales are down, you should strive to maintain a good margin. To do this, you must focus on pricing optimization.
“Charm price” should be used.
Use charm pricing and choose a price that ends in 9, such as €4.99.
“Prices ending with 9” can even outsell lower-priced products. It’s because prices ending in 9 are often considered to be on sale.
Use the “Buy One Get One Free” promotion.
Use the Buy One Get One Free deal to swiftly sell out less-popular items.
People are more likely to buy something or spend more money when they know they will receive something for free in exchange.
These techniques might be useful for designing picture alterations for social product adverts, such as those on Facebook. With higher performing product advertising, image alterations help you to increase ROAS.
6. Enhance and improve your website
You may differentiate yourself from your competition not only by lowering your prices, but also by optimizing and upgrading your website. First and foremost, you must solve two crucial issues.
Faster product page load time
A faster loading time for your website enhances the user experience. This improves the possibility that website visitors will make a purchase from you.
Did you know that if a page does not load in 3 seconds, 57% of customers would abandon the site? To make matters worse, 80% of them will never return.
Here are four things you can do to enhance page load time:
- Image size should be reduced (Utilize server caching)
- Fix any broken links.
- Rather than sliders, use banners.
- Limit the use of pop-ups.
Enhance your mobile experience
In this day and age, you must also ensure that you can give a fantastic mobile experience for your clients in order for them to easily search for and purchase the proper goods from your eCommerce store. Did you know that in 2020, mobile channels will account for 72.9% of all internet sales?
When your consumer searches for anything on your website via their mobile device, you want to avoid the phrase “Couldn’t locate what you were looking for.” Also, omit the phrase “Content is not supported by the mobile style.”
7. Accept the omnichannel transformation
Be present when customers are most likely to make a purchase — when they have an immediate need for your items. With Google LIA, you can offer your items with local availability and beat the competition by listing for less.
Listing your items through Google Local Inventory advertisements has been shown to enhance not only sales but also conversion rates and in-store purchases.
Prepare for a downturn.
Even though it is impossible to foresee what the future holds for eCommerce, you should be prepared to be competitive through a recession or other economic issues. Implementing the methods indicated in this article will increase the success and durability of your eCommerce business in the future.
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