Businesses in a variety of industries encounter tough obstacles during economic downturns. E-commerce, on the other hand, has shown to be a robust industry, providing chances for development and success even in trying times. While surviving a recession can be challenging, e-commerce companies can prosper by using strategic planning, flexibility, and a customer-centric mindset. In this blog, we will examine important tactics and recommended procedures that might help online business owners succeed in an e-commerce downturn.
Learn more: Why the best eCommerce platform is Shopify
Table of Content
- How might the economic downturn affect your company?
- What are e-commerce brands capable of?
- Adjust and diversify your stock portfolio
- Give your clients more options
- Think about the loyalty of customers
- Consider things differently
- Conclusion
How might the economic downturn affect your company?
When a nation’s GDP declines for two straight quarters, a recession has occurred.
This frequently leads to fewer jobs, poorer pay, and more expensive goods.
This could have some significant detrimental effects on e-commerce enterprises. Consumer spending declines and product demand declines during economic downturns, especially for luxury and non-essential items.
As brands strive to lower prices in order to appeal to customers, diminishing profit margins for all parties involved, this can occasionally result in even more rivalry among enterprises.
However, recessions affect more than just consumer perceptions. If you’re seeking for extra finance and investment, it can get harder as investors and lenders become increasingly risk-averse.
Ecommerce businesses must create clever tactics if they want to endure, or perhaps prosper, amid a recession. Whether that is accomplished by cost-cutting, product diversification, or coming up with entirely new methods of doing things.
What are e-commerce brands capable of?
Save money
No e-commerce company wants to engage in it. Reduced operational capability as a result of cost cutting might occasionally result in lower revenue. However, if the economy is struggling, you might need to think about what compromises you can make.
There is also a false belief that cost-cutting invariably results in lower output and productivity. But that isn’t accurate. In reality, making sacrifices now and again might help you narrow your focus and enhance the services you provide.
As an illustration, imagine that your supply chain and fulfilment operations are expensive. By optimising that part of your firm, you can cut costs while maintaining or even improving performance. Perhaps you could go to a 3PL business that handles everything and completely get rid of your warehouse. Another option is to make your warehouse smaller while improving how you pick, pack, and store your products so that you don’t require the extra room.
This also applies to other situations. You may realise that you are overspending on advertisements that don’t yield many conversions after taking a close look at your marketing plan.
You can find areas that need improvement by conducting a thorough review of your organisation.
Learn more: Introducing Shopify, the Best Ecommerce Platform available
Adjust and diversify your stock portfolio
During a recession, people’s spending typically decreases in all areas. Some product categories continue to be more well-liked than others, though.
This is especially true for non-essential purchases, as people limit their spending on luxury products and other items they may otherwise “treat” themselves to.
However, 55% of consumers claim that during a recession, they spend the majority of their income on food or groceries. And over 40% of consumers think they spend the most on basic items for personal care and hygiene.
This demonstrates that despite economic downturns, some ecommerce industries continue to experience strong business. And even if your company doesn’t operate in those sectors, you may still profit from fads and needs in your own unique way.
One of the best ways to do this is by diversifying your stock portfolio. In spite of the economy, people still need your ranges, therefore make them more visible and diverse. For instance, fashion companies might consider introducing more affordable, basic clothes like socks, pants and t-shirts. This might entice customers to purchase from you even when they aren’t wanting to spend extra money on brand clothing.
To diversify your stock, consider what your brand represents and what it sells.
Give your clients more options
People have less money to spend when the economy is down. In light of this, people value online retailers who are kind and understanding despite this.
By continuing to send out excellent deals and discounts, for instance. 70% of consumers claim to shop around more for discounts and offers during economic downturns.
If you publicise a sale, that’s a sizable fraction of customers could wind up coming in droves.
But it’s not limited to offers and discounts. You may approach providing more in a completely different way by launching a campaign to raise awareness of a social issue or pledging to donate a specific percentage of the revenues from each order to a charitable organisation.
Although it may not result in any immediate financial gain, this is an excellent method to generate interest in your company. In particular during a recession, which will distinguish your brand as kind and considerate.
Learn more: What Performance Branding can do for your Customer
Think about the loyalty of customers
When a recession strikes, people want to stick with what they are familiar with and at ease with. They don’t enjoy taking chances. And it holds true for both their e-commerce purchasing habits and other aspects of their lives.
If you have a competitor who offers the same item but they are more familiar with, consumers are less likely to take a chance on your brand. Because of this, concentrating on your present consumers in order to foster and maintain loyalty may be a successful strategy.
Whether it’s through frequent emails, exclusive offers, or a dedicated loyalty programme, letting them know how much you value their business is a wonderful approach to develop a relationship with them.
Since they will always think of you first, loyal customers can help you mitigate the effects of a recession. Additionally, 77% of customers will refer a brand to a friend that they enjoy doing business with, making this a marketing strategy that both draws in new customers and keeps existing ones.
Learn more: How Can Influencer Marketing Expand Your E-Commerce Business?
Consider things differently
We’ve only begun to scratch the surface of what your e-commerce company could do to thrive in a downturn.
In fact, you could want to try something entirely new and come up with a brand-new tactic that has never been used before.
Ecommerce brands are always more successful when they have a committed agency partner at their side, regardless of whether you want to think outside the box or put some of the solutions we’ve discussed into practise.
At WizeSaaS, we offer a system of assistance, a plan, and knowledge to support the expansion of your company.
Conclusion
While navigating during a recession might be difficult, e-commerce companies have the opportunity to prosper and expand. Online business owners can position themselves for success by utilising digital marketing, comprehending client wants, streamlining inventory management, adopting creative pricing methods, boosting customer engagement, diversifying sales channels, and remaining flexible. Remember that adopting a customer-centric mindset and being adaptable are essential components that can assist in helping your e-commerce business not only survive but also expand throughout the recession.
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