6 Ways E-Commerce Brands Can Survive and Thrive During a Recession
Economists are warning that a recession might be around the corner, but this doesn’t mean that online brands can’t continue growing and winning customers. With the right mix of preparation, strategy and technology, a potential downturn can represent a transformation and a tailwind that sets your e-commerce business up for success in the short and long run.
The resulting high inflation from global economic shockwaves is already being felt in e-commerce as consumers curb their spending. For the first quarter of 2022, Shopify reported its slowest growth (22 percent), while Amazon.com's service and e-commerce revenue dropped 15 percent. What can brands do to remain competitive in times of uncertainty and downturn?
6 Strategies to Recession-Proof Your E-Commerce Business
A Harvard Business Review article that analyzed the last three recessions found that 9 percent of companies didn’t only recover post-downturns, but also outperformed competitors by at least 10 percent in profit growth. Preparation was the key differentiator.
Here’s how to strategize and equip your brand from here onward:
1. Focus on branding and community to stay top of mind.
It’s natural to want to pull back on marketing and customer engagement spending, but just because shoppers aren’t spending much now doesn’t mean the demand will never pick up again. It’s important to ensure that your brand stays top of mind to keep shoppers, especially price-sensitive ones, from looking at competitors. Continue engaging with customers online on different platforms, create online events to keep shoppers in the loop, and highlight brand values that relate to your core audience.
2. Provide value in line with changing consumer preferences.
As consumers adjust to the extended effects of inflation, they’re going to make changes in their spending habits and lifestyle choices. There are already signs that shoppers are devoting more of their wallets to nondiscretionary categories. To stay relevant, know what shoppers are looking for. Winning brands will regularly re-examine product- and category-specific strategies, know which ones face the most pressure from inflation and consumers’ buying behavior, and tailor pricing and campaigns accordingly.
3. Save margins with personalized promotions.
As prices go up, it’s expected that shoppers will look for ways to save. This doesn’t necessarily mean that e-commerce brands have to offer promotions at the cost of a poor bottom line. You can use intent-based data to offer the right discount to the right shopper at the right time.
Consumers have different goals when shopping, and not all of them need the same promo to convert. Therefore, it doesn’t make sense to have a one-size-fits-all approach to your promotions. By diversifying them based on site visitors’ real-time context, you can ensure that you don’t overdeliver to those who are already in buying mode. You can also refocus your budget on those who need more push to buy.
4. Evaluate your operational efficiency.
Keeping operations lean can better position your e-commerce brand during a prolonged downturn. One way to maximize operations is to leverage your on-site user data and external trends to predict demand and manage the supply chain. You can couple this with real-time monitoring of production costs, including raw materials, freight, labor, and more, to better manage SKUs and optimize product design and specifications. Another way is to improve self-service solutions like chatbots and robust FAQs to reduce pressure on customer service staff.
5. Cater to hesitant shoppers with trust signals.
Without the physical presence or personal touch of in-store staff, it can not only be difficult to establish trust but also to gauge online shoppers’ likelihood to purchase. As consumers dial down on spending, it’s crucial to nurture the shopping journey with trust signals to encourage them to buy. For instance, detecting hesitant shoppers can help you segment them so they receive the appropriate experience, such as highlighting media-rich customer reviews, promoting free shipping and returns, and triggering chatbots to assist them when they spend too much time on product pages.
6. Become more data-driven to make smarter decisions quicker.
Having a central hub for your site’s customer journeys that allows you to manage multiple data points from various sources can help you deliver valuable shopping experiences that matter to customers. With this advantage, you can uncover insights on customer journey data that you can act on in real time, promoting efficiency and streamlining your workflows.
Additionally, the visibility from search to purchase, and all the components in between, such as site events, attributes and segments, can enable you to optimize every aspect of your site experience and deliver relevant, end-to-end customer interactions.
Being Prepared and Agile is the Key
The effects of the recession, if it comes down to it, generally last for months or even years. Along with preparation, e-commerce brands must be agile to proactively adapt to a dynamic and uncertain market. With these strategies, it’s never too late to prepare, plan and pivot — especially when at the core, you’re building on a holistic understanding of your customers and what they expect from your brand.
Chemi Katz is the co-founder and CEO of Namogoo, the world's first digital journey continuity platform, helping over 1,000 unstoppable brands shape their customer journeys to fit each and every shopper's needs.
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Chemi Katz is the co-founder and CEO of Namogoo, the world's first Digital Journey Continuity platform, helping over 1,000 unstoppable brands shape their customer journeys to fit each and every shopper's needs.
With over 17 years of experience in the security, commerce and advertising spaces, Chemi is a serial entrepreneur with a track record of leading some of the tech industry’s most innovative companies. Prior to co-founding Namogoo, Chemi was General Manager of DoubleVerify Israel and co-founded Seapai and Reissod. Earlier in his career, Chemi led Production Operations at LivePerson (NASDAQ: LPSN), was Global Business Technology Manager for Aladdin and managed IT Outsourcing for Bynet.