Remaining strong amidst the turbulence of a fluctuating market is not something that all E-Commerce brands have been able to do. As of June this year, inflation in the United States alone has climbed to an all-time high of 9.1 percent, the highest it has been since November of 1981.
Consumers all around the world are looking at their budgets and endeavoring to cut costs. This includes their online spending, which affects the world of E-Commerce dramatically. Many businesses being forced to close their doors (even online stores) due to supply chain woes and shortages in materials.
To avoid being sucked into the vortex of business closure due to the slowing market, it is best to take action and make preparation for the inevitable slowing market. Let’s examine a few areas to prepare for (and survive) this market slump.
Closely Examine Cost
First and foremost it is critical to very closely examine where the business is spending money and how you can trim down on costs. This needs to be done while still maintaining brand expectation and not lowering the quality of the product.
Thanks to the economic crisis, suppliers of raw materials will raise their prices to manufacturers, who in turn do the same to retailers. Retailers are then required to pay more which puts them between a rock and a hard place and many are forced to raise their product prices as well.
The overall costs in most E-Commerce businesses will differ depending on the kind of business it is and the products offered. However, website development and maintenance will contribute a substantial chunk to your expenses. So, too, will product research and development, which can include advertising as well.
In general, the average marketing budget is around 7% to 12 % of revenue.
Retain Customers By Strengthening Relationships
It is better to have return customers to your business than to constantly have to net in new customers. A study done by Bain & Company has shown that it is far more profitable to have customers who come back regularly and make purchases.
Business can increase their profits by 25% to 95% simply by having a five percent customer retention rate. Return customers also tend to spread the word to their friends and family, as well as staying loyal to the brand.
Attracting a new customer takes a lot more effort and tends to cost the company more, which is why it is so important to retain more customers instead of having to make new ones all the time. According to statistics, repeat customers are responsible for up to 65% of sales. Customers tend to stay loyal to brands that go the extra mile to build strong customer relationships.
Variety Is Key
As the market slows and consumers are forced to tighten their belts to make it through the rising inflation and skyrocketing costs of living, re-evaluate your product inventory.
Make sure that you are offering a wider variety of products but ones that have a lower manufacturing cost so that you can keep the prices competitive. As customers fill their shopping cart with a variety of products, shipping costs will also be considerably less than if they were only able to buy one or two products.
While having a variety of products to select from will offer consumers more opportunity to enlarge their shopping cart, you also need to take a closer look at the shipping options that are offered at the checkout as this will incentivize checkout follow through. Statistics show that the biggest reason for consumers abandoning their carts is high shipping costs.
Whilst it isn’t always viable to have free shipping and still keep product costs competitive, look at offering a cheaper shipping option like BOPIS (Buy Online Pick Up In Store) or BOPA (Buy Online Pickup Anywhere).
Something else that you may want to seriously consider is adding products to your current inventory that you don’t necessarily have to make yourself — or pay to have made. Manufacturing costs are skyrocketing, so look at products that you could offer that are complementary to your brand.
Website Optimization Is Critical to Survival
Something that cannot be mentioned enough when it comes to surviving through a slow market is to have a website that is optimized and user friendly. Keeping your website up to date and glitch free is absolutely critical to keeping customers coming back.
Nobody is going to struggle through navigating a website that is riddled with glitches or that is so “busy” that they can’t find what they want easily and without hassle.
Another pitfall to avoid is having so many advertisements on your website or pop up messages that customers get irritated and leave before even making a first time purchase. It is very seldom that customers will push through a difficult to use website and make a purchase. Most just throw in the towel and leave to go find what they are looking for somewhere else …
Don’t let that happen to your business.
Keep the website up to date with products, new releases and promotions, and do so without cluttering the site. Also ensure that your website is optimized for mobile use as well as computer use. These days many consumers will make their online purchases via their mobile phones instead of via a computer.
Slow and Steady
With even E-Commerce giants like Amazon and Alibaba taking a hit, the future may seem pretty bleak to smaller businesses. However, by making adequate preparations, cutting costs, improving online offerings and ensuring customer satisfaction, you can strengthen the odds of survival substantially.
Whilst the initial E-Commerce boom was phenomenal, it’s slow and steady that will win through in these days of slowing market and uncertainty.