Did you know the global ecommerce market is expected to surpass $5.7 trillion? Despite ever-evolving market conditions today, brands prepared to tackle the ups and downs are making severe money in ecommerce.
With such a vast industry also comes the potential to grow a profitable business long-term.
Being able to navigate an economic downturn like the one we are going through today in 2023, you can achieve market dominance and outperform competitors in the industry too.
This blog will cover an economic downturn’s impact on your business, five strategies to help you plan for it, and how you can prepare for the future to maximize your chances for success despite it.
The ecommerce industry undeniably suffers during an economic downturn, with sales, revenue, and profits taking a hit. But statistically, looking at the bigger picture gives you a clearer idea of what to expect for your brand during a market shift like this.
A worldwide ecommerce sales report notes that even though the % change of total retail sales is downward, the % of total retail sales has continued to grow consistently from 18.8% in 2021 to a projected 24% by 2026.
One inevitable effect of an economic downturn is inflation. High inflation rates mean consumers become cost-conscious and want to maximize their dollars more than ever.
But with the correct set of strategies, you can minimize the negative impact of an economic downturn.
Your customers are the most critical factor in helping you navigate a recession. While most businesses focus on product-first tactics like offering discounts, a customer-oriented approach often yields much better results.
For example, the latest generation of shoppers, aka the Gen-Z, show a preference for simpler shopping mechanisms time and time again. Optimizing your image search can target high-intent shoppers more efficiently and boost conversion rates.
This also enables you to drive easy revenue modes and encourage customers to return regularly, building loyalty. Converting and retaining high-intent shoppers is one of the best ways to ensure your cash flow remains consistent, even during slower sale seasons.
The first step to making a ton of sales is to know which products you want to prioritize. One way to do this is to revisit your assortment mix and category strategies to identify popular products. Then, you can keep sales and revenue flowing by selling these products at competitive prices.
Another way to do this is by streamlining supply chain operations. For example, revisit your PDPs (Product Detail Pages) and PLPs (Product Listing Pages) and revamp them based on popular shopping patterns to amplify conversions.
An ecommerce brand’s content is an underrated asset. Still, if you can retarget it based on current market conditions, you can avoid stagnant inventory by ensuring your campaigns prioritize available products. You can also boost the AOV (average order value) by pushing these products.
Unpredictable industry phases mean prioritizing savings and planning your inventory is critical to maximizing your resources’ efficiency.
This is where AI automated tagging can be an indispensable tool for online brands and retailers trying to combat the unpredictability of the market. AI assists you in making accurate demand forecasts in real-time and turns them into intelligent data reports to ensure:
By keeping your overheads in check, you can maximize all your resources, including warehouse space, workforce, and equipment. As a key decision maker, demand forecasting is one way to ensure your brand grows consistently, not your overheads.
The RFM, or Recency, Frequency, Monetary model, is one of the most efficient ways to improve business. It can prove helpful when trying to capture the market during an economic downturn.
Using this model, you can identify high-intent customers and utilize the recommendation engine to suggest additional purchases with similar products based on their shopping behaviors. By encouraging customers to try more than one product from your brand, you can leverage the post-purchase journey to promote complementary purchases and good communication.
The RFM model is popular in the ecommerce industry and for a good reason. In a recessive environment, you don’t have to reduce marketing expenditures or try gimmicky strategies. Once you know where most of your business lies, you can take active steps to double down on it and improve your ROI significantly.
As budgets tighten and pressure grows to do more with less, look for opportunities to streamline your ecommerce site management.
Does your team spend hours every week finding ways to promote new products in the catalog?
Do you lose valuable time on manual merchandising updates?
Automation, AI, and personalization solutions can dramatically lighten the workload of under-resourced teams. Revising your resource allocation by diversifying your product offering and investing in tools that free up time can enhance the customers’ shopping experience while improving efficiency.
While some strategies employed during an economic downturn can be short-term measures to keep the business profitable during tough times, it’s essential to think from a long-term perspective when making important decisions.
When you create the frameworks for a brand that can stand the test of time through economic downturns and market shifts, you can make revenue growth by cementing yourself as a leader in the industry.
Excited to begin planning for your brand but don’t know where to start?
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