Recessions are a natural part of the economic cycle, but as 2022 draws to a close, there’s no doubt that a recession could be on the horizon. According to Teikametrics, “economic experts have indicated that it is likely the US will be in a recession by early 2023.”
So although a recession is nothing to panic about, it’s still wise to understand how a recession could affect your ecommerce business. Here’s what you need to know about recession-proofing your business and succeeding even during an economic downturn.
How Do Recessions Affect Business?
As the economic cycle ebbs and flows, prices fluctuate and earnings shift. Although there are multiple factors that lead to an economic era being labeled as a “recession,” recessions often begin with inflation. During a period of increased demand and raised prices for raw materials, it’s common for businesses to cut their budget in order to continue to make a profit. With budget cuts come lower wages, and overall lower income per household. Due to this new economic strain, individuals tend to spend less on non-essential purchases. As these factors play out, the sequence of events becomes cyclical.
What is the Impact on Ecommerce?
Unlike many industries, ecommerce sales actually increased during the COVID-19 pandemic and subsequent recession. With many consumers forced to stay home during lockdown, there was a significant increase in online shopping.
As a whole, ecommerce profits will continue to rise, but that doesn’t mean a recession won’t put strain on smaller ecommerce businesses. Inflation coupled with augmented fuel costs may force many small or mid-sized ecommerce companies to resort to drastic measures in order to stay afloat.
How to Minimize the Impact of a Recession on Your Ecommerce Business
Recession-proofing your business hinges on strong branding, positive customer experiences, and cutting-edge products.
- Emphasize Your Brand – A consistent and unique brand message differentiates your business from the competition. By developing your brand, you invest in the future of your company and attract new customers. According to a Forbes article about “recession-proofing” your business, “big companies are typically the first to slow down when a recession hits. By communicating how your products are better than those of the household names, you’ll stand to earn new customers from those who’ve migrated away from big brands.”
- Invest in Customer Experience – During a recession, consumers are less likely to spend their money on non-essential items. This means that your business needs to stand out in order to attract new clientele. Investing in your customers is one of the most effective ways to gain new business and maintain existing clients. Ensure that customers have access to customer service representatives and clear information regarding products. Update your product pages and shopping cart to provide a more appealing and streamlined experience. Ensure on-time delivery and shipping accuracy.
- Focus on Email and Social Marketing – Email campaigns are a fantastic, cost-effective method to continue your marketing efforts during a recession. Email marketing allows you to target prospects at every stage of the sales funnel. The same Forbes article on recession-proofing, categorizes email as “one of the few marketing channels you own end-to-end, meaning, if you’re smart, the return on investment (ROI) can be extremely high.”
- Don’t Rely on Discounts – Resist the urge to throw caution to the winds by offering too many discounts. Although it’s natural to try special deals and promotions as a means to tempt reluctant customers, relying on discounts is not a sustainable practice during a recession. Instead, invest your time into instating loyalty programs or other customer-centric benefits that won’t eat away at your margins.
- Invest In Technology – Sometimes making a small investment up-front will save money in the long run. Invest in cloud-based ecommerce management software to keep operations running smoothly through thick and thin. From channel data integration to warehouse management, to logistics, product information, and beyond, ecommerce management software consolidates all your ecommerce needs into one platform.
Working with Digitbridge
Digitbridge is a user-friendly ecommerce operation management platform designed for the industry, by the industry. Digitbridge’s all-in-one platform allows you to buy, sell, and fulfill orders all from one intuitive interface for omni-channel commerce business. Check on inventory, shipping updates, and customer inquiries using Digitbridge’s cloud-based platform. It’s time to invest in the future of your ecommerce business. Contact us today for your free demo.