When it comes to protecting your eCommerce company from rising inflation, you have a few options. Try some of these techniques to beat back rising consumer prices and stay ahead of your competition.
Consumer inflation may be hovering at 9.1%, which is its biggest hike in more than 40 years. That doesn’t mean that your eCommerce company has to suffer. You may not be able to control gasoline price increases but you can certainly protect your business.
Below are several strategies to help you weather the inflation storm. By implementing at least a few of them, you’ll position your organization to feel less of an economic brunt. Plus, you may see some indirect benefits to being innovative, like improved employee loyalty and more positive customer sentiment. So the sooner you start, the sooner you’ll see results.
1. Cut unnecessary expenses.
This may go without saying, but companies incur plenty of “hidden” expenses that erode their profit margins.
Case in point: All those subscriptions that you’ve forgotten about. Many products and services require you to pay for them on a regular basis, such as quarterly or annually. However, it can be easy to “set and forget” the subscriptions you’ve signed up for.
Conduct an audit of your corporate spending. Look through all your business credit cards. You may spot items here and there that just aren’t providing any value. If one of them is a subscription, make sure it’s for something your employees use. Otherwise, you’re just wasting money.
2. Stock up on supplies.
Though some experts are hopeful that supply chain worries are nearing an end, one of the largest shipping companies isn’t so sure.
DHL announced in early 2022 its prediction that supply chains would remain disrupted through 2023. Sure, that’s not something you want to hear as an eCommerce store. Nevertheless, it’s something that you need to keep in mind in terms of procurement.
Let’s say you know you’re likely to get a seasonal bump in sales on some of the merchandise you sell. It may be wise to purchase as many of those items as you can immediately. Or, you may want to source them from a variety of vendors rather than sticking with one.
The last thing you want is to run out of a bestseller at the peak of your sales season. Stocking up sooner in the year can help offset supply chain snags.
3. Outsource wherever feasible.
Outsourcing remains one of the most reliable ways to spend less without sacrificing the quality of your services. When you outsource, you remove a lot of the overhead that can bog you down.
Take paying for warehousing and shipping costs, for example. Tradefull, which is a complete eCommerce solution, has the infrastructure to handle the logistics like storage, dropshipping, picking and packing, and more on behalf of its eCommerce partners. As a result, its partners don’t have to pay for their own warehousing needs — they outsource to Tradefull.
Where could outsourcing work for you? In addition to your eCommerce solutions needs, consider outsourcing anything from your payroll management to customer service. You could be able to slash everything from the cost to rent space to the cost to hire full-time workers.
4. Improve cash flow.
Making improvements to your cash flow means you’ll be able to make payroll, buy products and pay bills. A proven way to increase your cash is to shorten the time it takes to get paid.
For instance, reconsider the types of payment options you offer customers. Some might help you get paid a little faster. As explained by Rotessa, an application for small businesses, credit card processing tends to get money into your account faster than through ACH payments. The trade-off is a percentage of the purchase price.
Alternatively, you might want to add more bulk-buying incentives to the table such as discounts for purchasing multiple items. Allowing a customer to shave dollars off an order when buying two, three or more items is a win-win solution. You get more cash from the sale than you would have and your buyer has gotten a deal.
If you have excess inventory, creating low-priced “bundled” merchandise may be a similar way to get more cash.
5. Concentrate on marketing your bestsellers.
You may or may not know what your best-selling products are. It’s worth finding out for sure and then promoting them ahead of other items.
Don’t worry if your bestsellers aren’t the highest-priced items in your eStore. You want to find products with strong profit margins, such as those with significant markups. And those won’t necessarily be the ones with the highest price tags.
Once you’ve named your top products, make sure you’re showcasing them in your advertising.
Feel free to shift some of your budget or change your copy and imaging. Though other merchandise you sell will get less upfront promotion, your top sellers will bring leads in the door. Once shoppers are on your eCommerce site, they can be introduced to other products.
6. Maintain a buzzworthy customer experience.
Every time a customer has a gold medal experience, your company wins.
Customer experience has become an enormous differentiator for consumers. Nearly three-quarters of shoppers base their buying behavior on customer experience, according to PwC’s research.
It isn’t necessary to spend a fortune to improve your customer experience, either. Removing clunky user interfaces or solving inadequate packaging problems can smooth out the rough spots.
Remember that it always costs more to acquire customers than to keep the ones in the mix. An impressive customer experience helps you maintain a higher level of satisfaction and retention, which pays dividends.
7. Automate whenever possible.
How many repetitive processes do your employees engage in daily? If the number is high, you’re probably losing more money than you realize.
You’re not alone, though. Information from Forrester Consulting suggests that up to 73% of manual processes that could be automated aren’t. Automation is one of the quickest ways to improve efficiency across your e-commerce business.
The more tasks you can automate, the less time your personnel will spend on mundane duties. Best of all, you’ll reduce the risk of human error.
To figure out where and what to automate, ask your team to find areas of repetition in what they do normally. Then, consider options that could help you automate some or all of those responsibilities.
Don’t forget to look at the technology you’re using. Some of the systems or software tools that you already use, such as your CRM, may have automation solutions that you’re not using.
8. Revisit your pricing strategies.
Contrary to popular belief, it’s okay to raise prices now. That’s what 40% of businesses say they’re going to do — and they’re looking at a 10% price hike at minimum. However, the key is to raise prices reasonably.
For example, doubling the price of an item probably isn’t wise unless you can justify the price hike. On the other hand, a slight pricing jump might make shoppers grumble, but most of your fans will stay.
How do you know the sweet spot for a price increase? One tried and true method is to check the market. See what it’s bearing now by conducting competitor research. You aren’t required to have the lowest prices but beware of being the highest price unless you’re in a luxury goods niche.
9. Seek new customer pools.
If you’re able to bring more customers into your eCommerce store, you’ll be statistically likely to increase your sales. Tapping into new audience personas can be one way to entice more customers.
For example, you might not realize that you’ve been overlooking a significant population of potential buyers until you conduct internal marketing research.
A fast way to uncover possible new customer buckets is to look at your current buyers. See which buyers have the highest single and lifetime sales. Do they represent audiences you haven’t been marketing to?
Even one untapped pool of leads could give your sales the bump-up you need to stay afloat despite inflation.
10. Attract and retain talent.
In addition to other economic concerns, the labor market is having struggles of its own. Yes, job openings declined in Q2 2022.
Nonetheless, The New York Times explains that employers are still having trouble filling seats. So holding onto the team members already invested in your eCommerce company makes a lot of sense.
Creating a healthy, toxic-free culture is a surefire way to keep your employees happier. Encourage, embrace and model smart management practices like open communication, empathy and adaptability.
When one of your best workers resigns, try to renegotiate if you can. Sometimes, employees may be willing to stay if you offer the right incentive. Even if you have to pay everyone a little more, it may be far less than you’ll pay to recruit and train replacements.
11. Drop unproductive marketing tactics — but keep marketing.
You might be tempted to slash your marketing budget. Don’t. Just rework it.
For instance, use data from Google Analytics to determine which marketing methods are working like a charm and which are duds. Temporarily put a hold on the duds and spend more on the marketing you can count on.
Certainly, you can still try some innovative marketing efforts. Be willing to shelve them if necessary. Test something you haven’t tried, run a few experiments, and see what happens. But make sure you’re holding onto the marketing that you know always drives business.
You can’t stop inflation. That’s a fact. Nevertheless, you can stop it from ruining your eCommerce business. Consumers may be buying more selectively, but they’re still buying. Your job is to make sure they spend their dollars on your merchandise.