The cost of living crisis caused by rising energy costs and the subsequent squeeze on household budgets will hit online retail businesses hard this winter. Not only will people have less money to spend on little luxuries and everyday essentials, but the cost of doing business will also soar as suppliers pass on ever-increasing expenses to their clients.
We are not pulling any punches here. Christmas 2022 is going to be challenging for many retailers. While there is no “magic bullet” to solve the problem, there are a number of levers businesses can pull to help them better weather the storm.
10 Tips To Help Online Retail Businesses Survive The Cost of Living Crisis
- Liquidate Distressed Inventory Immediately: When every penny is a prisoner, distressed inventory is an expense your business cannot afford. Not only is old stock tying up money you could be investing in your business, but it’s also costing you money in terms of depreciation and warehouse space. Online marketplaces like eBay provide the perfect venue to shift distressed inventory. Although eBay auctions are not very fashionable at the moment, they can offer an excellent route to market by connecting bargain hunters with good deals.
- Optimise Your eBay Product Listings: The most dangerous thing you can say in business is, “we’ve always done it this way.” If your eBay listings look a lot like they did this time last year (or even the year before), there is a good chance they don’t comply with the eBay listing best practices that dictate whether or not your items appear in eBay search. A free eBay listing health check can help you prioritise your optimisation strategy if your eBay sales have fallen off a cliff recently.
- Take Time to Research Your Products: Now is not the time to rely on gut instinct when selecting products to sell. When you consider that 80% of your profits will typically come from just 20% of your products, it’s more essential than ever to research your products. There are several tools that help eBay and Amazon sellers research top-selling items and ensure they are not left with slow-moving stock.
- Work Smarter, Not Harder: A carefully considered technology stack can help you save time and money by helping your business become more efficient across multiple processes. For example, on a recent Frooition podcast, Shaun O’Brien from Direct Plants explained how working with Frooition, Linnworks and BigCommerce helped him dramatically scale his business without adding additional and expensive human resources to his operation.
- Apply for Government Assistance To Build Your eCommerce Presence: Schemes like the UK Government’s Help to Grow: Digital can offer significant savings on essential technology products like BigCommerce’s eCommerce platform.
- Invest in Low-Cost, High-Return Marketing Strategies: Marketing doesn’t always have to cost a fortune. For example, email marketing provides a low-cost, high-return marketing strategy for businesses operating their own eCommerce retail stores. Email can be viewed as the profitable component of more expensive acquisition strategies like paid search. If you are paying to acquire new customers and don’t invest in email, you may never see a positive return on your investment. Now might also be a good time to invest some time and effort into understanding the potential of new social media channels like TikTok.
- Outsource Your Fulfilment: You don’t make money stuffing envelopes, and your warehouse is probably the least efficient part of your business. Not only will outsourcing your fulfilment to a company like Huboo, Fulfilment by Amazon (FBA), or Orange Connex, can help streamline your operation by managing the entire picking, packing, and dispatch process. In addition, it will save time and effort with customer returns and may even improve your visibility on the various marketplaces. Outsourced fulfilment will also remove the additional pressure on your business caused by scaling up and down for peak selling seasons like Christmas.
- Change Your Business Direction: Historically, your business might have operated on a B2B, B2C, or D2C basis. However, thanks to flexible eCommerce platforms like BigCommerce and outsourced solutions like Huboo, your business can now sell to anyone and everyone. At Frooition, we are increasingly approached by wholesale firms who want to change their model and sell directly to the consumer. We are also learning about companies like Peloton investing in a hybrid D2C/B2C business model.
- Invest in Flexible/Remote Working: While not everyone can or wishes to work from home, having a flexible attitude to remote working can help your business and your employees save money. Remote working will help your employees save money on their daily commutes and other costs relating to coming into the office. It may also help you reduce your business’s energy and miscellaneous office costs. Of course, promoting flexible and remote working conditions isn’t an all-or-nothing solution. Finding a solution that works for your business and its employees is key.
- Keep Communicating: Don’t sweep problems under the carpet. Even the smallest of issues can quickly escalate when you ignore them. Always strive to keep lines of communication open between your business, your suppliers, and your employees – and remember, honesty is always the best policy. The small business community is a community like any other. Therefore you should use the opportunity to check in with your friends and colleagues regularly and make sure everyone keeps talking.
How Can Frooition Help?
Frooition has more than 16 years of experience helping thousands of online retailers optimise their businesses in both good and bad times. During this time, we’ve helped online retailers solve numerous problems, identify new opportunities, and react to periods of great uncertainty. To learn more about how we can help your business not only survive but potentially thrive in these unprecedented times, book a free 15-minute discovery call with one of our eCommerce experts today.