4 Tips to Sustain Your Ecommerce Brand in a Recession

It seems increasingly likely that a recession will soon impact virtually every business and consumer worldwide. In the US, the New York Fed Recession probability indicator suggested there was a 68.2% chance of a recession coming in the next year.

That’s the highest reading we’ve seen in more than four decades. 

If a recession does arrive, then there are going to be a lot of challenges for ecommerce business owners to overcome. During a recession, supply prices soar, logistics chains are disrupted, and customers generally buy less. 

However, while a recession is worrying for any business owner, it doesn’t have to spell disaster. With the right strategies, ecommerce companies can prepare for the worst, improving their chances of sustaining sales and revenue during a downturn. 

Here are four tips you can use to protect your ecommerce brand in the event of a recession.

Prioritize Excellent Customer Experiences

The evolution of the ecommerce world means that there are countless companies now selling similar products and services online. In this environment, it’s not necessarily exciting features that prompt customers to buy something, but the promise of an excellent experience. 

PWC found that 73% of customers say experience is an important factor in their purchasing decisions. Investing in a more customer-centric business and a focus on good “CX” can help ecommerce businesses thrive, even when purchasing behaviors change. 

Studies have even shown that 75% of men and 70% of women will continue buying products from brands that raise their prices if they feel valued by the company. Delivering excellent experiences means thinking about ways you can delight buyers and reduce frictions throughout the whole purchasing journey. For instance, you could:

• Explore new ways to deliver value: If you can’t cut prices for cash-strapped customers, give them access to other forms of value instead. You might offer free delivery or returns, loyalty programs for VIP customers, and rewards. 
• Adapt to customer needs: Pay attention to the main issues customers face with your business. Do they need a more responsive experience when shopping on mobile? Can you help them to make purchases by offering more payment methods at the checkout?
• Improve user experience: Enhance the user experience on your ecommerce store by eliminating frustrating steps. Implement a guest checkout option, make sure your pages load quickly on all devices, and help customers search for the products they need.

2. Keep Investing in Marketing and Technology

When a recession looms and your budget begins to dwindle, it’s tempting to slow down and look for ways to cut costs in as many places as possible. You might decide to stop purchasing new technology-based tools, or minimize your marketing campaigns and reduce your SEO strategy. 

However, cutting costs in the wrong places could make it harder to sustain your ecommerce company. Failing to invest in the latest technology, such as AI for writing engaging product descriptions, analytical apps, and tools for delivering real-time customer service (like chatbots), puts you at a disadvantage.

It means your customers’ experience will begin to suffer, and competitors will have an opportunity to swoop in and steal your valued buyers. Similarly, overlooking the importance of marketing in a recession could mean you begin to lose your visibility online. 

There are countless new companies emerging in the ecommerce space every day, and it’s easy to lose your market share. Studies show that companies that continue to invest in areas like marketing and technology, even during a recession, might not see growth immediately, but will flourish when the market starts to balance out. The key to success may not be reducing spend, but spending more strategically.

Analyze your marketing campaigns and track the ROI of your technology investments to ensure you’re spending your budget where it counts. 

3. Reduce Overhead Costs: Keep Operations Lean

Just because you shouldn’t be cutting down on important investments doesn’t mean you can’t find ways to reduce overhead costs. Surviving in a recession usually means taking a lean and efficient approach to growth. Examine your outgoing operational costs and ask yourself where you might be able to minimize spending, without compromising on performance. 

For instance, you could:

Seek Expert Financial Guidance: Working with the Best E-commerce Accountants can be a game-changer in managing your finances efficiently. These professionals can provide valuable insights on tax benefits, financial planning, cost-saving measures and tailored specifically for e-commerce businesses. 

Automate recurring tasks: Reduce your reliance on manual labor and make your employees more efficient and productive with automation. In the ecommerce world, you can automate everything from logistics and supply chain management to warehouse management. You can work with third parties that automate processes, such as intelligent space management in warehouses using Mecalux, which offers a variety of smart storage solutions. 

Invest in AI: Artificial intelligence is becoming a powerful tool for ecommerce brands. With AI bots, you can streamline customer self-service and reduce your employment overheads. You can even use AI to help you create marketing campaigns and product descriptions. Tools like ChatGPT and Jasper are ideal for this purpose.

Streamline your supply chain: Explore your supply chain and look for ways to minimize expenses. You might consider working with multiple logistics professionals to reduce the risk of stock-outs, or use planning tools to help with making inventory purchasing decisions.

Another way to reduce overhead costs is to minimize your risk of returns. Providing customers with more intuitive product descriptions, videos, and pictures can help them to make better purchasing decisions, reducing the revenue you lose to returns. 

4. Boost Cash Flow with Funding

In a recession, boosting cash flow is essential. You need to ensure that you have access to constant capital you can use to pivot rapidly to changes and trends in the marketplace. There are a few ways you can strengthen your cash flow. For instance, consider speaking to suppliers and asking for new payment terms and contracts to give you more flexibility. 

Focusing on customer retention, rather than simply looking for new ways to fill your sales pipeline all the time, can be helpful too. Loyalty programs and rewards can transform your customers into advocates for your brand, helping you to attract the attention of new customers and increase both customer lifetime value and average order value. 

If you’re struggling to stay agile with your cash flow, it might even be worth considering external sources of funding. Revenue-based financing, debt financing, and various other options can give companies more freedom to thrive during difficult financial periods. 

There are also tech-based solutions that offer funding specifically for the needs of ecommerce businesses. 8fig is one such solution, offering ecommerce brands access to continuous funding in accordance with their supply chain needs to fuel cash flow growth. With its platform, you also receive access to a range of financial planning and supply chain management tools, helping to make more informed decisions throughout the different stages of the supply chain, such as inventory ordering, marketing spend, and logistics coordination. 

Not Just Surviving, But Thriving in a Recession

Recessions are never easy for companies or their customers. However, a recession doesn’t have to bring your ecommerce brand to its knees. With a strategy for building business resilience, ecommerce brands can survive, and even thrive, during difficult financial periods. 

With the steps above, you’ll be able to ensure your ecommerce business is perfectly positioned to not only survive the recession, but come out on the other end stronger and ready for growth.