How an Economic Slowdown Impacts Ecommerce
The post-holiday sales slump is always a challenge for retailers. This year, the slowdown could hit a little harder than usual. Market volatility, economic uncertainty, and ongoing inflation are a recipe for conservative spending in the first quarter of 2023.
As a retailer, what can you do to best serve cost-conscious customers? And, how can you maintain steady revenue through choppy economic conditions?
The forecasts for retail returns in Q1 of 2023 are mixed. Inflation appears to be slowing and consumer confidence is on the up, but tight margins have the potential to offset any improvements:
- Inflation will push up global retail sales by 5% in U.S. dollar terms in 2023, but a lower volume of sales and increased costs will weaken retailers’ profits.
- Online sales are expected to slow, but the online share of retail sales will continue to edge upward.
- After several months of decline, consumer confidence improved in December 2022.
- Projections say there is a 38% probability of recession in the U.S. by November 2023.
The only clear conclusion? The ecommerce industry is in for yet another unpredictable year.
5 Ways to Keep Converting Post-Holidays
Even if spending levels dip in the coming weeks and months, consumers will continue to shop. To win over cautious customers, retailers must provide a compelling reason to choose your store over the competition.
1. Focus on Value
Merchandise your online store to highlight value for wary spenders. Use boost rules and merchandising badges to showcase consistent best sellers and durable investment items, rather than passing trends or single-use products. Remember, value and savings aren’t necessarily the same thing. Deep discounts devalue your brand in the long term, and can quickly eat into profits if overall sales decline. Instead, address shoppers’ current needs with products they need and use frequently.
2. Be Mindful with Upsell Strategies
Upsell and cross-sell recommendations are a smart way to boost cart values during slow sales periods. However, now is not the time to push your most expensive products. If a shopper views a pair of shoes for $50, for example, suggest similar styles in a comparable price range under “You May Also Like.” This approach is more likely to result in a purchase, compared to recommendations for products at $100+. Apply this tactic to both on-site and email recommendations for the best results.
3. Reward Loyal Customers
If you need to scale back on site-wide sales and promotions, consider exclusive incentives for members of your loyalty program instead. Regular customers will appreciate the gesture now more than ever, and now is a good time to invest in lasting relationships with your shoppers. Focus on what sets you apart from the competition – whether it’s sustainability, brand mission, or community – and reinforce your brand message. As consumers become more selective about where they spend their hard-earned dollars, give them a worthwhile reason to choose your store.
4. Deliver Effortless Experiences
As shoppers assess whether they really need to make purchases right now, retailers must work harder to make conversions effortless. Given the slightest inconvenience, a hesitant customer is sure to quit browsing or abandon their cart. Don’t let avoidable obstacles like irrelevant search results, confusing navigation, or clunky checkouts drive up your bounce rate. Seamless buyer journeys are critical to ease purchasing decisions – now and always.
5. Do More With Less
As budgets tighten and pressure grows to do more with less, look for opportunities to streamline your ecommerce site management. Does your marketing team spend hours every week rearranging product displays? Do you lose valuable time on manual merchandising updates? Automation, AI, and personalization solutions can dramatically lighten the workload of under-resourced teams. Invest in tools that free up your time and enhance the shopping experience for improved efficiency all-round.
Set Your Ecommerce Business Up For Success
If the post-holiday slowdown begins to impact your ecommerce business, don’t panic. Look at this time as an opportunity to reimagine the shopping experience and consolidate your operations. With the right tactics and tools in place, it is possible to achieve more and spend less.
Start with a solution that personalizes the buyer journey and equips you to make site-wide changes in an instant, so you can get back to growing your business.