5 Strategies for E-commerce Businesses to Stay Afloat in the Face of Rising Inflation
February 22, 2023
As an e-commerce business owner, you’re no stranger to the challenges of running a successful online store. From inventory nightmares to shipping constraints and razor-thin margins, it’s not a walk in the park.
Then tack on the highest inflation rates in decades and an economy teetering on the edge of a recession, and now you’re really starting to feel the squeeze.
That’s why it’s more important than ever to be proactive and take the appropriate measures to protect your bottom line.
So if you’re feeling the pressure and wondering how e-commerce businesses can stay afloat with rising inflation, you’ve come to the right place.
In this post, we’ll share five effective strategies you can start using today to keep your e-commerce business thriving, no matter what the economy throws your way.
Let’s dive in.
1. Ship More Efficiently
You know the drill: get new products, package them, and ship them out to eager customers.
Smooth sailing, right?
Wrong-o, as the Grinch would say.
The after-effects of COVID-19 and the ongoing conflict in Ukraine have significantly impacted supply chains, leading to disruptions and increased shipping costs.
At the same time, supply and demand imbalances are causing shortages of raw materials and higher demand for certain products — we’re looking at you, Rolex, and Stanley cups.
So it’s more important than ever to rethink your shipping strategy. And who better to learn from than the leader of the pack? That’s right, Amazon.
Amazon Day Delivery is a feature that allows customers to schedule all of their deliveries for a designated day of the week.
(This shipping strategy simplifies the delivery process for customers while offering benefits such as free shipping and exclusive discounts. Amazon also benefits by optimizing its shipping operations through bulk deliveries to a specific area on a specific day.
Talk about a win-win scenario.
So, take a page out of Amazon’s book and consider how you can make your shipping process more efficient. You may be surprised at how much of a difference it can make.
2. Utilize Technology
In today’s fast-paced business world, technology is your best friend.
Why work harder when you can work smarter?
Automating workflows allows you to speed up internal processes and deliver orders to your customers more quickly. And by using technology to streamline operations, you can reduce the need for human resources and focus on what matters: growing your business.
I know what you’re thinking. There are millions of software solutions, so how do you find the right ones for your business?
Well, here are a few suggestions to get you started.
You can’t go wrong with a catch-all solution like workflow software. Why?
Investing in a tool that saves you time and resources and can improve efficiency and customer satisfaction is a no-brainer. It’s a subtle yet effective way for your e-commerce business to stay one step ahead in a constantly evolving market.
Technology helps us achieve two important things: streamlining processes and reducing overhead costs. We’ve already touched on the first point, so what’s the deal with cost savings?
For instance, by adding an AI-powered chatbot to your e-commerce site, you can scale back on human resources in your customer service departments. And let’s face it. Humans are expensive to employ.
Chatbots cost a fraction of the price and can answer customer service questions 24/7, track customer information, and even provide product recommendations.
Take a peek at how Sephora integrates a chatbot on its website. It’s simple yet effective.
And last but certainly not least, pay close attention to your retail analytics. This data is worth its weight in gold.
When you hone in on these analytics, you can learn more about your customer’s behaviors and buying patterns, spot trends, and identify where you fall short.
The result? An improved decision-making process, backed by data, puts you on the right path to higher margins and business longevity.
If crunching numbers isn’t your thing, there’s a solution for that as well. You can use one of the best notion widgets to easily analyze and track your KPI metrics.
These tools save you valuable time and ensure that your data is always precise — down to the hour — without manually updating anything. Score.
3. Incentivize Customer Retention
Did you know that acquiring a new customer costs five times more than retaining existing ones?
Plus, they spend more too. In other words, loyal customers are your best customers.
Here are a few simple ways you can turn a one-time buyer into a loyal customer:
- Implement a loyalty program: By offering rewards and incentives to customers who make repeat purchases, you’ll encourage them to keep coming back. It can be as simple as a points system or as elaborate as a full-fledged rewards program.
- Innovate your products: Keep up with market demand by introducing new products that solve customer problems or fulfill their needs. Share the updates via email and social media to keep your customers engaged and interested in your brand.
- Provide excellent customer service: Make sure your customers feel valued and supported. Respond promptly to inquiries, address any concerns, and provide helpful information.
- Reduce friction in the sales process: Make it as easy as possible for customers by offering multiple payment options, providing clear and concise product information, and streamlining the checkout process.
Let’s take a look at an example in action. MegaFit Meals uses a loyalty program, Mega Perks, to incentivize customers to make repeat purchases.
The program is simple: earn points for every dollar spent. After you reach 1,000 points, get $20 in rewards towards your next purchase.
(You might be thinking there’s no way this works. Well, the statistics speak for themselves.
62% of consumers are more likely to spend more money on a brand after joining its loyalty program.
So don’t underestimate the power of customer loyalty. The small things matter and your bottom line will reap the rewards (along with your customer).
4. Encourage Your Customers to Spend Less
Sometimes less is more.
Encouraging your customers to spend less may seem counterintuitive, but it can benefit your business in the long run.
By carefully considering your target audience, you can adjust your pricing strategy to make your products more affordable and accessible.
For instance, if your primary customers are Gen Zers who only have access to prepaid debit cards, consider pricing your products in $5 or $10 increments (with all taxes and fees baked in).
That way, teenagers can still purchase without exceeding their set limit. And the more teenagers that can shop on your site, the better.
You can also build trust with potential customers by being transparent about the prices of your products. When you are upfront, customers will feel more confident making a purchase. Plus, it’s an excellent tactic for reducing shopping cart abandonment.
Another great option to help your customers save money is offering bundles, subscriptions, or discounts on bulk purchases.
Costco uses the bulk items methodology but also makes up for slim margins through membership fees. This strategy works out cheaper for consumers in the long run while providing steady business for the wholesale giant.
On the e-commerce front, Olipop uses the “subscribe and save” method to offer discounted prices and free shipping.
Customers win because they get their favorite healthy soda delivered to their front door at a lower price. And Olipop benefits from recurring revenue, something SaaS businesses know a thing or two about.
Talk about an idyllic model. It almost sounds too good to be true!
5. Optimize Your Advertising to Target High-Quality Customers
And finally, you need to spend money to make money.
While promotions and discounts are certainly an important part of e-commerce, relying solely on these tactics can significantly reduce your bottom line.
Instead, you should focus on building a strong online presence that appeals to the right customers.
Budget-friendly options like free blogging sites to boost brand awareness and reach a wider audience could be a subtle yet effective strategy for cutting costs and maintaining profitability.
But even with a small budget, you can hire a blog writer to deliver high-quality content that provides value to your target audience.
And you might be wondering if a blog is necessary for an e-commerce store. The answer is…yes.
Why?
68% of online experiences start with a search engine. And if your store organically appears on the first page of the search engine results page (SERP), it’ll attract new customers to your e-commerce store.
Plus, it helps establish your brand as an authority in your niche. You can write detailed buyer’s guides or answer common questions your audience is searching for.
For instance, Pressed shares expert insights on its blog about what fruits and vegetables are in season during the winter, driving potential leads to its website.
If blogging isn’t your thing, you can dabble in email marketing campaigns. It’s proven to have one of the highest returns on investments across marketing strategies. You have the potential to earn $36 for every $1 spent. Not too shabby.
The best part is that you can use personalization and retargeting strategies via email campaigns to engage with customers who have already shown an interest in your products.
Here’s an example of a shopping cart abandonment email from Away to encourage a lead to finalize their purchase:
Or you can create buyer personas and segment your audience based on demographics, interests, and behaviors. This extra step will help you create more effective campaigns and better target new leads who are likely to purchase.
Wrap Up
It’s a stressful time for any business owner. But inflation is a significant concern in the e-commerce industry, impacting everything from customer purchasing power to shipping costs.
With so many unknowns on the horizon, it’s easy to feel the pressure start to creep in. However, we hope these strategies can help ensure your business is well-prepared to tackle any economic challenges that lie ahead.
From shipping more efficiently and using technology to incentivizing customer retention and optimizing your advertising, you can create a robust and resilient e-commerce business that can withstand the tests of time.
So buckle up. You’re in for the long haul. Keep your head high and march on. This, too, shall pass.
