Key Strategies for a Recession-Proof Ecommerce Business

2023 recession forecasts

We can’t help but hear experts worldwide forecast a global economic slowdown to hit in 2023. Several factors could cause it. The World Bank’s latest Global Economic Prospects report cites rising inflation, soaring interest rates, and disruptions caused by escalating geopolitical conflicts.

However, some analysts disagree – and while they don’t think the global economy is heading straight for a recession, they still advise bracing for a slowdown.

During a downturn, it’s important to be proactive in dealing with the challenges that may arise. This may involve making tough decisions, but it can also be a chance for something new.

We encourage you to look at slowdowns as an opportunity for business growth and innovation. After all, according to a 2009 Kaufman Foundation study:

51% of Fortune 500 companies were launched in recessionary periods.

Key ecommerce recession strategies for growth

With the right plan in place, online businesses can not just survive but thrive during a recession. We recommend exploring the following strategies during an economic downturn.

Recession-Proof Ecommerce Business #1:
Do the math.

Some online stores may decide to discount their products in an attempt to boost their sales. If you find yourself in the middle of a price-dumping war, don’t panic. Instead, do the math.

If you decide to offer discounts, you must:

• Monitor your competitor’s pricing,
• Stay aware of your margins to ensure profitability.

Once you know those figures, you can calculate a discount rate that won’t hurt your business.

Recession-Proof Ecommerce Business #2:
Stay competitive and grab any occasion others didn’t grab.

In recent years, ecommerce has become an increasingly popular way to earn a living. Many people turn to online marketplaces like Amazon or eBay to sell goods. It can be a lucrative opportunity, but the seller scene is getting more crowded and competitive. What can you do?

1. Do your research to stay ahead of the competition.
2. Keep tabs on what other sellers are doing.
3. Try to learn from their mistakes and profit from occasions they failed to grab.

If there is an opportunity for growth that other sellers shy from, inspect it before you dismiss it too. It might turn out that it doesn’t require a lot of additional resources, just some of your time and research. You can set yourself up for success with just a bit of effort and almost no competition.

An excellent example of such an opportunity is selling cross-border to France in light of the recent EPR legislation updates. Some sellers have hastily closed their French accounts in response. Little did they know that getting compliant is a straightforward procedure that can only benefit their business. Don’t hesitate to grab such occasions!

[Download our FREE Extended Producer Responsibility guide]

Recession-Proof Ecommerce Business #3:
Distinguish trends and bestsellers.

Everyone is wondering what are the best recession-proof products to sell online. While there is no guaranteed formula for success, certain products have proven to be more resilient during economic downturns. According to industry reports, they include categories such as food and beverage, health and wellness, and essential goods.

Trending products

It’s important to keep in mind that consumer behavior can vary widely depending on the specific circumstances of a recession. A steady flow of sales from top-selling items is a nice thing to have, but a sudden surge in sales is most often caused by trending products.

Trends are a double-edged sword. Pay attention to currently trending products because their popularity and high demand might increase your revenue. It’s an obvious and easy win.

There’s no easy recipe for predicting trends, but you won’t be able to do it without investing some time into research. Follow industry sources and relevant experts to understand how trends might shape and shift.

Best-selling products

However, trends can also pass. And not all trending products will become bestsellers. It’s essential to be aware when a trending product you carry is about to lose momentum. If you miss-assess it, you might end up with excess inventory that will be hard to liquidate later.

But most importantly, before you even venture into researching trending products, make sure you can recognize the best-selling items on top marketplaces. Those might turn out to be the ultimate recession-proof products to sell online.

Recession-Proof Ecommerce Business #4:
Find a niche.

Avoid picking heavily-saturated markets. Instead, consider international markets or niche markets.

The market for niche products is obviously much smaller. However, niches rarely struggle from lack of interest. And the customers interested in such products are usually loyal and have a higher potential of becoming recurring clients.

You can explore just niche products or whole niche marketplaces. They are specialized platforms that cater to a specific range of products within one particular retail category. These marketplaces provide a focused and curated shopping experience, which sets them apart from large and more generalized marketplaces.

Recession-Proof Ecommerce Business #5:
Don’t let excess inventory bring you down.

While it’s true that ecommerce sales may drop during a recession, there are steps that ecommerce businesses can take to mitigate the impact. If you do end up with items that take up shelf space but are challenging to sell, it’s not the end of the world.

There are various ways to incentivize customers during an economic slowdown.

Explore the following options first, especially if you’re selling on various marketplaces:

• Cross-selling or up-selling the product
• Creating a unique product bundle
• Promoting the product in a special campaign
• Reuse the product in a different context (such as an Easter egg basket that could become a picnic basket for Barbecue Month)

If none of the above work, there is always the strategy of discounting them – just enough for them to sell and for you to still make at least a minimum profit.

Recession-Proof Ecommerce Business #6:
Don’t cancel advertising budget just yet.

While a recession may force some businesses to cut costs, studies suggest that it is not necessarily the best idea to do so with advertising. Bain & Company’s analysis of nearly 3,900 companies worldwide found that:

Companies that, among other efforts, maintained marketing during the 2008 recession came out of it ahead of the competition.

Does it seem counterintuitive to keep investing in advertising when you’re forced to reduce costs? On the contrary. Instead of reducing your marketing budget, try to rethink it. When times are tough and there’s less spending online, you need to make sure your customers see you and your listings first. You can achieve it in various ways.

Advertising: low-budget option

If you have any budget left for marketing, you should invest in increasing the visibility of your products on marketplaces in a smart and efficient way. How?

• You can benefit from eBay Promoted Listings at lower advertising costs.
• You can learn how to effectively advertise through Amazon Advertising.
• Choose an automated solution that will help you achieve maximum sales increase while decreasing advertising costs.

Can you be certain that such an investment will pay back? Our experiments confirm that promoting listings on eBay boosts product visibility: impressions tend to increase 4-5 times, while visits on product pages increase by 60-70%.

Advertising: no-budget option

Even if you have no budget left, you can still:

• Do a deep-dive keywords research and try to optimize your listings.
• Keep nurturing clients through email campaigns.
• Invest your time in social media marketing and be active on the platforms your clients use.

Recession-Proof Ecommerce Business#7:
Focus on client retention

Price is not the only factor influencing purchasing decisions.

Ecommerce Customer Experience is a broad concept. It encompasses all the engagements, feelings, and experiences a client might have when interacting with your online store. This means all your online endeavors, not just your marketplace listings and the current purchase.

Many sellers mistakenly think that customer experience is restricted to brick-and-mortar stores. It exists in the digital world too! And it can help increase sales in the short term and fostering brand loyalty in the long term.

According to a 2021 study by Invesp, the cost of acquiring a new customer can be up to five times higher than retaining an existing one.

Building a strong foundation based on factors like customer loyalty can help recession-proof your business.

Recession-Proof Ecommerce Business#8:
Listen to industry experts

Ecommerce landscape can change quite quickly. If you want to stay ahead of the game, you need to be prepared and adapt quickly.

How can you stay on track with all the important updates?

• Subscribe to relevant news outlets for in-depth industry reports.
• Track trends and predictions through social media.
• Follow ecommerce experts for their exclusive insights.

The video series CEO’s Brew features Adrien Salvat sharing his insights about the biggest challenges for cross-border selling on marketplaces in 2023. Watch the video below to learn more about finding growth opportunities in a steady or decreasing market:

Key tools to recession-proof your ecommerce business

Recessions can be challenging for businesses, whether you’re a one-man operation or a bigger company. Luckily it’s possible to recession-proof your ecommerce business to a certain extent with the right tools.

While a downturn might not be the best time to hire new people, the cost of technology is experiencing a decline. AI-driven ecommerce solutions are becoming accessible to a broader range of online businesses. Most of them will focus on automating your daily business operations.

During a recession, businesses are often faced with the challenge of balancing cost-saving measures with the need to maintain quality and efficiency.

Automation can save time and reduce costs by streamlining most of the processes taking place in an ecommerce operation.

Recognizing areas where automation might be able to save you time and improve efficiency can ultimately lead to reducing costs in the long run. Especially in regard to tasks such as data entry, order processing, inventory management, listing optimization and localization, streamlining shipments and returns.

You can use tailor-made ecommerce solutions for the entirety of your operations, or just for one aspect you struggle with. But often, a holistic approach might prove to be the most profitable. Ultimately, the end goal of deploying such solutions is to enable you to increase your revenue.

Additional benefits of AI-driven automation

What are some other benefits of relying on technology and automated ecommerce tools? They help to:

• Minimize the risk of business-critical errors
• Maintain a high level of productivity
• Navigate a new market and its regulations
• Better understand customers

Businesses that are able to embrace and leverage technology during a recession are more likely to stay competitive and thrive, even during difficult economic times.

Is ecommerce recession-proof itself?

One might argue that ecommerce is better positioned to weather a recession than traditional retail, as online sales may be less impacted by factors such as reduced foot traffic and consumer spending. Most importantly, by selling directly to consumers online, ecommerce businesses eliminate the costs associated with traditional brick-and-mortar retail, such as rent and staffing expenses. And thus have a better chance of optimizing their spending.

While no business is completely recession-proof, there are strategies that ecommerce companies can employ to increase their chances of success during an economic downturn. These may include diversifying their product offerings or investing in marketing and advertising.

Previous statistics point to the recurring importance of online marketplaces and ecommerce during economic downturns. Ecommerce and recession seem to be an oddly good fit:

Interestingly, as a Deloitte report states, ecommerce continued to grow during the 2008 Great Recession in the US.

Recession-proof ecommerce strategies: Final notes

Selling online can be a lucrative option during economic downturns. It is essential to monitor the fluctuations in consumer behavior and adapt accordingly. Don’t be afraid to pivot and change course if necessary. Focus on providing excellent customer experience and service to retain loyal customers and attract new ones.

In summary, retailers must be proactive and adaptable in the face of changing market conditions and a possible recession. It’s crucial to stay informed, monitor key metrics, focus on customer service, and invest in technology. By prioritizing these areas, businesses can create a strong foundation that can weather the ups and downs of the economy, and come out stronger on the other side.

 

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About Webinterpret’s AI-powered automated solution for ecommerce

Webinterpret is a global ecommerce solution for marketplace sellers. We enable marketplace sellers to sell more effectively in international marketplaces with automated listing localization, marketing, and logistics (shipping and returns).

Our solution is perfectly integrated with marketplace platforms, such as eBay or Amazon. By giving your international customers a full end-to-end local shopping experience, Webinterpret improves your conversion and helps establish your business on a global scale.

If you’re looking for new ways to grow your online sales, feel free to book a demo with our sales experts.

Sources

• Why everyone thinks a recession is coming in 2023
• Deloitte: The next consumer recession. Preparing now
• Reduce marketing spend during a recession? History says no.
• Recession Fears 2023: What Lies Ahead?
• When Down Is Up: Building Brands in Recessionary Periods