Implement Booming E-Commerce Trends To Combat The Recession.
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Recessions, which are defined as two quarters in a row of negative economic growth, can be brought on by financial panics (like the one that preceded the Great Recession), rapid changes in economic expectations (the so-called "animal spirits" described by John Maynard Keynes, which led to the burst of the dot-com bubble), economic shocks (like a spike in oil prices), or some combination of the three.
Most businesses suffer during a recession, primarily because demand (and revenue) falls and uncertainty about the future rises. However, research indicates that there are ways to limit the damage.
In the 2010 HBR article "Roaring Out of Recession," Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen discovered that during the recessions of 1980, 1990, and 2000, 17% of the 4,700 public companies they studied fared extremely badly: they went bankrupt, went private, or were acquired.
But, even more striking, 9% of the companies did not simply recover in the three years following a recession; they thrived, outperforming competitors by at least 10% in sales and profit growth.
A more recent analysis by Bain using data from the Great Recession confirmed that finding. The top 10% of companies in Bain's analysis saw their earnings rise steadily throughout the period and continue to rise afterwards.
In simple terms, a recession is a period of economic downturn, typically marked by a decrease in the gross domestic product (GDP), an increase in unemployment, and a decline in consumer spending.
In e-commerce, a recession could potentially lead to a decrease in sales and revenue for online businesses, as consumers may be more hesitant to make purchases if they feel financially uncertain.
However, it's important to note that the effects of a recession on e-commerce can vary depending on the specific circumstances and how well the online business can adapt to the changing economic climate.
The Covid-19 pandemic had a significant impact on the global economy. Even as the economy struggled to recover, the Russia-Ukraine war was another major setback. Combining these two factors will put the global economy into recession next year. And India isn't an exception.
In 2023, there will be a significant reduction in output. If the pandemic had not occurred, the global output would have increased by 23% since 2016. However, it is now expected to grow by only 17%. The global slowdown will keep real GDP below its pre-pandemic trend and cost more than $17 trillion, or nearly 20% of global income.
According to a United Nations Conference on Trade and Development (UNCTAD) report, Russia, Indonesia, India, the United Kingdom, and Germany are among the countries that may contribute the most to this global output loss.
While India is expected to lose 7.8 percent of its output in 2023, the Eurozone is expected to lose 5.1 percent, China 5.7 percent, the United Kingdom 6.8 percent, and Russia 12.6 percent.
Rising interest rates, currency weakness, rising public debt, and rising food and fuel prices have created uncertainty in global markets. According to a new World Bank study, raising interest rates to combat inflation may be bad. Along with the recession, this is likely to lead to several financial crises.
"Global growth is slowing sharply, and further slowing is likely as more countries enter a recession. My deep concern is that these trends will continue, with long-term consequences that will devastate people in emerging markets and developing economies, "said World Bank Group President David Malpass.
The International Monetary Fund (IMF) has also predicted a recession for next year. The IMF's managing director, Kristalina Georgieva, stated earlier this week that global economic growth could be reduced by $4 trillion by 2026. She added that things are more likely to get worse before they get better.
While all regions are expected to be affected, developing countries, many of which are on the verge of debt default, are receiving the most attention. Lower-income and lower-middle-income countries are spending more on public debt services. The countries with the highest proportion of revenue required to service their public debt are Somalia, Sri Lanka, Angola, Gabon, and Laos.
Developing countries have spent nearly $379 billion of their reserves to cushion weakening currencies, nearly double the amount of new Special Drawing Rights (SDR) issued by the IMF. An SDR's value is determined by a basket of the world's five major currencies: the US dollar, euro, yuan, yen, and British pound.
It is estimated that advanced economies' interest rate hikes disproportionately affect the most vulnerable. According to the UNCTAD, nearly 90 developing countries' currencies have weakened against the dollar this year, with more than a third losing more than 10%.
Food and energy are two factors that have a direct impact on the lives of ordinary people. Food and fuel prices have risen dramatically in 2022. While the food price index reached a lifetime high of 125.7 in 2021, rising to 146.94 by September 2022, the Indian basket of crude oil prices averaged $102.14 per barrel between April and October 2022.
The price of the Indian crude oil basket in 2021-22 was $79.18 per barrel, up from $44.82 per barrel the previous fiscal year.
The Great Recession was an economic downturn that began in the United States following the financial crisis of 2007-08 and rapidly spread to other countries. It was the longest and deepest economic downturn in several countries, including the United States, since the Great Depression, beginning in late 2007 and lasting until mid-2009 (1929–c. 1939).
The financial crisis, characterised by a severe contraction of liquidity in global financial markets, began in 2007 due to the collapse of the US housing bubble.
Since 2001, successive decreases in the prime rate (the interest rate that banks charge their "prime," or low-risk, customers) have allowed banks to make mortgage loans at lower interest rates to millions of customers who would not otherwise have qualified (see subprime mortgage; subprime lending), and the resulting purchases have greatly increased demand for new housing, pushing home prices ever higher.
Even among well-qualified borrowers, housing demand decreased when interest rates finally rose in 2005, leading to a decline in home prices. Most Subprime borrowers had adjustable-rate mortgages (ARMs) and could no longer afford their loan payments due to rising interest rates.
They couldn't save themselves, as they used to, by borrowing against the increased value of their homes or selling them at a profit. (In fact, many borrowers, both prime and subprime, were "underwater," meaning they owed more on their mortgage loans than their homes were worth.) As foreclosures increased, banks stopped lending to subprime customers, reducing demand and prices.
As the subprime mortgage market collapsed, many banks were in serious trouble because a sizable portion of their assets had become subprime loans or bonds created by combining subprime loans with less risky consumer debt (see mortgage-backed security; MBS).
Banks started to doubt each other's solvency as a result of the fact that the underlying subprime loans in any given MBS were challenging to track, even for the institution that owned them. This led to an interbank credit freeze, which restricted banks' ability to extend credit to financially sound customers, including businesses.
As a result, businesses were forced to cut costs and invest less, resulting in widespread job losses and, predictably, lower product demand because many of their former customers were now unemployed or underemployed.
As it became clear that the portfolios of even the most prestigious banks and investment firms were largely fictitious, based on nearly worthless ("toxic") assets, many of these institutions sought government bailouts, merged with healthier firms, or declared bankruptcy.
Other major corporations that sold their products with consumer loans suffered significant losses. For example, General Motors and Chrysler declared bankruptcy in 2009 and were forced to accept partial government ownership through bailout programs.
Throughout it all, consumer confidence in the economy was understandably shaken, prompting most Americans to cut back on spending in anticipation of tougher times ahead. This trend dealt a further blow to business health. These factors all worked together to start and prolong the severe recession in the United States.
Between the start of the recession in December 2007 and its official end in June 2009, real GDP (i.e., GDP adjusted for inflation or deflation) fell by 4.3 percent, and unemployment rose from 5% to 9.5 percent, peaking at 10% in October 2009.
Poverty in the United States rose from 12.5 percent in 2007 to more than 15 percent in 2010, as millions lost their homes, jobs, and savings. According to some experts, only federal legislation, the 2009 American Recovery and Reinvestment Act (ARRA), provided funds to create and preserve jobs and extend or expand unemployment insurance and other safety net programs, such as preventing a greater increase in poverty.
Despite these measures, poverty among children and young adults (aged 18-24) reached around 22% in 2007-10, representing increases of 4% and 4.7 percent, respectively.
Much wealth was lost as US stock prices (as measured by the S&P 500 index) fell by 57 percent between 2007 and 2009. (by 2013, the S&P had recovered that loss, which soon greatly exceeded its 2007 peak).
Between late 2007 and early 2009, American households lost an estimated $16 trillion in net worth; one-quarter lost at least 75 percent of their net worth, and more than half lost at least 25 percent.
Households headed by younger adults, particularly those born in the 1980s, lost the most wealth when measured as a percentage of what previous generations in similar age groups had accumulated.
In 2010, the wealth of the median 1980s-born household was nearly 25% less than that of previous generations of the same age group; the shortfall increased to 41% in 2013 and remained at more than 34% as late as 2016.
Because of these setbacks, some economists have spoken of a "lost generation" of young people who, resulting from the Great Recession, will be poorer for the rest of their lives than previous generations.
Before the downturn, wealth losses and recovery rates varied significantly by socioeconomic class, with the wealthiest groups suffering the least (in percentage terms) and recovering the quickest. For these reasons, it is widely accepted that the Great Recession exacerbated the already significant wealth inequality in the United States.
According to one study, during the first two years following the official end of the recession, from 2009 to 2011, the aggregate net worth of the wealthiest 7% of households increased by 28%, while the lower 93% decreased by 4%. As a result, the richest 7% increased their share of total national wealth from 56% to 63%.
Another study discovered that between 2010 and 2013, the richest 1% of Americans' aggregate net worth increased by 7.8 percent, representing a 1.4 percent increase in their share of the nation's total wealth (from 33.9 % to 35.3 %).
The recession spread as the financial crisis spread from the United States to other countries, particularly Western Europe (where several major banks had invested heavily in American MBSs).
Most industrialised countries experienced varying degrees of economic slowdown (notable exceptions included China, India, and Indonesia), and many responded with stimulus packages related to the ARRA.
Recovery was slow and uneven in all countries affected by the Great Recession. The broader social consequences of the downturn, including lower fertility rates, record-high levels of student debt, and reduced job prospects among young adults in the United States, were expected to linger for many years.
According to a new World Bank study, as central banks worldwide simultaneously raise interest rates in response to inflation, the world may be progressively moving toward a global recession in 2023 and a string of financial crises in expanding markets and developing economies that would cause long-term harm.
According to the report, central banks worldwide have been raising interest rates with remarkable synchronicity this year, which is expected to continue well into next year. However, the current trajectory of interest-rate increases and other policy actions may not be sufficient to return global inflation to pre-pandemic levels.
Investors expect central banks to raise global monetary policy rates to nearly 4% by 2023, an increase of more than 2% from their 2021 average. Unless supply disruptions and labour-market pressures decrease, the study finds that interest-rate increases could leave global core inflation (excluding energy) at around 5% in 2023, nearly double the five-year average before the pandemic.
The model used in the report suggests that town global inflation to a level consistent with their targets, central banks may need to increase interest rates by an additional 2 % points.
If this is accompanied by financial-market stress, global GDP growth will slow to 0.5 percent in 2023, representing a 0.4 percent contraction in per-capita terms and meeting the technical definition of a global recession.
Note: I got the above stats through deep research. Please create the statistics in a new format. Also, you can use the above data-centric content to create new stats.
Recession in the Indian Context
Former Niti Aayog Vice-Chairman Rajiv Kumar has stated that India will continue to grow at 6%-7% in the fiscal year 2023-24, even though the economy may be affected by uncertain global conditions.
Mr Kumar also stated a synchronised downturn in the United States, Europe, Japan, and China, which could push the global economy into a recession in the coming months.
In an interview with PTI, he said, "Thankfully, there is no such potential of a recession in India because, while global conditions may negatively affect our growth, we will still manage to grow at 6-7 percent in 2023–24.
The World Bank projected a 6.5% growth rate for the Indian economy in 2022-23, down one percentage point from its June 2022 projections, citing the declining international environment. The IMF projected a 6.8% growth rate in 2022, down from 8.7% in 2021.
According to IMF chief Kristalina Georgieva, the global economy is transitioning from relative predictability to greater uncertainty. In response to a question about high inflation, Mr Kumar stated that retail inflation would likely remain in the 6-7% range for some time.
"After that, the estimate is that it will begin to rise and then fall," he said. Mr Kumar added that it is heavily dependent on global oil prices, which may continue to rise due to the ongoing conflict in Ukraine.
"However, the domestic drivers of inflation will cool down," he said. Retail inflation fell to 6.7% in October, indicating an easing of the price situation, while the wholesale price index fell to a 19-month low, owing primarily to lower food prices.
The central bank must keep inflation at 4%, with 2% margins for upside and downside. When asked about the impact of a weakening Indian rupee on the common person, the former Niti Aayog vice chairman stated that the average Indian does not consume a lot of imported goods or services.
According to Mr Kumar, a rupee near its true value is far better for the economy than an appreciated one, and a depreciated one poses few downside risks. Regarding India's growing trade deficit, Kumar stated that with negative growth in exports in October, it is clear that the country requires a real policy focus on expanding its exports of goods and services.
"We must need to develop state-specific export promotion policies. Because having a single export promotion policy for the entire country makes no sense, "He stated. He said Punjab is a double landlocked state, while Tamil Nadu is a coastal state with centuries of trading experience.
After a two-year hiatus, India's exports fell sharply by 16.65% to $29.78 billion in October, owing primarily to a slowdown in global demand, even as the trade deficit increased to $26.91 billion.
Imports increased by about 6% to $56.69 billion during the month under review, owing to increased inbound shipments of crude oil and certain raw materials such as cotton, fertiliser, and machinery.
Mr Kumar responded to a question about some states switching to the old pension scheme (OPS), saying, "That is a step backwards. and I don't believe it should be taken." He believes some opposition parties are promoting it as a populist measure.
"I believe the Indian economy, the Indian working class, and the Indian middle class are maturing to the point where they can manage their pension funds and take advantage of the new pension scheme, which offers significantly more options than the old pension scheme," Mr Kumar said.
Disruptions are frequently used as catalysts for business transformation; for example, the COVID-19 pandemic resulted in an exponential increase in digital adoption and e-commerce across Indian retail.
According to the India Retail and E-commerce Trends Report 2022, this discontinuity experienced by buyers and brands has accelerated e-commerce adoption and growth while disrupting traditional retail and organised brick-and-mortar business models, making e-commerce the modern retail industry's backbone.
According to a Segment of the industry and Wazir Advisors report, e-commerce players, retail brands, and digital-first businesses have quickly met new consumer demands by leveraging advances in online shopping technology and supply chain optimisation.
Their success on these fronts is backed up by a 69.4 percent year-on-year increase in e-commerce order volumes in FY 2022. Today, the need to provide optimal customer purchasing experiences directly correlates to increased revenue growth and profitability.
This means establishing an offline presence through exclusive stores and traditional distribution channels for digital-first brands, whereas traditional retail prefers a comprehensive online presence. Organised Brick-and-Mortar Online Account for 18.5% of Total Retail.
Following the pandemic, India's retail sector saw an 8.5 percent decline in market size in FY 2021. The organised and traditional retail segments took a significant hit, while online retail maintained its growth momentum.
In FY 2022, India's retail sector is worth $836 billion, with traditional retail accounting for 81.5 percent of the total. Organised brick-and-mortar retail accounts for 12 percent of the total retail market, with online sales channels accounting for 6.5 percent.
Online retail is still outperforming.
Despite the pandemic, the Indian online retail market is expected to grow by 32% (approx.) over the next few years, with a potential value of $225 billion (approx.). The D2C will be the primary driver of this expansion, with a CAGR of nearly 45 percent.
With D2C and digital-first major investments heavily in technology, they will combine to lend a 38 percent growth to the D2C channel segment, assisting D2C to grow from 18% to 30% contribution share to a special $70 billion opportunity.
BPC outperforms, and emerging segments continue to grow rapidly. Sustained growth across online purchase platforms is still a distinguishing feature of the beauty and personal care segment.
Further expansion is possible, as online sales account for 9.4 percent of the total segment. It reports significant growth of 143 percent in order volumes and more than 132 percent in order values.
Brand Websites Build Loyalty Among Online Shoppers
As customers continue shopping online, brands across all segments focus on increased online visibility and direct sales.
The increase in technology investments appears to be paying off, as evidenced by the 80.4 percent year-on-year growth on brand websites. In comparison, e-commerce volume on marketplaces increased by 59.6 percent during the same period.
Brand websites drive strong growth in the Health & Pharmaceuticals (84.8 percent) and Fashion segments (89.5 percent). Consumers in the hinterlands drive the next phase of e-commerce growth.
In FY 2022, shoppers from Tier II and Tier III cities account for more than 61 percent of the total market share. Much higher than the 53.8 percent figure for FY 2021. These cities experienced 92.2 percent and 85.2 percent growth, respectively, whereas Tier I cities experienced 47.2 percent growth.
Shopping trends in India
Over the last two years, there has been an unexpected increase in customer churn. Consumers have evolved in some ways while returning to old purchasing habits in others, indicating the revival of innate purchasing patterns.
The rise of smartphone users has undoubtedly influenced how and when consumers buy products. Consumers can now learn about new products, compare features, read user reviews, and make informed purchases.
A quick search on social media platforms and search engines enables customers to research products before they 'checkout' from their e-commerce shopping cart or visit their local store.
According to an industry report, 90% of customers discovered new products on YouTube, and 64% of Indian customers purchased based on an influencer's recommendation or an online review.
This has increased a brand's responsibility to establish and maintain an online presence and reputation. While the diverse thinking of Indian marketers and the intelligence obtained from digital analytics have driven many changes, consumers have been responsible for changing marketing practices.
Marketers have been constantly focused on identifying the changing 'need gap' in consumers' daily lives. These shifting preferences and the emergence of new needs have aided in developing new product lines, evolved features, enhanced services, and one-of-a-kind outlets (experience zones) for customers to purchase products.
Here are some of the purchasing habits of Indian consumers that have emerged in the last year and will continue to influence consumption in 2023:
Purchasing equipment that provides both convenience and comfort.
Due to the decline in out-of-home expenses during the pandemic, disposable income increased for many families. As a result, consumers are investing in appliances and gadgets that make their homes more comfortable and convenient.
According to a report on the Indian consumer economy released this year, the Indian middle class has grown from 14% in 2005 to 31% in 2021 and will reach 63% by 2047. This explains why easily replaceable income has been recorded as the biggest driver of rising spending on household appliances.
Another interesting point is that this trend has not subsided despite people returning to their normal lives. As the cost of living rises faster than income, more family members work to live prosperous lives.
This has increased demand for home appliances that simplify household chores, freeing up time for rest and recreation. Mobile phone applications can access smart integrated appliances, automated electronics, and intelligent cooling systems. As a result, these have gained significant traction in the last two years.
The rising interest in new types of electronics
While traditional home appliances have remained popular over the last decade, there has been a noticeable preference for newly launched appliance categories.
Customers regard products such as air purifiers, dishwashers, and robot cleaners as new enablers in today's world. As the market for these products is new and rapidly evolving, this has encouraged industry players to build capabilities to meet the demand of this niche category.
A deep dive into the consumer's psyche revealed that swipe-up and carousel advertisement posts and endorsements made by online influencers drive a significant portion of this demand.
This leads us to the next point Option for social and digital platforms when making informed purchasing decisions Due to a growing preference for subtle marketing, today's advertisements have significantly shifted in the last few years. Most customers have a left swipe response to advertisements about the brand and its offers.
Instead, brands that partner with popular and relevant influencers have received much attention for allowing consumers to look at the brand's ethics and purpose. Brands that offer indigenously made products using environmentally friendly methods by utilising local talent have seen encouraging off-take and brand shout-outs on public platforms.
Furthermore, the social media algorithm has been pushing services and products that have received huge popularity or match companies similar to the Consumer's frequently visited pages.
Hybrid Purchasing While the initial point suggests that customers are conducting online research, there is a shift in purchasing behaviour. Customers are not all buying online, as more offline stores offer improved purchasing experiences.
According to one study, 45% of Indian buyers research online but buy offline. More brands now provide experiential brand outlets for customers to interact physically with products, particularly when making high-end purchases.
This trend is here to stay, as offline shopping allows customers to spend time outside the home with themselves or their families. While the online contribution of sales in the Consumer Durables industry increased from 20% (pre-Covid) to 30% (during Covid), it will now settle at 25%.
Payment methods are shifting from debit to credit.
According to industry reports, 80% of Indians want to save money because of the sudden rise in living costs. Accommodation, food, electronics, travel, education, and other fixed and variable expenses are included. As a result, affordability has become critical for customers when adding desired products to their wish lists.
Easy instalments, buy now, pay later, percentage discounts when using specific credit cards or payment gateways, cashback incentives, and vouchers have all become a part of every customer purchase decision. Consumers have shifted to purchasing on credit rather than withdrawing funds from their savings accounts all at once.
Maintaining a focus on hygiene and health
Customers now have access to information they did not previously have due to the increased time spent on social media. Customers are regularly sensitised on how an individual's health is impacted by their ability to connect with doctors and health experts online.
This has resulted in a strong emphasis on products that keep consumers healthy and improve the overall hygiene quotient of homes. The awareness that began with purchasing organic products and supplements has spread to purchasing air purifiers, appliances with germ-killing features, and surface disinfectants.
As a result, companies are now innovating to provide advanced health and sanitation features that appeal to consumers' evolving wellness needs. 2023 will be the year of care, convenience, and comfort.
2020-2021-2022: According to a Bain & Company report, India's e-commerce market can overtake the US to become the second-largest shopper base in the next one to two years, with 190 million online shoppers in 2021.
India's e-commerce market increased to around $40 billion in 2021 and is expected to reach $50 billion in 2022, growing at 25-30% per year for the next five years, with a steady increase in user base. India has the world's third-largest online shopper base, trailing only China and the United States.
Huge legroom in terms of smartphone penetration (36% in India vs 63% in China and 76% in the US) and shows how much money ($2K per capita in India vs $12K in China and $69K in the US) will fuel consumption and increase spending per shopper, in addition to already low data prices.
Historically, mobile phones, electronics, and appliances accounted for the lion's share of the e-retail market. Still, over the next five years, fashion, general merchandise (including personal care), and grocery will account for as much as two-thirds of the e-retail market by 2027.
Shopper acquisition will remain at the heart of future e-commerce growth. India's online shoppers are expected to rise to 400-450 million by 2027. Most of these shoppers are already in the digital funnel-450-500 million used social media in 2021, compared to 180-190 million who shopped online.
Between 40 and 50 million new customers were added to the Indian e- retail market in 2021 alone, representing a 30%-35% increase over the online shopper base in 2020.
These new shoppers are mostly from tier 3 or smaller cities, including Generation Z, which will be a critical cohort in the future. They buy fashion as the first category online and usually start at low prices.
More than 40% of new online shoppers purchased fashion, and the average selling price (ASP) for items purchased by new shoppers was 20% lower than for existing shoppers.
"With the rate of growth we're talking about, we'll be the second largest shopping base in the world, only behind China," said Manan Bhasin, partner at Bain & Co. A rapid expansion of the seller base and efficient logistics infrastructure development has accompanied the e-commerce market expansion.
Seller growth has outpaced e-commerce growth, with the number of sellers increasing at 35% per year. The scale of e-commerce has enabled a consistent reduction in shipping costs, which have fallen to 8% of the average order value (vs 10% in China).
Shopping festivals continue to help new shopper growth, with over 3X more online shoppers onboarded daily during the flagship annual festivals than the rest of the year (2021).
Mobile and electronics had the highest e-commerce penetration in India (nearly 30%), followed by fashion and retail goods at around 10% each. While the home and furniture category had a 5% penetration, the grocery category had less than 1%. The report also predicted that e-commerce penetration in India would more than double to 9-10% by 2027, up from 4.5% in 2021.
The daily active users to unique visitors ratio increased from 18% to 20% in 2019 to more than 25% in 2021. Customers spend 20% more monthly on retail platforms than the previous year. Bain categorises the Indian e-commerce market into three stages:
The first period extends from the inception of e-commerce to 2015, when cash-on-delivery was first introduced and experienced "cautious early adoption" in major cities. From 2015 to 2020, the "massification phase" saw increased customers in tier-2 cities, faster delivery times, and the emergence of affordability strategies such as buy-now and pay-later. India is in the third phase of e-commerce, characterised by emerging new marketing strategies and micro-segments.
Bhasin claimed that distinct groups in the e-commerce client base, such as Gen-Z users, low-income users, and users from tier-1 cities, were beginning to emerge. They are targeted by various business strategies such as rapid and social commerce.
Considering 400 million Indians use their cell phones to watch videos, features such as live streaming and video commerce have a lot of potential and present a huge opportunity.
Platforms that offer live and video commerce are classified as marketplaces or short video platforms. The three ways to promote commerce in this space are strong authors and content, a learning algorithm, and commerce integration.
E-commerce trends to follow to beat the recession
You don't have the high overhead of a traditional store. However, eCommerce businesses still have expenses. Looking closely at your business operations, from software and marketing to fulfilment and payroll, can help you identify cost-cutting opportunities. Reduce your overheads to increase profitability and free up cash to invest in revenue-generating areas for your store.
Implementation: This can be difficult to master. Cutting back and compromising your customers' purchasing experience can be disastrous. The first thing to consider is the software and tools you use to run your business. Are there any subscriptions that you aren't making the most of? Could you use a less expensive alternative?
Another high cost is inventory storage and shipping. A dropshipping model is one of the most effective ways to cut this cost. You can find a dropshipping supplier and delegate fulfilment to them. If you already have stock for certain products, you can use drop shipping to test other products (without investing too much) to see if they sell well.
While this may reduce your margins slightly, it is an excellent way to save money without limiting the variety of your product line. Our comprehensive guide teaches you about dropshipping and other e-commerce store models.
A recession can hurt your bottom line. And, as your costs rise, you'll need to sell more products to make a profit. Cutting costs allows your company to become leaner and more profitable. It can also motivate you to develop new winning products. As a result, you can boost your margins or lower your prices to attract more customers.
Prioritise Customer Lifetime Value (CLV).
Unless you're new to eCommerce, you'll already know that repeat customers are the most profitable. And if you're new to selling online, start with our beginner's guide before moving on to more advanced topics like customer retention strategies.
Profits can be maximised by focusing on customer lifetime value and retention. According to a widely cited research paper by Bain & Company, increasing customer retention by just 5% can boost profits by 25% to 95%.
Implementation : If you don't already have a loyalty scheme now is the time to implement one. Loyalty programs are one of the most useful tactics for retaining customers.
Exclusive discounts, freebies, and bonuses can be used to reward repeat customers and encourage them to spend more. Saving money is the most important motivator for participation in loyalty programs: That doesn't mean you have to offer a substantial discount on every item. Instead, think outside the box when it comes to rewarding customers.
You can, for example, give discounts to customers who leave product reviews or take quizzes to help you better understand their preferences. A loyalty program is a win-win situation for both the customer and your business.
Replace Underperforming Products
Every eCommerce store has some products that sell slowly. Consider removing products from your store that sell infrequently.
If you're dropshipping the product, this is simple. However, if you have leftover inventory, it may be more difficult. Consider a sale or a package deal to move your underperforming products and recoup your investment.
Implementation: With a flash sale, you can shift underperforming inventory. With a stock counter next to the "Buy Now" button, you can create a sense of urgency and increase conversions.
Numerous Shopify Apps and WordPress plugins are available to help you add this functionality to your store. If you're still having trouble getting sales, product bundles are a great way to keep profits while selling off discontinued lines. You can combine an underperforming product with a best seller.
Increase Your Product Offering
Relying on a few product lines to generate sales exposes you to disruption during a recession. If your customers decide that your product isn't necessary or find a cheaper alternative, your sales could plummet.
Increasing your range can help to reduce that risk. You can diversify your revenue streams and strengthen your eCommerce store's resilience to changing spending habits. As previously stated, you can expand your product line by dropshipping first to see if there is a demand for that product.
Implementation: Consider adding products that suit your current offering or would appeal to your target audience. Consider selling USB desk fans, office cleaning supplies, and other related items if you sell home office furniture. You must ensure customer demand before adding a product to your store.
That is where a tool that can assist businesses comes in. You don't have to sift through pages and pages of product listings to find top-selling product ideas.
Choose a niche and use the filters to find low-competition products selling well on Amazon, eBay, and AliExpress. Once you've identified a winning product, you can quickly contact a pre-vetted supplier via the built-in chat feature or their contact information.
Do not reduce your marketing budget to the same.
In periods of economic uncertainty, the first instinct is to reduce spending, beginning with your marketing budget. However, this is a mistake. "A man who stops advertising from saving money is like a man who stops a clock from saving time," Henry Ford once said.
You can capitalise on lower advertising fees if your competitors' budgets are being cut. By pushing forward, you can strengthen your market position and expand your customer base.
Implementation: Rather than reducing your marketing budget, consider how you can adapt your marketing approach to changing consumer preferences. During a recession, for example, people are more budget-conscious and value for money. As a result, they spend more time researching products and making purchasing decisions.
You can capitalise on this trend by creating more educational content that addresses your customers' pain points. Here's an example from the blog Into The Gloss of the beauty brand Glossier: Use content marketing to assist customers in locating the best options for their needs. You can, for example, create educational guides, comparative articles, and other content assets to target each stage of the buyer's journey.
This is one of the most important lessons from previous recessions. During the 1981 recession, brands that increased or maintained their marketing spending grew 275% faster than those that reduced their marketing budgets.
The same thing happened during the 2001 and 2007 economic downturns. While your competitors cut back, you can gain an advantage and increase your market share.
Sales strategy to get the most out of sales and marketing campaigns
Concentrate on Small Markets. Regarding prospecting, casting a wide net is not always a good idea. The number and variety of accounts can quickly overwhelm you, making your goal appear unattainable.
Begin with a limited contact list and concentrate on a specific industry, business size, or location. Even if the chosen niche fails to produce results, you will quickly move on to a new one with nothing to lose. When you find a profitable niche, it will re-energize your attempts and increase your self-assurance.
Salespeople use stories to increase customer interaction and keep their attention. A person's intentions, motivations, beliefs, emotional responses, and actions are all influenced by storytelling.
Because storytelling is directly related to the sentimental side, and people intuitively connect to stories, capturing that deeper feeling with your leads will give you a better chance of converting them into repeat customers.
At various stages of the sales process, storytelling can be used.
You can include an intriguing tale about your company, add a narrative to your product pitch presentations, or use contextual metaphors when presenting yourself. Don't ignore the critiques. Listen to your customers if they frequently request product features or if leads are dissatisfied with your pricing packages.
Keep your ears open, collect customer product feedback, and be ready to push for changes. Customers will not feel ignored or lose interest in your company if they notice you are adaptable and good at problem-solving.
Examine Your Previous Sales
Your historical sales data can provide valuable information about your prospects and their purchasing habits, allowing you to forecast future sales and identify areas for improvement.
When setting sales goals, review your sales records from the previous year to determine which accounts spent the most, whether there was a new hire in the sales department or anything else that could affect the outcome, and how many trade shows, conferences, and events you attended.
This data can show you what works and doesn't and point you in the right direction. For example, suppose you notice an increase in sales after attending a liquidation sale, hiring a new sales representative, or changing the type or frequency of customer communication. In that case, these factors played a role.
Be flexible and adaptive.
When it comes to negotiating, flexibility is crucial. When prospects are still on the fence, being open to a slightly different agreement and making concessions can positively impact the outcome.
You risk losing a customer by insisting on minor details. On the other hand, your desire to give in and accept your prospects' additional demands demonstrates a clear intention to work with them again.
This is a long-term sales strategy because if you're flexible, your prospect will be more likely to buy from you again or extend their subscription - which is far better and more valuable than a one-time sale.
You must, however, establish the quantity below which you will not go, and you must do so before the meeting. Don't change your mind after that, and if your possibility wants an even lower price, communicate your limit.
However, before sacrificing your pricing, consider providing extra value instead. Add some premium features, and you've got a win-win situation. It will be difficult for your prospect to refuse such a generous offer, and you will maintain your initial pricing.
More entrepreneurs will emerge in the future of Indian e-commerce. Furthermore, because the company provides global shipping, brands require constant access to their inventory. It also aids in keeping track of his daily orders and deliveries.
The Indian e-commerce sector directly impacts micro, small, and medium-sized enterprises (MSME), and it has a beneficial cascading effect on other industries by providing funding, Technology and training. The Indian e-commerce market is expected to surpass the United States by 2034 to become the world's second-largest e-commerce market.
Technological innovations such as digital payments, excitable logistics, analytics-driven customer engagement, and digital marketing are expected to aid the sector's growth. India also intends to launch an Open Network for Digital Commerce (ONDC).
The ONDC will enable e-commerce operating systems to show products and services from all forums by synchronising search results. The growth of e-commerce in India will be aided, and MSMEs may do more business.
The e-commerce industry in India is expected to expand into new geographic areas. The Indian e-commerce market is expected to grow rapidly in the coming years, reaching Rs. 1.8 trillion (US$ 25.75 billion) in FY20 with a CAGR of more than 35%.
Over the next five years, the Indian e-commerce sector will attract more than 300-350 million consumers, bringing the online Gross Merchandise Value (GMV) to US$ 100-120 billion by 2025. This projection is based on the industry's expected annual growth rate of 20%.
According to a Bain & Company report, social commerce in India is expected to reach a gross merchandise value (GMV) of more than 2 billion US dollars by 2020. Analysts predict that due to the widespread adoption of mobile technology, it will reach US$ 20 billion by 2025 and then skyrocket to US$ 70 billion by 2030.
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What are the booming e-commerce trends that can help combat the recession?
The booming e-commerce trends that can help combat the recession include social commerce, voice search optimization, augmented reality, omnichannel retailing, mobile optimization, and personalized shopping experiences.
What is social commerce, and how can it help combat the recession?
Social commerce refers to the use of social media platforms like Facebook, Instagram, and Twitter to sell products directly to consumers. It can help combat the recession by providing an additional sales channel and reaching a wider audience through social media.
What is voice search optimization, and how can it help combat the recession?
Voice search optimization refers to optimizing your e-commerce website for voice-based searches. It can help combat the recession by making it easier for consumers to find and purchase products online, even if they do not have access to a computer or mobile device.
What is augmented reality, and how can it help combat the recession?
Augmented reality refers to the use of computer-generated images and sounds to enhance the user's real-world experience. It can help combat the recession by providing an immersive shopping experience that can help drive sales and improve customer engagement.
What is omnichannel retailing, and how can it help combat the recession?
Omnichannel retailing refers to the use of multiple sales channels to provide a seamless shopping experience for customers. It can help combat the recession by allowing businesses to reach customers through multiple touchpoints and increase sales through cross-selling and upselling opportunities.
What are personalized shopping experiences, and how can they help combat the recession?
Personalized shopping experiences involve tailoring the shopping experience to the individual customer's preferences and needs. It can help combat the recession by providing a more engaging and relevant shopping experience, increasing customer loyalty, and driving sales.