Navigating a eCommerce Business During an Economic Downturn

The eCommerce business world started with global supply chain disruptions causing an increase in production costs that many businesses were forced to bear. Now consumers are beginning to experience the cost of more than two years of lockdowns, with rising inflation and growing interest rates just over the horizon.

Some eCommerce businesses are already experiencing downturns of 10 to 15% or more, with customers not buying, households revising their budgets, and overheads, particularly labour, destined to be on the chopping board.

In this article, we take a look at two simple yet powerful solutions that can help you not only keep your head above water during an economic downturn but minimize the impact on the most critical parts of your eCommerce business.

The biggest eCommerce Business losers

The biggest losers during tough times are sadly often those who have had the greatest impact on your business, helping you to get to where you are today. Your employees, and regular, repeat customers. It can be soul-crushing having to lay off staff who have become like a second family or lose your most loyal customers as a result of price increases that you are forced to pass on, even if it’s just to barely break even.

Reallocating your resources can and should be done in a way to minimise (as much as possible) the impact on your overall business, while most importantly, maintaining key performance metrics and preserving high customer satisfaction.

Big-ticket expenses in eCommerce Business

Downsizing your workforce is often a typical first course of action for many businesses during trying economic times. Sales are down. You have 10 pickers, each of which you are paying $25 per hour, and have to let two, three or four go, simply because you cannot afford to keep them. But here’s the problem. How can you continue to maintain the efficiency of pick runs that your business relies on to satisfy the customers that are still purchasing, while reducing staff?

Aside from labour, the other big-ticket expense for eCommerce businesses usually involves tangible costs. Costs which you cannot afford not to pay. We are talking about shipping. After all, what good is your online business if you cannot get orders to your customer’s doors cheap and fast, or worse, at all?

Two key considerations

At EIZ, our “brains trust” has decided on a pair of key considerations that we believe will help your eCommerce business not only save money but stay competitive, especially as you reevaluate your priorities and restructure your workflow.

1. Technology. eCommerce management technology – the software and hardware that powers your online business – is what enables efficiency. Almost as importantly, it is what allows you to scale. Not only will the right platform grow with your business, but it will also allow you to pull back, while maintaining efficiency, during challenging times.

A robust multichannel order management system allows you to keep demand pipelines open, maximizing storefront exposure to as many customers and markets in as many locations as possible. The great advantage of this is that it can be run with very few staff, and is not labour-intensive. Keep in mind that irrespective of whether times are good or bad, it is still all about location, location, location, or in our case, exposure, exposure, exposure.

On the other hand, pick-and-pack systems enable your business to process orders, at volume. A properly designed pick-and-pack system will allow you to redesign pick runs and employ more optimal picking methods (for example, batch or tote pick) to better suit or utilise a smaller group of pickers, should you have no option but to downsize your workforce.

2. Shipping rates. When it comes to tangible costs to your customers and business that often account for an appreciable chunk, we turn our attention to shipping. A shipping management system will allow you to integrate with as many carriers as you like. And keep in mind that signing up with a carrier is usually free. The more carriers, more the options you have in terms of price. Think of it as competition. Also, this is an important consideration as supply chain disruptions in the future can never be completely ruled out. You will need to plan smartly and be able to change a provider should you need to circumvent a bottleneck or major issue arise.

If you are processing substantial volume each month, and have a good track record, we encourage you to speak to your couriers, carriers, shipping and freight providers, and ask them for a better rate. Shipping will remain a tangible cost that customers accept and are willing to bear, so your business should make sure it is not losing out on any margins, margins which become especially important in dire times.

To learn more about eCommerce management technology that is designed to help you restructure, downsize or reoptimize your business during a downturn, reach out to us today at enquiry@eiz.com.au. At EIZ, our team have expertise in carrier selection and is experienced in negotiating for more competitive rates with providers, should your business require any guidance. No matter if you are in the market for order management, shipping management, or pick and pack (we handle it all, and much, much more), no matter your size, whether you are a start-up or an enterprise-level business, we have the right solution for you.