The retail industry’s cautiously optimistic outlook going into 2022 has been eroded by strong economic headwinds, geopolitical instability, soaring inflation and plummeting consumer confidence. But for online retailers, there are still opportunities to ride out the downturn and grow their businesses. Mark Elward, vice president of enterprise sales, and Peter Edgar, chief financial officer, Huboo, reflects on a turbulent 2022 and consider how ecommerce can win in the year ahead…
Reduce costs by offering economical delivery services as standard
At the start of 2022, over half of online shoppers said they thought same-day delivery was important – up from a third of shoppers pre-pandemic. However, signs suggest that in these more frugal times, customers’ expectations are softening. In response, we’re seeing ecommerce brands swapping out expensive same-day or next-day delivery for more economical services. It’s a handy and quick way to reduce the price point of products without impacting profit margins. Brands can still retain the option of super-fast delivery for customers willing to pay a premium, but there is no need to offer this as standard.
Alongside this, many brands would be wise to decrease the price threshold for free delivery, in recognition that customers are unable to spend more. This is a particularly helpful tactic for retailers whose priority is to hold onto existing customers or to try and reduce cart abandonment at checkout.
Finally, ecommerce brands need to pay careful attention to their returns policy in the year ahead – which has the potential to make or break a sale. By keeping the returns process simple while reducing the cost for the customer, they should be confident of getting more sales over the line.
A tough year ahead, but there are opportunities on the horizon
Retailers will be put to the test again in 2023, in yet another year of significant economic challenges.
As with the pandemic, we are likely to see a divergence of the fortunes of bricks-and-mortar and online retailers. Physical retailers will find themselves more exposed due to fixed costs – such as retail space, energy bills and shop floor staff. With fewer overheads and a greater ability to adapt their business models and sales tactics in line with market movements, ecommerce brands find themselves in a stronger position to ride out the downturn and achieve success in 2023.
Adaptability will continue to be the ecommerce secret weapon. It won’t be easy, but if online retailers take learnings from the last 12 months, they will put their businesses on a positive trajectory and will emerge from the downturn stronger, leaner, and more attuned to their customers’ needs.
Mark Elward, vice president of enterprise sales, and Peter Edgar, chief financial officer, Huboo