In the current economic downturn, many online stores are struggling with the impact of high inflation. With their own costs rising and their customers’ purchasing power in decline, businesses need to develop strategies that will keep them viable. Thankfully, there are things that online retailers can do to maximise sales and minimise costs to help them weather the storm. In this post, we look at what these are.
Manage inventory cost-effectively
As every company is learning, high inflation means that the cost of goods and services will go up, sometimes considerably. As such, it becomes extremely important for online stores to optimise how they manage their inventory. One way to do this is to make use of tools that help them to forecast demand, manage stock levels and reduce wastage. For example, by adopting just-in-time inventory practices, businesses can minimise holding costs and avoid tying up capital in unsold stock.
Automate operations
During periods of high inflation, online stores can maintain their profit margins by reducing operational costs. Making use of technology and automation is one way to achieve this. Online stores built using WooCommerce, for example, can take advantage of its ability to integrate with tools that automate tasks such as order processing, customer service and marketing campaigns. These automated systems can significantly reduce their labour costs and increase operational efficiency.
Use dynamic pricing
Over the last decade, consumers have been attracted to online stores that offer better customer experience and have been willing to pay more for it. However, with the rising cost of living, product pricing is likely to have a bigger impact on their purchasing decisions. For eCommerce companies, this means keeping a close eye on what their rivals are charging if they want to stay competitive.
A popular option for many stores is to adopt dynamic pricing. In other words, to continually change the price of their products to remain consistently competitive but where possible to maximise profits. There are now tools available that enable you to do this automatically on your site. They will search the market and adjust your prices up or down in line with what your competitors charge. Of course, you can always set minimum and maximum levels so that you never make a loss on an item and provide good value to your customers.
Offer value bundles
Another strategy that has been effectively used by countless online stores is to offer product bundles. You see these offers on sites like Amazon all the time. By packaging complementary products together at a slightly reduced price, you can encourage more sales and increase the average order value. What’s more, bundling not only helps move more stock; it also provides customers with the perception of getting a better deal, making them more likely to purchase and stay loyal.
Focus on customer retention
It’s a long-established fact that acquiring new customers is often more expensive than retaining your existing ones. With this in mind, it’s better to focus your attention and budget on the customers you know will keep coming back. Tools that track customer interactions, preferences and purchase histories can provide useful insights that enable online stores to personalise offers, reward loyal customers and enhance the overall shopping experience.
Spread the cost for customers
With householders’ budgets stretched, the total cost of an item could be too expensive for them to pay in one go. Offering them flexible payment options is one way you can help them buy a product without pushing them into the red. There are several solutions you can use to offer this, such as Klarna or PayPal’s ‘Buy Now Pay Later’ scheme. By offering flexible payments, you can benefit from increased sales and keep hold of customers who might otherwise shop elsewhere.
Negotiate with suppliers
Now more than ever, it’s vital to have good relationships with your suppliers. It’s important to remember that inflation will be impacting them too and they will need your business to keep their head above water. Strengthening partnerships in the supply chain can lead to cost savings which can be crucial in the current climate. If you need to, consider renegotiating terms, asking for discounts or explore the possibility of making bulk purchases.
Conclusion
High inflation may be daunting, but there are ways to lessen its impact on your online store. By increasing your agility, making use of the latest tools and focusing on keeping customers loyal, you stand a better chance of riding the current wave of high inflation. Hopefully, the information provided here will help you find appropriate strategies for your online store.
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