Here are three tips from our CEO Toni Stork that all e-commerce organizations should bear in mind as we prepare for the new year.
1) Growth and Purchase Planning
Most crucially, e-commerce organizations need to focus on good growth and purchase planning. Based on the past few years and next year’s predictors, we would recommend no growth planning in Q1 of 2023, as compared to Q1 of 2022. Q1 2022 did moderately well and we would expect similar numbers again. However, from April onwards (Q2, 2023), we anticipate a return to double-digit growth rates in e-commerce in 2023.
This double-digit growth must be reflected in purchasing. If you have too much stock, this can lead to problems, like the following example of swimming pools. In 2021, people bought and installed swimming pools in their homes. Consequently, in 2022 many retailers bought swimming pools as they assumed people would continue to buy them. Many pool retailers did not recognize that, as we were still in a ‘Covid high’ in 2021, the online penetration rate was particularly high and would experience a drop in 2022.
Taking this example further, in 2022 people were travelling again and didn't necessarily want pools in their own homes anymore. All dealers had pools in stock and any continued purchases would lead to an extreme price war in response to the outpacing of demand with supply. Bringing this example back to 2023 e-commerce, we must learn from the poor planning of 2022 when it comes to purchasing, and focus on cash conversion and inventory reduction as a priority.
2) Focus on a Data Model When Investing Into the Business
Focusing on data is essential when it comes to marketing and selling stock. With a good data model, organizations can be at their most efficient when it comes to sales and operations.
If you have the funds, you should focus on the three relevant data sources: Customer data, transaction data, and product data. Having these 3 data pools under control helps to reduce customer acquisition costs and will enable your e-commerce organization to become more efficient in marketing and sales because, with a data model involved, you are able to look at transactions, customers and customer value much more comprehensively.
3) Break Away From Silos in Customer Acquisition Channels
Customers today are finding businesses through an enormous variety of online channels. Google organic, Google paid, display, programmatic, and social media channels are just a few of the ways customers can stumble across a business. It therefore makes no sense to silo digital marketing channels into separate departments/budgets and optimize them one by one. Rather, e-commerce organizations should take an omnichannel approach with one big customer-centric team.
A customer-centric approach is the most important thing, and the customer has many touchpoints. Consequently, getting out of silos and starting to think about customers holistically is essential. A customer-centric attribution model combined with an underlying strong data model is a core tenant of operations in a modern e-commerce organization. You are flying blind if you optimize only single channels.
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