3 Minutes Read By Dr. Stefan Sambol

Three Priorities for E-commerce Businesses to Survive the Consumer Squeeze

#Digital Strategy

The aggressive jump in inflation rates keenly felt here in the UK through the cost of living crisis, has unsurprisingly, delivered an enormous impact on the e-commerce industry. Spending has dropped and consumer confidence is at record-low levels while many e-commerce startups are struggling to drum up funding or even survive the current economic environment. To balance the fall in revenues and low demand for their goods and services, e-commerce businesses must reprioritise their spending to ensure survival. The good news is there are several measures e-commerce companies can take to stay afloat and continue attracting investors. These measures include: gaining brand awareness through omnichannel digital marketing, ensuring marketing efficiency through end-to-end analytics and optimising supply chains through inventory and active price management.

Regardless of circumstances, effective planning is key during a consumer squeeze, when every business needs to renew its strategy and reprioritise or minimise spending to survive this tough market.

Omnichannel Digital Marketing and Sales Channels

Breaking away from siloed marketing channels is critical. The key is to consider consumer outlook, and having one consumer-centric digital strategy is the best way to reach a consumer audience as you’re offering a singular touchpoint across multiple channels.

Omnichannel digital marketing involves both non-organic and organic channels, meaning that a brand is communicating with its customer base cohesively through paid channels like digital ads, and unpaid channels like social media and SEO optimisation. Maintaining a digital marketing strategy through organic marketing channels can only benefit e-commerce companies in the future as digital natives naturally become the target consumers of products and services and will expect to be able to communicate with any brand online.

Similarly, diversified digital marketing channels allow customers to stumble across the company website more easily, and access reviews and product features. For luxury brands in particular, a digital presence allows businesses to benefit from the Research Online, Purchase Offline (ROPO) effect, whereby customers feel more connected to the brand and comfortable with their purchase decision in-store having found all the information they needed about the product online.

When facing an economic downturn, an overhaul of organic digital marketing channels can be a cost-effective way to help sustain customer demand for products and services and ultimately, convert followers to customers. Additionally, companies looking to cut down costs can analyse the amount of traffic created through backlinks from omnichannel engagement to understand how to optimise channels to increase conversion rates.

Marketing Efficiency and End-To-End Analytics

E-commerce companies naturally gather massive amounts of raw data around digital marketing, logistics, transactions, and customers. However, this data is frequently collected into various systems owned or used by different departments. As a result, departments only have a limited view of useful data.

Through end-to-end analytics, companies can understand and optimise their profitability by identifying and strategically dealing with toxic products with below-average profitability. With this intelligence, companies can also provide more value to their customers, creating a more focused and targeted user experience. For example, companies can use metrics like ROAS to calculate the total revenue generated per dollar spent.

ROAS is a metric calculated by dividing campaign revenue by campaign cost. Through utilising ROAS, e-commerce companies can ensure that their digital marketing is efficient in generating the maximum results from the minimum ad spend. Companies can utilise analytics to ensure they are not losing out on providing value for their customers by up-selling or cross-selling to customers. Additionally, end-to-end analytics provides intelligence for companies to understand purchase decisions made by retained customers to drive customer loyalty and their relationships with newly acquired customers.


Inventory and Active Price Management

Inventory is purchased to be resold at a profit; however, having too much inventory on hand can result in working capital being tied up as goods. Consequently, another consideration e-commerce companies should prioritise during a downturn is the use of good inventory management tools, as this guarantees there is always adequate inventory to fulfil client orders and sufficient cash flow available.

Typically, inventory is tracked from product acquisition to sale. E-commerce companies can use certain strategies to maximise their ability to convert inventory to cash. Using an ABC analysis companies can evaluate stock to see what is most in demand and preempt those orders, alternatively, they use a Just-In-Time strategy and sell excess stock while keeping the inventory of stock at low levels.

While companies look to manage inventory, they should also look to secure costs within the supply chain to ensure they can guarantee stable prices during a period of inflation. One issue around pricing is that there is no universal pricing template for companies undergoing a consumer squeeze or a period of negative growth. Due to not scaling prices up or down, companies can end up losing value related to pricing opportunities. Companies do not always understand their cost breakdown or have the technology to offset price increases fast enough. While prices are overlooked, companies forgo successfully passing on cost increases which make it difficult to recover margins in a competitive environment.

Price management, therefore, sits amongst the critical priorities for surviving a market downturn as an e-commerce business. By implementing strategies for improved brand awareness through organic marketing channels, utilising end-to-end analytics or implementing inventory and pricing tools, companies can reprioritise spending to survive or even thrive in a period of financial uncertainty.

By Dr. Stefan Sambol

Contact an expert

Do you want to know more about our experience in transaction advisory? Get in touch!

ESG webinar cover

Industry Insights

Insights from our ESG webinar with carbmee

We recently conducted a webinar with our partner carbmee, whose enterprise software solution empowers enterprises to manage their value chain carbon [...]

Industry Insights

Insights from the Mergermarket M&A Forum Germany 2023

Corporate due diligence is an essential part of mergers and acquisitions (M&A) processes, as it helps dealmakers identify and protect against [...]

Industry Insights

Looking Beyond ChatGPT: How AI Will Shape Transactions and Competitive Advantage

Launched in late 2022, ChatGTP is a D2C conversional chatbot technology giving end-users convenient access to one of the most potent Large Language [...]

Industry Insights

How to Ensure Effective Cyber Security at Your Organization

In our ever-increasing connected lives, cyber security is becoming increasingly important to organizations, due to the risks of cyber threats and data [...]

Case Studies

The KLAFS Case

KLAFS is the leading sauna manufacturer in Europe in the premium segment. In 1952, Erich Klafs delivered the first Erich Klafs Sauna, the first [...]

Case Studies

The BHS tabletop case

BHS tabletop AG is a mid-sized German company with around 750 employees, established in 1998. The company is a leading manufacturer and supplier of [...]

Case Studies

The Sana Kliniken Case

Sana Kliniken AG is Germany’s largest independent clinic-/ healthcare provider. From prevention to outpatient and inpatient care, rehabilitation, [...]

Case Studies

The Alpega Case

Alpega is a leading B2B logistics software company that offers end-to-end solutions for all transportation needs, including Transport Management [...]

Sign Up for the Newsletter

Development and Execution of a Customized Digital Growth Strategy