As COVID-19 develops and traverses across the continents, more and more businesses are struggling to mitigate the impact it leaves. From managing customers, suppliers, and vendors to digitizing communication, handling logistics, and supply chain – business owners are on a fast-tracked learning process to stay afloat. In this short guide, we'll tell about 7 quick and 7 long-term solutions minimizing the impact of COVID-19.
The Window of Opportunity
In all this gloom, there is also a ray of hope, especially for eCommerce businesses. While most of the people are staying at home, customers have to rely solely on online orders, even for essential supplies. The WHO clarification aided this. Receiving a package is safe, even if it's shipped from an area where COVID-19 is reported.
The likelihood of an infected person contaminating commercial goods is low, as well as the risk of catching the virus that causes COVID-19 from a package. Since the delivery was moved, traveled, and exposed to different conditions and temperatures. Not only are eCommerce businesses safe to continue operations, but they have also emerged as a lifeline, ensuring supplies and goods are received all over the world.
So, COVID-19 can offer a window of opportunity for eCommerce business owners, while also becoming their most significant challenge. Whether it makes or breaks a business – solely depends on how quickly owners assess the situation and minimize the risk caused by COVID-19.
As a result of the pandemic, consumer habits and buying preferences have drastically changed. There has been a drop in demand in certain categories, and an increase in others. It is essential to understand the changing patterns in customer preferences, to strategize the best solution for your individual business.
Here's an infographic with top-100 fastest growing ecommerce categories from Stackline:
Businesses that rely heavily on importing their inventory from countries like China have experienced a massive slow down in production and transit times. Those who have been sourcing their products locally are reaping their benefits now more than ever.
For major marketplaces like Amazon, the immediate focus is to ensure containment, healthcare, and supply of essential services. While non-essential goods are temporarily suspended from coming into their warehouses. Some FBA (Fulfilled by Amazon) merchants are able to benefit from the new prioritization – if their products fall into the essential category. Others had to make the switch to FBM (Fulfilled by Merchant) or begin selling essential products to keep their Amazon businesses running.
For businesses selling through Shopify and other eCommerce platforms, the rise and fall in demand and sales rely much more heavily on the changing spending patterns of consumers. Businesses in the medical, household, children, cleaning, and grocery categories are seeing a massive increase in demand, while those in the fashion, apparel, travel, and jewelry categories are experiencing a sharp decline.
100 ecommerce categories declined the most, by the results of Stackline research are:
Here are some strategies used by eCommerce business owners, to help their business stay afloat during the pandemic:
- If you are an online seller associated with one or two channels/platforms, now is the time to diversify into other channels and platforms to sell your products, such as Lyst for fashion, Houzz for home goods, or Newegg for electronics. Assess where your products may be in demand to reach a wider audience with a more specific need.
- Focus on customer service. With so much to deal with, it's easy to lose sight of the customer. Up your social media marketing and email marketing efforts. Make sure you interact with customers regularly, update them about your business, and try to adjust your tone of voice – nothing too aggressive or pushy will work well for your brand.
- Analyze your customers behavior changes to try to forecast the demand now. Still, you need to get it: now it could not be accurate, as the situation is still unstable and changing. Still, tracking customers behavior metrics will help you to plan your supply chain effectively.
- Start working on a list of alternate suppliers who may come in handy, especially if you currently source from a single supplier. Vet their capabilities, check the quality of their materials against your primary supplier (you can ask them to send you samples). Check their availability and flexibility to ensure there is consistency in fulfillment, pricing competitiveness, and of course, look for stability.
- Plan out your cash flow by looking at ways to increase your line of credit, which can help you if things start going south. Relook at your marketing and advertising spend to cut costs there and keep enough liquid reserves for your business. For example, there is no need to promote certain categories, which have higher demand now.
- Since the lifeline of an eCommerce business is logistics, leverage all the available logistics capacity. If required, change the mode of transport like pre-booking air/ rail capacity to tide through by working with your shipping partners.
- If you are an Amazon seller and selling non-essential items, look at partnering with a 3PL to continue business by fulfilling your orders via FBM, to keep costs and transit times low. Choose a reliable shipping partner who can support your business and guide you through difficult times such as these and stay operational.
The long term lessons are still panning out, as we have not yet seen where or how this is going to end. However, based on the huge impact it has had so far, we can still list out a few.
- It is crucial now not to depend on one region for the supply as it happened in the case of China. The better way would be to spread out with some backup suppliers locally or in a few other places. Local suppliers are a must though, considering that almost all commercial traffic has ground to a halt, whether air or by sea. Assess your risk management and business continuity plans and ensure a diverse supplier ecosystem to sustain.
- Revise your promotion strategy: clearly, offline promos won't work in such a situation, and there may be a need to cut expenses on paid ads. Put your attention to more long-term strategies, such as brand building, community building, and SEO. These require a lot of effort and won't give you immediate ROI as paid ads do, still these will support your business and make it more sustainable. As well as investment in visual content will. Check how investing in product photography helped a beauty brand founder increase sales up to 20% in 4 months.
- Plan out a strategy to handle an inevitable economic slowdown that will dictate a change in customer buying behavior. From logistics to freight fares, to people losing jobs or taking pay cuts, to constrained supply chains, each will impact your business. Try to be less dependent on international sales/supplies and become more local.
- Since the COVID-19 happened to spread by contact, creating new safety measures for personnel, working across all departments, including those in logistics and delivery, is a must. Frame policies around such situations for the future.
- Constant official communications regarding all measures taken, safety guidelines to follow, etc. is a must to keep the morale of your team high. It also ensures that the right communication is reaching people, busting panic and myths. This way, people are enabled and empowered to continue working.
- Work out the communication with your stakeholders like investors, suppliers, and shipping partners, as well as your internal team: to make sure that business operations will run as usual, even if you work remotely.
- Choose a reliable shipping partner who can support your business and guide you through difficult times such as these and stay operational.
While we stay anxious about a solution to reverse the effects of the virus, we're also hoping for businesses to run and continue as usual. If you decide to take immediate measures in diversifying your products and marketplace, or with fulfillment and warehousing, you can reach out to eShipper.
And at Squareshot, we’re always ready to help you with product photography. Check out our awesome gallery, to see how gorgeous our works look. Stay safe, and let's get through these times to become even stronger.