The uncertainty of the economic landscape over the last three years has affected both brick-and-mortar and ecommerce businesses. With a higher-than-usual unemployment rate and the rise of inflation and interest rates, consumer spending across the board has become much more conservative and shopping priorities have shifted.
While ecommerce businesses have certainly faced their own common and unique challenges since the onset of the pandemic in 2020, 2023 has proven, and is continuing to prove, that there are now many opportunities for ecommerce businesses to thrive.
According to J.P. Morgan, a full-blown recession seems to be “off the table” this year due to a strong economic momentum. This is great news, but leads us to wonder how we can use this time of strength to prepare for potential future scenarios of weakness.
Read on to discover the positive points coming from the current state of the economy, marketing trends, and how you, as an ecommerce business, can use these trends to position yourself for success.
The Economic Landscape in 2023
While business investments were slow to begin the year, there have been significant indications as of August 2023 that the economy has turned, and is turning the corner. J.P. Morgan shares positive areas of growth, including:
- Consumer spending has been resilient
- Inflation is gradually improving
- There’s a better balance between supply and demand for labor and a lower quit rate from 2022
- Supply chain pressures have dissipated, lowering shipping costs and delivery times
Unfortunately, these positives also come with negatives, such as:
- Slower loan growth from regional banks
- Commercial real estate challenges due to a drop in capital markets activity
- The restart of student loan payments
- Mounted pressure on corporate profit margins led to a slow in hiring and an increase in unemployment
Even though the economic landscape is constantly evolving and it’s beneficial to keep the above-mentioned points in mind, a positive sign is that ecommerce business continues to grow. ROI Revolution shares that “online sales have increased tremendously since the onset of the pandemic.”
Why? In short, because consumers prioritize convenience, safety and competitive pricing. Since supply chain issues have greatly softened since 2020, it’s now easier than ever for consumers to compare costs from different e-tailers versus in-store prices – and it’s even easier for e-tailers to be competitive about those prices. In fact, ecommerce sales are steadily growing, with an estimated 20.8% of retail purchases expected to take place online in 2023 (Forbes).
The improvement of supply chain issues is a direct contributor to ecommerce businesses now being able to stay competitive through different channels. Let’s dive deeper into those, next.
Six Ways Ecommerce Businesses Can Stay Ahead Now, and During a Recession
Today, ecommerce businesses are focusing heavily on cost-effective logistics, enhanced customer experiences and innovative marketing strategies in order to draw a competitive advantage. Here are six specific ways to achieve success with your ecommerce business in both strong and weak economic environments.
1. Social Media Shopping
According to Forbes, “The integration of shopping features within social media platforms, such as Instagram’s Checkout and Facebook’s Marketplace, allows users to purchase products without ever leaving the platform. This seamless integration is expected to drive social commerce growth in 2023 and beyond.” By making shopping readily available on platforms where users spend most of their time, your ecommerce strategy is sure to find success.
2. Artificial Intelligence (AI) and Virtual Reality (VR)
Did you know that AI can collect data on customers’ shopping behaviors? Sprout Social shares this, along with how bots are evolving to provide more effective customer service offerings and products based on moods and preferences. AI data can help you learn more about your customer base, personalize the shopping experience and target ads to every individual.
And while the process hasn’t been perfected yet, the goal of VR technology is to allow customers to virtually try on clothing, visualize how to design their homes and provide an overall enhanced and interactive shopping experience without the shopper ever having to leave home.
3. Subscription Services
Why are subscription-based models so effective? Not only do they provide convenience and personally curated items, but they also provide great cost value. From beauty products to food, other perishables, pet toys and even clothing, subscription models help retain loyal customers and compete directly against rising inflation rates of in-store consumer goods.
4. Sustainable, Ethical Sourcing and Packaging
As the world evolves, so do consumer mindsets – and these mindsets value sustainability more and more. Reducing your carbon footprint is important to purchasing decisions, along with more sustainable packaging (saying goodbye to plastic) and sourcing.
5. Mobile and Livestream Shopping
The world is run by influencers and creators, with more brands and personalities beginning to interact with their followers in real-time. According to Sprout Social’s Q1 2023 Sprout Pulse survey, “Some 49% of consumers plan on watching live streams in 2023,” and therefore can shop as those live streams take place.
Mobile shopping also aids in following purchasing activities. Now, it’s about more than a consumer using their phone to shop, but that they can also engage with customer service representatives in apps and interactive ads.
6. Partnering With a Trusted 3PL Warehousing and Fulfillment Partner
At G&B Fulfillment, our experts work closely with ecommerce retailers to ensure a streamlined process from warehouse to consumer, allowing more time for you to focus on your business instead of worrying about distribution. Partnering with us will help your fast-growing businesses overcome economic and market challenges while maintaining and increasing your revenue stream.
With offerings like inventory management, automated/ad hoc reporting, parcel freight management and other helpful services, your ecommerce business can thrive today and at the onset of any potential recession down the line.
Have questions? We’re happy to get you on the trajectory to success. Talk to one of our experts today to get started.