Is your eCommerce business actually ready for growth?
By Tom Jenkins, Solutions Specialist at JH
Time and again across the eCommerce landscape, I see merchants saying their number one goal within their business is ‘more revenue’ – like it’s some kind of magical KPI that’s going to leapfrog them into the next stage of their success.
But can your business cope with more revenue?
It really is like they say – “more money, more problems”. Additional revenue isn’t a magic wand that suddenly fixes all the issues within your business – in fact, in many cases it magnifies those exact issues and puts them squarely (and immovably) into the path of your growth.
So what can you do about it?
The pandemic changed everything
Many merchants stumbled upon what I like to call ‘accidental revenue’ during the pandemic – additional customers and income that they didn’t necessarily go out and seek, but that effectively landed in their lap as consumer habits shifted.
As the possibilities of consumer spending changed dramatically, many consumers found that their usual habits of dining out, social events and even holidays were no longer an option – plus with nowhere to go and many services forced to close, spending on fashion, beauty services and even fuel all plummeted.
But consumers still needed to fill their time – and adjust to this new way of life – somehow, so multiple sectors experienced an unexpected rise in revenue, just by consumers choosing to spend their money differently. We all saw the panic-buying in supermarkets caused by collective concerns in supply chains – but it wasn’t just toilet roll, pasta, tinned tomatoes and bread flour that experienced a surge. DIY and interior brands saw an uptick as people kitted out new home offices and spruced up their surroundings. Art, craft and hobbies saw unprecedented growth, as people rediscovered old passions, or tried new ones for the first time, to keep them busy under stay-at-home orders. Home fitness supplies – like dumbbells, yoga mats and exercise bikes – were in high demand as gyms closed and outdoor exercise was limited to a single hour a day.
And products that we tended to usually purchase in-person were suddenly in demand online instead – everything from groceries and beauty products to furniture and gifting.
But this sudden shift in behaviour was so unprecedented, that many online retailers just weren’t prepared for what came their way.
Consumers were acting so fast, retailers couldn’t keep up. Every online grocery retailer experienced unprecedented demand for their timeslots, causing widespread anger and frustration for customers who felt like they were competing with their neighbors for their grocery deliveries. Supermarkets started limiting delivery dates, order sizes, and even putting limits on how many products you could buy – suddenly, the days of buying more than 4 tins of chopped tomatoes at a time seemed like a distant memory.
Other retailers’ revenue increased so dramatically that they were forced to re-evaluate their entire business plans – turning off PPC ads, extending delivery times, and long waits on back-ordered stock suddenly became the norm.
Notwithstanding the pressure that the pandemic put many merchants under, this overnight surge in market share should have been music to their ears – but for many retailers, it ended up frustrating their customers, stressing out their staff, and causing them to miss out on the additional revenue they needed for growth.
Where did it go wrong?
Across sectors, niches and markets, most retailers who faced blockers to this additional revenue had the same set of problems – they simply weren’t ready to cope with the growth.
Large traffic spikes can often end up taking sites down – and even when queueing systems are implemented, high demand can still cause customer frustration when they aren’t set up to scale. Plus, just-in-time stock levels to save warehouse space backfired in countless industries, causing customers to flit to competitor brands, or simply lose interest altogether by the time products were finally listed as ‘back in stock’.
And brands that didn’t have easy access to update their website missed out – customers needed to see COVID-19 updates on everything from delivery times to service availability, and the knock-on effect of this was unprecedented call centre wait times as they tried to get the answers to their questions.
It’s about more than your website (and it goes beyond the pandemic)
As a specialist eCommerce agency, you might be forgiven for thinking we’re just concerned with website builds here at JH – but that’s not the full story. There’s a lot more to growth plans than just website development, and being prepared to capture additional revenue goes deeper than new website launches.
A lot of the problems retailers faced over the last year were due to areas related to their eCommerce store, not directly on the site – issues with logistics, infrastructure, retention and over-reliance on manual processes.
It doesn’t stop at COVID – other issues you may face include:
- One of your marketing campaigns nails it, and brings in 1000s or 100,000s of new customers in a matter of days
- A celebrity or major influencer endorses one of your products, generating unprecedented demand
- A large publication features your brand and sends tons of traffic your way
- New health and safety laws are introduced, reducing your staffing capacity
- A key person announces they are leaving the business, putting you at risk of losing specialist knowledge
- A shift in the global trade market completely changes the way you do business
No matter your industry, specialism or market share – it benefits all areas of your business to be ready to react to changes that might come your way.
As the global market becomes more connected, could your current logistics model be causing you to miss out on demand from other markets? We saw a dramatic example of this around Brexit, which left many merchants scrambling to set up overseas warehouses, get their head around new tax laws, and try to figure out the new paperwork requirements. Some businesses cut off entire markets, unable to fulfil export or tax needs, and others put other plans on hold while they sourced overseas warehouses to get their global strategies back on track.
For our clients Crafter’s Companion, going global meant building standalone eCommerce websites to serve their US and EU customers. For other merchants, it might mean taking other steps – it’s all about what will bring the best ROI for your business.
- How can you facilitate and capture growth in other markets?
- Are you able to cope with increases in overseas demand?
- Can you easily capture payments in other currencies?
- Will you benefit from investing in overseas warehouses to offset import costs?
- Are your export and import processes adaptable to potential change – like we saw with Brexit and Europe?
- Do you have a good internal understanding of international taxation, or would your business benefit from working with an external partner?
- Will any changes in your current processes leave you with no other option but to put other business plans on hold?
Many merchants were also let down by their infrastructure during the pandemic. Whether it was warehouse capacity or management systems, planning for scalability and growth can’t hurt – and being able to move through your growth plan faster when needed gives you more flexibility in the long run.
- Can you move your warehouse from a 9-5 to a shift model to amp up flexibility during busy periods?
- What is the best approach to office, retail and warehousing space for your customers and staff going forward?
- Do the technologies you use fulfil your business needs, or are they creating more work for your staff?
- Are your current CRM and warehouse management systems set up to scale with you as you grow?
- Will any of your current systems create an artificial ceiling down the line, requiring you to rebuild processes and potentially miss out on revenue?
- How will you source and onboard additional staff – possibly remotely – to deal with spikes in revenue?
- Can you bring in more automation to your workflow to adapt as your task pipeline changes or expands?
Prioritising customer retention
For those merchants who did benefit from the ‘accidental revenue’ during the pandemic, it’s likely much of it came from brand new customers. Now’s the time to really invest your time and energy into customer retention strategies, to make sure those consumers become loyal to you and your brand.
- How will you keep customers coming back to your store when brick and mortar retail starts to open up again?
- How can you make consumers switch from being you customer out of necessity, into them being loyal to your brand because they want to be?
- What can you add to improve the customer experience overall – a loyalty scheme, faster shipping options, a community space?
For more guidance and advice on customer retention, check out our blog series on the topic.
Where do we go now?
It’s unlikely we’ll see a shift of quite the magnitude of what we’ve seen in the last year – at least, hopefully, not for a while – but building your growth strategy with a contingency plan in place to cope with unexpected success is useful in other areas, too.
It’s not all about coping with unexpected success – it’s more about building your strategy around being flexible, so you can ride the highs and manage the lows.
Being ready to adapt, flex and cope with unexpected changes is all down to looking two steps ahead – where will your business be in 6 months, 1 year, 5 years? What would you do if your company experienced 2 years’ growth in just 6 months? Can you even afford for that to happen?
The right plan for your business
We know very well that looking ahead isn’t always easy, especially when you’re in the thick of it – like in a global pandemic! I’ve provided advice to eCommerce businesses large and small across a slew of industries – helping them to build a plan that looks right for them, no matter what stage they are at in their journey.
If support to build a growth plan that will adapt and change with your business (as well as what’s happening in the market) sounds like something your organisation needs, definitely get in touch – I’d be happy to have a 1:1 chat with you to explore how the team at JH can help you develop your strategy for the months and years ahead of you.
And in the meantime – don’t forget to look ahead!