Looking back on 2020, one of the brighter spots has been the growth of ecommerce. For many, being able to sell goods and services effectively online has been the difference between survival and closure.
And while Michael Healey, president of Yeoman Technology Group, foresees this remaining the case over the final months of the year, he cautioned ecommerce decision-makers not to be complacent during a Business Forward presentation earlier this month as part of the Oracle NetSuite Now On Air digital conference(opens in new tab).
Healey assured attendees that ecommerce will continue to show year-over-year improvement regardless of what happens, and that if COVID-19 is still a concern, demand will be that much higher. He cautioned companies to be prepared for anything.
“If we get ahead of the virus, when we’re looking at March and April of next year your ecommerce sales will absolutely slow,” he said. “It’s a good opportunity to reset yourselves.”
Will Ecommerce Growth Last?
One thing Healey recommended companies do is get clear on whether the ecommerce growth they’re experiencing is temporary or permanent.
For instance, Amazon has slowed its Google ad spending during the pandemic, in large part because it’s struggled to keep up with demand and has run into shipping issues. Smaller sellers have been able to take advantage of Amazon’s struggle with demand, which has also plagued other ecommerce powerhouses, but Healey warned this is a temporary situation.
In other words: Don’t think that your ecommerce sales will hold until brick-and-mortar retail stores reopen. Eventually, Amazon and others will resume their normal marketing, and that opportunity will dry up.
Generating more online sales from existing customers has been another temporary source of ecommerce growth. Those sales are likely to return to normal levels when stores reopen, whereas new customers can mean additional ongoing sales.
“If you can attract more people to your website that have never been there before, that to me is the big [chance to maintain growth],” Healey said.
Pandemic-Related Challenges Abound
One thing companies have learned over the past several months is how to contend with ecommerce surges, a lesson that should serve them well heading into the holiday shopping season. But other challenges have emerged during the pandemic, including last-mile delivery issues and unexpected cost increases, and Healey recommended companies tackle these sooner rather than later.
On shipping front, Healey noted that delivery performance has taken a noticeable hit during the pandemic. As a result, while online retailers could rely on either FedEx or UPS to handle all of their shipping needs last year, it might be advisable to have arrangements with as many logistics partners as possible now.
“You’ve got to be able to spread this risk, and at the same time, you have to be able to avoid the known issues,” he said, referring to the clear evidence that last-mile issues have resulted in deliveries that normally arrive in three or four days now requiring a week or two.
Healey recommended mapping out customer locations and delivery schedules, and considering all options.
Meanwhile, unexpected costs are creeping into the equation at nearly every stage. Warehouses are running at 15% to 20% below capacity due to staffing shortages, and significant recruiting and hiring challenges are making it impossible to remedy this. Air and ocean shipping rates have sky rocketed, and supply chain delays have emerged for all sorts of reasons, introducing a variety of additional expenses.
Healey said all of these cost-related challenges have companies wondering if they should raise shipping charges.
“That’s the million-dollar question,” he said.
Atypical Strategies for Atypical Times
Even marketing must be rethought, Healey said. He mentioned a major retail company that decided to remove a 10% discount from half of its brand-name items in August. The brands that still had the discount saw a subsequent 4.4% increase in sales, while the brands with the discount removed saw a 1.4% increase. In other words, the boost in revenue wasn’t sufficient to justify the discount.
While such maneuvers might not normally prove effective, companies must consider atypical strategies during these atypical times.
“If you’re in that scenario where costs are high, capacity’s limited and you’ve got surging demand, you’ve got the hard decision of what am I going to do with my prices?” said Healey. “You should be testing this now.”
In fact, it’s that mentality — the one that says “let’s try anything that works” — that’s separating the companies that are thriving during the pandemic from those that are wilting.
In other words, when it comes to ecommerce as 2021 approaches, Healey’s message is clear: Leave no stone unturned.
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