It's no secret that we're currently dealing with turbulent market conditions.
The IMF estimates that a third of the world may face a recession in 2023, which means it makes sense that typical E-commerce consumers may be tightening their belts at the moment.
But, while it's true that a retail downturn like this can be a real challenge for E-commerce retailers, it's important to remember some simple E-commerce optimization steps can be taken to not only survive, but thrive, in these conditions.
In fact, recessions often bring with them a unique set of opportunities, as businesses are forced to adapt and find new ways to succeed in a challenging environment. While it's not easy, there's no reason to give up just yet.
Below, we’ll run through what we mean by turbulent markets, some past examples of similar times, and how you can take advantage of these conditions with E-commerce optimization.
Turbulent markets refer to economic conditions characterized by high levels of uncertainty and unpredictability.
In the context of E-commerce this means fluctuations in consumer spending, changes in customer preferences and behaviors, as well as shifts in market competition. This dynamic environment creates challenges for E-commerce businesses, as you need to be able to rapidly adapt to these changes in order to remain successful.
When Deloitte studied the impacts on the retail sector from two recent economic downturns, the 2001 and 2008 recessions, the data showed some expected outcomes. These included decreases in revenue, salaries, margin pressures, and increases in bankruptcies.
However, what was surprising was the extent to which the retail industry's structural changes seemed to accelerate during these economic retail downturns. This left many companies that did not adapt to these changes in a more vulnerable position when the market recovered. However, it also paved the way for more nimble and foresighted E-commerce companies to optimize their business.
If we look back at the financial crisis in 2008, soon after the crash there was a trend of smaller, more agile E-commerce retailers gaining market share from larger, established retailers.
These new entrants came in various forms, including digitally native companies, vertically integrated startups, companies entering new markets, and companies optimizing their direct-to-consumer efforts.
The financial crisis was a turning point for these newer entrants. Many older retailers were unable to invest in ways that would allow them to compete with these new competitors, which led to a shift in consumer preferences.
Racing legend Ayrton Senna said it well:
"You cannot overtake 15 cars when it's sunny...but you can when it's raining."
In short, there may be an advantage during a recession for E-commerce companies willing to take it.
If you’re reading this and know you’re ready to make some changes to harness this economic downturn, but you’re not sure how to start, we’ve got you covered.
At Depict we have a deep understanding of trends and changes in fashion E-commerce, so can give you some pointers towards the most important places to get started and overtake the competition.
Wasted time is wasted money. In the modern-day turbulent fashion E-commerce market, there’s no reason for time to be spent on manually assigning product recommendations, or crafting every block of your PLPs.
Instead, automating this is essential. A personalization engine like Depict can quickly, efficiently, and effectively personalize your site for each visitor, in a way that increases the revenue and site experience. This leaves time for your team to work on tasks that matter and brainstorms more ways to improve your business.
As Kajsa Hjlem, E-Commerce Manager at Gina Tricot, put it:
“Depict is working on its own. We don’t need to do anything. We really appreciate that it’s working that well without any input from us.”
Overstocking and understocking are two of the main hardships fashion E-commerce retailers are facing during this market turbulence. Having too much stock ultimately leads to discount, which we all know has highly detrimental impacts on E-commerce profitability. And understocking your items means you’re losing out on potential profits, too.
How do you do this? Well, having an effective product recommendation tool is a great way to do this. Depict’s visual-AI-led product recommendation tool, for example, understands the patterns and products a customer is most likely to add to the basket and buy, then recommends these. This helps move stock sensibly, ensuring you’re recommending the right things to the right people.
Having a product search tool that works is also essential to avoiding overstock. If you’ve got the exact outfit a customer wants, but they can’t find it, that product simply won’t sell. A product search that understands fashion taxonomy and smartly navigates typos, such as is inbuilt into the Depict product, will make sure a customer never leaves empty-handed.
Acquiring new customers is expensive, so to make this cost worthwhile it is essential to boost each visitor’s lifetime value.
The best way to do this is to offer a personalized experience, that they won’t get anywhere else. Showing customers that you fully understand their style and what they want to buy, will keep them coming back time and time again.
A lightning-fast, responsive user experience is also important. And, impressive search functionality and eye-catching PLPs as mentioned above will keep you top of mind when a customer wants to shop again.
The faster you start making these changes, the faster you’ll start seeing results. Depict can help kickstart your E-commerce optimization journey, and find a plan that suits your needs.
Get in touch today and we can show you just how our powerful fashion-focused personalization engine can optimize your E-commerce performance.