From Sticky Prices to Strategic Solutions: Thriving in a High-Cost Environment

Welcome back to The Gateway to Growth!

Last month, we delved into the complexities of consumer financing, emphasizing Buy Now, Pay Later (BNPL) as a pivotal tool for merchants to bypass lending limitations. BNPL solutions undoubtedly offer significant advantages to businesses. However, integrating this technology requires resources, most often in the form of time and attention– regardless of how streamlined the process may be. In the corporate resource hierarchy, consumer financing often takes a backseat to competing priorities, particularly as businesses grapple with escalating operating costs.?

Identifying the Problem

The current economic landscape has seen a significant price surge, largely catalyzed by the market disruption that accompanied COVID-19. In June of 2020, inflation peaked to a staggering 9.1%-- a level not witnessed since the 2008 financial crisis. And while inflation has slowly but surely begun to regulate, the pressure on businesses remains relentless, with household names like Bed Bath & Beyond facing the harsh reality of rising costs.

As businesses fight to navigate economic fluctuations, the challenge lies in striking a balance between profitability and consumer affordability. The reality is that once prices are raised, they tend to stick, even as inflation moderates– a concept coined by economists as “price stickiness” or “inflation inertia.”

In a B2B transaction, these dynamics become even more intricate, as price hikes can trigger ripple effects throughout the supply chain- creating a cycle of elevated prices that persists even as the factors driving inflation begin to ease. For businesses, this translates into higher operating costs, presenting a distinct challenge to existing revenue streams.

Common Solutions

Historically, companies have tackled these challenges through one of two primary strategies, or a blend of both: (1) raising their own prices or (2) cutting operational costs. However, each solution comes with its own set of drawbacks.?

Increasing Prices

Raising pricing offers a quick fix to offset rising operating costs and secure profit margins, especially during times of inflation when customers have limited bargaining power. However, as inflation recedes and customers regain some of that purchasing power, businesses must avoid overpricing. Failing to align prices with customer expectations may ultimately lead to a net loss in sales, outweighing any potential gains in profit margin from a price increase.?

Cutting Costs

In response to rising operating costs, some businesses choose to turn inward, seeking opportunities to streamline processes and trim expenses. This approach not only alleviates the need for drastic price hikes but also fosters long-term sustainability and competitiveness. However, each cost-saving measure carries inherent risk to market share and quality. If cutting costs is taken to an extreme, the reputation of the brand may be compromised.

An Alternative Path

In our last newsletter, Ditching Limits, Driving Growth, we highlighted the impact of inflation on lenders, leading to tighter borrowing restrictions and increased borrowing costs. It's now more critical than ever to choose the right financing partner to navigate this landscape effectively. Unfortunately, not all financing partners are equally equipped to handle these challenges, and aligning with the wrong one could jeopardize your consumer financing strategies.?

Most trends suggest that companies using services like Klarna and Bread may be witnessing a decline in sales for high-ticket items. The increased cost of borrowing prompts these providers to heighten their lending criteria, potentially turning customers away from a sale. Unfortunately, this pattern prevails as merchants become limited in the lenders they can pick and inadvertently get shackled to suboptimal financing partners. These partnerships can significantly hamper their success and even lead to business failures.?

Consumer Financing Without the Hassle

WeGetFinancing provides a solution that not only increases sales without stretching resources or deterring customers, but also offers financing that minimizes lender limitations. Take a look at some of the features that might help your business not only weather the storm of rising costs, but also thrive in a dynamic marketplace:

• Extensive lender network: WeGetFinancing comes with a suite of lenders, which enables us to maximize the offers presented to customers.
• Performance-based pricing model: Our success is tied to yours, we thrive only as much as the business we bring to you. This ensures that our services complement rather than compete with your existing revenue streams.
• Price-conscious financing: In an era where consumers are hyper-aware of pricing, it's crucial to offer flexible payment options that align with their budgetary constraints. Our financing solutions cater to this need, offering patrons the flexibility they require to make purchases confidently.
• Ease of integration: Our platform is designed for simplicity, offering a hassle-free integration process that is more straightforward than traditional cost-cutting measures. With minimal effort, you can implement our plug-in financing solution and streamline your checkout process, enhancing customer satisfaction and boosting conversions.

As we conclude this month's newsletter, let's keep in mind that conventional solutions aren't always the most effective. If your business strives to navigate the challenges of rising costs, consider WeGetFinancing as a simple yet powerful tool to boost sales.

We hope to have you back with us next month! In the meantime, we encourage you to continuously seek new avenues to drive your business forward.?