Why You Need Ecomm IQ To Survive The Next Phase In Retail

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One of my first retail ventures in my early 20s was as the proud owner of two video stores that were dispensing DVDs via vending machines. Don’t laugh –– I bought each store at pennies on the dollar in a bankruptcy deal, they were a steal! But it wasn’t easy. After several months of working seven days a week, my partner and I had taken the stores from a monthly operating loss to breaking even.?

At the time, it felt like a huge win. We were growing our monthly revenue at a steady rate, which meant progress. I thought it was a fabulous achievement until my business partner pointed out that assuming we continued our momentum, the margins were just never going to be worth the energy we were putting into the business. It was an important lesson — one I’ve found myself reflecting on as we experience an economic downturn.

The pandemic accelerated the adoption of ecommerce. In the US, online shopping jumped to 16% from 12% of retail sales in 2020. But as interest rates and inflation have increased, consumers are pulling back on spending. Now, we’re seeing a market correction, but stock prices are notoriously bad storytellers.

In other words: don’t pull your dollars out of your digital storefront. This ecommerce plateau we’re seeing is an opportunity to think long-term about your business. The best chapter of ecomm is still ahead of us for those clever enough to weather the storm. Here’s how to do it.?

External perspectives can bring internal clarity

As my DVD vending machine experience illustrates, as entrepreneurs, we can get so caught up in the vision and day-to-day operations that we forget about the long-term. It’s why sometimes the best perspectives can come from outside voices.

From Albert Einstein to Steve Jobs and Elon Musk: idealism is a common trait of entrepreneurs. Why? It’s simple, really. To some degree you have to drink your own Kool-Aid to persevere, and vision is a powerful motivator.

But where I’ve needed help is with the brass tacks of my business. As a counterbalance, now is the time to make sure you have a trusted economist or lawyer. Ask what they think, what risks, threats and opportunities they see and listen.

Lately, as my business has expanded and become more complicated, I’ve come to appreciate just how valuable a savvy Chief Financial Officer or accountant can be. These experts see your business through an entirely different lens. Their perspective can be extremely useful in keeping it on the rails.?

Forget everything you thought you knew about marketing online

As digital marketing gets more and more expensive and several EU countries move to enforce privacy with new legislation, it’s safe to say the days of precision advertising are over. As customers become harder for retailers to identify and connect with and advertising takes a dip in efficiency, e-tailers will have to get creative.?

This isn’t a bad thing. Retailers will have to work harder to delight their customers, but meaningful connection is a net positive for everyone involved. After all, retention offers far better ROI than acquisition –– only a 5% increase in customer retention can increase your company’s revenue by 25-95%.

One way retailers can accomplish this is by doubling down on customer service. Give?customers a reason to be loyal and they’ll do your marketing for you. Word of mouth is the best salesperson.

Take SF Bags, for instance. The retailer sells spectacular briefcases and accessories. Their advertising costs? Next to nothing. They’ve developed a cult following among Apple users and, as a DTC retailer, have a streamlined business model. The best part? Because they don’t have to worry about attracting customers, they can focus on delighting their existing shoppers and making the best possible product.?

This is only the beginning. As we refine and understand how technology can augment shoppers’ experiences, we can optimize online retail in ways it’s never been done before.?

Sharpen your ecomm IQ

From the panic of plunging stocks to the tunnel-vision of day-to-day operations, it’s easy to lose sight of the big picture, but it’s important to keep the long-view in mind in times of economic downturn.

Customer behavior has shifted dramatically just within a matter of years. For all the scary charts and headlines, it’s important to recognize there has never been a more widespread adoption of e-tail. In fact, the latest research found in India alone, there will be more online shoppers by 2025 than the population of the United States.

We also know retailers with a robust foundation in tech boost their performance? –– McKinsey found digital trailblazers generated 3.3 times the total shareholder return of those who lagged behind. Make no mistake, technology will be key to driving growth in this next phase of retail. Now, it’s critical to take the opportunity to hone your ecomm IQ.

The fusion of technology and commerce is still in its infancy, but already we’re seeing the possibilities. Take AR, for example. It’s now possible to see a piece of art or furniture within your space before you click “purchase.” Instead of the tedious process of trying on several pairs of glasses in-store, we can try them on virtually. This is only the beginning. As we refine and understand how technology can augment shoppers’ experiences, we can optimize online retail in ways it’s never been done before.?

Now that we have more people buying online than ever, clever businesses will double down on their virtual presence, ask themselves what’s working and what isn’t, and take e-shopping up a notch. In fact, those retailers that transform their ecomm from basic to brilliant will set themselves up for another boom.

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(Content from this post was originally featured in Forbes.)