While nothing has been declared yet, the economic impact of an impending recession is hard to argue with. Inflation is the highest it has been in the last 40 years, and 87% of shoppers surveyed by BCG state they’re concerned about recent price increases to household essentials. By contrast, only 18% of households have reported an increased income over the past six months.
How do these trends impact e-Commerce? With more money going towards household essentials, people are generally less likely to browse for their favorite brands in retail, technology, and luxury items in the months to come. Here’s how you can weather the storm and continue to drive growth for your e-Commerce business during a recession.
What happens to e-Commerce during a recession?
This recession may be unlike any one before it. Coming off of a global pandemic, people are spending based on pent-up demand from not being able to do things they were used to doing. 40% of people say they are ready to spend on travel to make up for lost time, which means they’ll be looking to spend less in other categories.
Even still, experts at the IMF say that any upcoming recession in 2023 will be short and shallow. E-Commerce companies should focus on generating ways to subsist and stay afloat during the dip, by delivering added value to customers.
How e-Commerce can drive growth during a recession:
Focus on collecting and acting on first-party data:
In order to enable personalized experiences at scale, collecting and acting on first-party data is imperative. Driving conversions and bolstering customer loyalty depends on your ability to intuit what your customer needs and address their concerns before they become complaints—or worse, a reason to abandon your brand for a competitor.
Collecting first-party data and attaching it to your business goals ensures that your e-Commerce brand stays nimble and customer-centric throughout a recession. Even if customers don’t buy right away, collecting this data on interaction and engagement can set you up for success when consumers feel more comfortable spending again.
Understand your ideal customer and increase lifetime value:
The right segment of customers can end up driving the majority of your revenue. In order to get to that point of loyalty, you must understand your customer journey by using data to become an expert on pain points, attribution, and purchase behavior. Once you’ve hammered out the details of your ideal customer, you can increase the rate of retention with timely recommendations and useful content that speaks to your customer’s needs.
If you are specific with your targeting and incentivize repeat purchases with predictive personalization, your customers’ lifetime value will increase. Then, you’ll be able to offset any losses to e-Commerce during a recession with increased average total value of orders and extra customer loyalty.
Improve the omnichannel experience:
Having visibility into the entire customer journey, from engagement to purchase, can enable meaningful improvements to your CX. With first-party data from your website, as well as engagement data from other channels like email, SMS, and social, you can better understand the customer journey, reduce any friction in your audience’s discovery and decision-making process, and increase your conversion rate with smart optimizations such as recommended products or personalized content.
E-Commerce can continue to thrive during a recession if brands prioritize understanding their customers and making data-driven decisions while also personalizing experiences at intent-rich moments. Whether that means providing personalized content on your homepage to educate new visitors, or designing lucrative bundles and coupons to incentivize purchases, you’ll find that data and personalization are the key to navigating new economic terrain in 2023.