The new normal involves a long-term shift to e-commerce as shoppers’ behaviors have drastically changed. That means online sellers are facing a lucrative opportunity to permanently disrupt the $5 trillion U.S. retail industry.
According to Deal Aid, 90% of consumers say their online shopping has increased since the pandemic began. Here are three important practices for e-commerce success in this new business landscape.
Nurture Your Top Customers
The “80/20” rule says that 80% of sales are generated from only 20% of customers. You need to nurture key relationships in order to obtain recurring orders. At a time when new customers are shifting to online shopping, it’s even more important to evaluate who the top spenders are and make sure their shopping experience is top-notch.
Considering that it can cost five times more to attract new customers versus retaining the existing ones, catering to your top customers makes even more sense.
This strategy leads to a win-win scenario – increasing revenue through repeat business and keeping your top customers engaged and happy.
Manage And Forecast Cash Flow
Small businesses have notoriously high failure rates – half shudder within five years. In the food industry, one in six restaurants have closed permanently because of the pandemic. And the World Bank estimates low economic growth worldwide of 1.9% until 2029 compared to 2.5% growth last decade.
The pandemic makes forecasting and managing cash a critical success factor. Businesses need extra funds as a buffer when there’s weak demand, and they need to know when there’s enough money to reinvest in the business or take out in the form of owner distribution.
E-commerce businesses can undergo high growth and still go out of business due to inability to pay bills. Problems can also arise when an optimistic entrepreneur orders too much inventory with slow sell-through, as this can significantly deplete a startup’s cash balance.
Managing cash flow is about timing, accurate budgeting, foresight, and anticipating money crunches. It helps to have a line of credit available, as well as alternative source of funds in case of an emergency. An online retailer needs to accurately forecast revenue and expenses which means the business must convert receivables into cash, as well as possess enough capital to pay big expenses and order inventory. Cash management enables entrepreneurs to grow their business.
Ensure Smooth Deliveries
According to a September 2020 survey by Manhattan Associates, 80% of shoppers expect to increase buy online and pickup in store (BOPIS) orders and curbside pickups. Moreover, 90% of shoppers prefer home delivery over a store visit in the near future.
Problem-free shipping is a critical success factor if a seller wants repeat orders from customers. 84% of shoppers are unlikely to shop with a brand again after a poor delivery experience, according to 2020 research by Retail TouchPoints. And 98% of shoppers say that delivery impacts their brand loyalty. Thanks to efficient fulfillment by giants like Amazon and Walmart, consumers have elevated their expectations of all retailers.
Unfortunately, not all retailers are skilled at handling operations, logistics, and shipping, efficiently. And with more and more delivery delays due to covid, businesses should focus on quicker preparation and fulfillment turnaround times to make up for some of the additional time that courier companies may need, in an effort to minimize the wait for consumers.
There are also a growing number of fulfillment service providers that minimize the need for an operator to personally manage delivery so he/she can focus on marketing and sales. Drop-shipping, packaging and forwarding services help retailers ensure smooth delivery to demanding customers.
Online sellers can take advantage of the seismic shift towards e-commerce. To succeed, they must develop long-term relationships with customers, forecast and manage cash, and ensure smooth and speedy delivery to buyers.