TLDR: In this post, Paul ‘Dilge’ Dilger of Volo Commerce suggests things you can do right now, with what you have in stock, to reduce the risk of pre-election fever hurting your ecommerce sales.
With the UK government’s announcement of a general election on the 4th July, we’ve entered another of those six-week limbo periods, the calm before the Thursday storm. The uncertainty may continue if the result is not clear-cut. For ecommerce sellers, however, this could be six or more crucial weeks of summer sales where we need to keep some kind of momentum going during a fragile economic recovery and a challenging ecommerce climate.
Half a lifetime ago – it seems – we speculated on how ecommerce might fare in the immediate wake of the Brexit referendum in 2016. We did the same again in early 2020, after the 2019 general election, 12 months before Brexit became real and at the very beginning of a pandemic which turned business upside down. Different times, different timeframes, but nonetheless a period of impending uncertainty that left us wondering how best to steer the boat.
What were our recommendations back then? In 2016 we suggested 4 things:
- Hedge your currency bets
- Watch your cash flow
- Look at drop-shipping
- Look at outsourcing
In 2020, one month before lockdown, we advised the following:
- Watch costs like a hawk
- Look at profitability at a product level
- Reduce your cash conversion cycle
- Really understand your performance
All pretty sensible, and arguably general stuff, then. How does our advice change for the here and now? For a high-level idea of what to expect from a new administration, here’s a good place to start. But what can you do right now, for a really solid summer, or to prepare for a really solid Q4?
It depends, of course, on what you sell, and when your quiet lulls and busy peaks generally occur. Are you making hay while the sun shines or getting your Christmas ducks (or turkeys…) in a row?
We don’t think it will be business as usual in June. Consumers have a natural tendency to ease off discretionary purchases during periods of uncertainty, to wait and see. This means we have to work even harder to secure their purchases, which probably signals nothing new in your behaviour compared with the last two-and-a-half years.
June and July are just around the corner. This means we’re not suggesting any strategic decisions like expanding to a new marketplace or negotiating better credit or carrier terms, because there simply isn’t time. By necessity our advice has to be more tactical, so that you can adjust things right now rather than waiting until it’s too late.
The first thing we suggest you do, if you’re reading this as an owner or manager, is to get off the warehouse or office floor. It’s time to spend a little time on the business, not in the business, and that means looking at the numbers. What is the data telling you? Are you missing anything, or exposed anywhere? Here are five critical areas you need to be close to.
Monitor performance as it happens
The more uncertain the times, the more frequently you need to be watching your performance. If you have a ‘dashboard’ view of your KPIs, look at them at least every day. If you can set up a daily email alert with your key metrics, this will remind you to pay attention. Set weekly targets and daily targets for sales, and monitor how you’re stacking up. Are you up or down? Can you see why? What can you do about it, now? What’s happening with the weather day-to-day, is June continuing to be changeable? How will it affect demand for your products and what can you do to take advantage of your insight and agility, either to increase sales or limit sluggishness?
Get dynamic with stock
Having a picture of how your stock is moving is really important for your cash flow. Which products are slow sellers or no sellers? Can you do deals to get them moving, to free up some cash? Can you bundle them up to create new SKUs and compelling offers? What about your fast moving items? How fast are they moving and when do you need to re-order given current sales rates and re-order lead times? What items are selling together that you don’t currently offer as a pair or package? What’s happening with the competition for your products? Are you the only provider with stock right now, for example? Answers to these question help with your dynamic pricing approach.
Focus on margin
In a similar vein, understanding exactly how much money you’re making allows you to keep the business in a good place. What kind of gross margins are your different products making from day to day? What does the order margin look like when you layer on the various costs of getting the item or items to your buyers? If you can get this down to the individual order level, so much the better, as you can cut out the loss-making orders quickly and focus on the higher margin ones. Then, if you can layer on your fixed costs and calculate an average amount per order, you have a good idea of net profit.
Think like your buyer
Yes, this is another perennial one, but it’s easy to lose sight of it when you’re focused on your company’s operations. You’re a buyer too, and you may be like the typical buyer of your own products, especially if you’re in the various lifestyle categories. How are you feeling about June? What purchases of products you sell would you yourself try and avoid during this uncertain period, and why? What would make you change your mind? Different value messaging, better pricing, bundles, more delivery options, better service? Ask your buyers, ask your staff. You might get an insight or two back that you hadn’t thought of.
Keep doing the obvious stuff
Again, you might see these as ‘d’oh’ recommendations, but they’re worth reinforcing. Keep checking your listings, especially of your popular products, and improving them where you can. Communicate clearly and often, on your website, via email and social media, so people know how to contact you, what your values are, where their orders are and how they organise their returns. Keep tweaking your marketing efforts to see what’s working well and quickly improve or stop what’s working less well. Make sure you have well placed customer testimonials and badges to maintain those trust and confidence levels.
Finally, project that aura of positivity and calm, which your staff will pick up on. They need to remember that amidst turbulence and change there is always opportunity.
We’ve purposely not talked about technology and automation, which tend to have slightly longer lead times. Contact us to discuss how you can scale your effort and your return.
