How Online Retailers Can Survive and Thrive in a Recession

Online retailers are not immune to feeling the squeeze when the economy slows and brick and mortar businesses begin to feel the heat. All retailers are exposed consumers are cutting back on frills like eating out and discretionary spending. When dealing with inflation and other commodity price increases, retailers do find that it’s hard to pass through higher costs on consumers, since they have a laser like focus on price.

How can an retailer increase revenue in this environment? Price increases used to the standard tactic. Consider how the movie Avatar can break box office receipts when compared to movies released decades ago. One of the key inputs in that case is higher ticket prices. However, price increases are harder to do in a competitive retail environment where consumers can easily price compare. One of the methods to increase your prices is actually change the product size. Not only does this hide a price increase, but it makes it harder to price compare since there is not an identical item. The other option is to create a package that gathers three separate items and offers value when purchased as a kit. By changing the product offering, whether smaller packages or value packages, you can offer value, create a competitive advantage, and appeal to the value conscious consumer.

Another method that online retailers use to improve revenue and profitability during recessions is to raise prices on items that are not in the best-selling category. Consider this strategy in action at the supermarket. Vigilant shoppers buy staples regularly and really understand the price of the product so marketers considering a price increase on milk, cereal, bread, and cheese could risk losing the customer. But if you can raise the prices of the other items that they don’t buy regularly and therefore they do not have a fixed idea of the cost, you could tack on 3 to 4% without the consumers noticing the increase in the price. There is an opportunity to make some margin back on the the lower selling items.

A method to improve customer loyalty and improve your sales during a recession is to offer reliable information. It is a known fact that the more reliable information on a product page, the more informative it is to the consumer. Lack of information or wrong information can actually turn off the consumer and they can’t trust your website. It is your responsibility to provide accurate information so that consumers can use to assess the products. This unique content can also help with improved rankings on search engines.

You can increase revenues by offering coupons. Almost 11 million internet coupons were redeemed in 2008 according to Carolina Marketing Services. Google reported a significant increase in searches for coupons in 2009 and this is only going to increase as other retailers adopt the strategy.

Create a first impression. An online retailer can promote sale items and highly discount products near the front page of a website or other high traffic pages. The retailer can create an impression that there is real value at the retailer. The bottom line is to create a perception that the customers are getting a good deal shopping at your site.

Finally, you need to understand how shoppers are navigating through your store. Brick-and-mortar stores know that shoppers moving counterclockwise through the store spent two dollars more per trip than if they go in the opposite direction. So have you tested how customers virtually navigate your store and find out which method produces more revenue per visit? You need to become an expert in human behavior when it comes online retail by testing different tactics.

Implementing some of the tips mentioned here can help increase sales growth during the tough headwinds in the wake of the market meltdown.

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