I have read (and occasionally written) many forward-thinking articles in my career, seen people predict up-and-coming digital trends (mostly wrong, but occasionally right) and spoken enthusiastically about the future of eCommerce. But I don’t think even the most accurate prognosticator could have foreseen where we’d find ourselves just three months into the new decade.
What have we seen so far?
No fewer than 75 percent of the emails I’ve received in the last seven days have contained the word “unprecedented”, or a variant thereof. However, it doesn’t seem to quite capture where we find ourselves right now – both in business and in our private lives. The feelings of uncertainty are universal, and where we’d typically look to our leaders and mentors for guidance, we are quickly realising that this is a situation which is, well… unprecedented.
There have been widespread stories of panic buying and empty shelves, but in actuality, supermarkets and the UK’s supply chain are currently doing a fantastic job of meeting a completely new challenge. The speed of events in the past couple of weeks has been so fast that it has demonstrated where bricks-and-mortar can still out-perform online: in real-time “I need it now” demand and, ironically, in the reassuring behaviour of herd mentality. Why are we buying toilet paper? No-one knows, but if I don’t do it now, I might not be able to get it when I need it in a few weeks’ time, so I’d better just pick up an extra roll or 48.
The new normal
With no set end for containment activities in sight and the prospect of stronger movement restrictions, if things continue to decline, people are starting to come to terms with the ‘new normal’ which might see us effectively housebound for the next 90 days.
Superficially, this has been a good thing for some online retailers. Several businesses I have spoken to have seen the best week of trading in their history. From DIY and painting supplies to arts and crafts, gaming and (home) office equipment, people are getting to grips with the reality that all their time will currently be spent at home.
On the opposite side of the spectrum, restaurants, cafes and shops selling non-essential items have been forced into temporary shutdown. As a result, many are turning to online solutions, apps and delivery services to counteract these losses where possible. This shift is likely to work well for brands who have a dedicated following on social media, or a core of internet-savvy clientele.
So, how does a business prepare itself for uncertainty or change?
Businesses need to be careful of how to best make use of this change in behaviour. There’s a fine line between looking out for your customers and taking advantage of them (or, at least, appearing to). Take, for example, Brew Dog’s announcement that they have switched production to hand sanitiser to help with shortages in the medical sector. You’d think an altruistic act like giving away vast amounts of free product would be universally celebrated. But there were quite a few people on Twitter and Facebook calling the activity a cynical marketing ploy and pointing out that the company didn’t need to brand the cleanser as heavily and recognisably as they did. Perhaps they were the same people celebrating a child’s ‘entrepreneurial spirit’ for selling sanitiser at school just a day before, but we may never know…
Scalability is key
The first thing which will become apparent is that scalability is key – whether that is scaling up or down. A business which has close control over its costs, and whose costs scale closely with the amount of business it does, will be able to withstand a sudden drop in demand more effectively than one who has fixed their costs on the basis of a longer-term strategic goal. This benefits small, well run enterprises much more than larger companies. Conversely, cash flow is also going to be a significant factor over the short-term (at least until the government is clear about the nature of its grants and loans offered to companies), and larger businesses generally find themselves in a better position in this regard.
For an online business, operating costs are closely related to automation. Many online companies start from very humble beginnings – hobbyists selling widgets online, people noticing a niche in the market or someone wanting to expose their boutique store to a wider audience. These tend to be very manual in their nature. As the company grows, there comes a point where manual process doesn’t scale at the same rate as the business, becoming a heavier cost through time, resource, or both.
Depending on that rate of change, and the investment in technology as a company grows, these costs might become prohibitive or they may go slightly unnoticed until something changes drastically. Either orders jump up to levels where manual processing can’t cope and the company starts losing customers, or they drop to a level where the cost to fulfil an order is far above what it should be and the company starts losing money. The situation many retailers find themselves in now has the potential to expose either of these scenarios.
So, if you know your costs aren’t scalable, and you lack the agility to make quick changes to rectify the situation, is all lost? No! There are still many businesses out there succeeding in spite of being too large to change or lacking in vast cash reserves. Incubator projects and dedicated microsites are a fantastic way to prove a concept or to identify opportunities with minimal time or cost outlays.
How can eCommerce help see you through?
Many eCommerce platforms can be set up quickly and with very little upfront investment if they are to be used at a small scale. The costs associated with running them will increase only when traffic (and ideally orders) increase as well. For businesses who have no (or very limited) online presence, now is the time to set something up – no matter how small – to see what the reception is.
Whilst logistics and fulfilment might initially need to be cobbled together, or wait entirely depending on the products you’re selling, preparing over the coming weeks of isolation may provide the opportunity to focus that ‘life as normal’ doesn’t always allow for.
The bottom line is that many businesses simply do not know what the next weeks and months may bring, but it is highly unlikely that things will return to normal. Change is not just inevitable, it is already here. There is no resisting the change being imposed on us by government, coronavirus and circumstance in general – it’s how your business responds to the change which will define your success in 2020 and beyond.
We’re fortunate enough to remain fully functional and provide our Magento clients with discussions and advice on what to do next. Right now, we’re all in the same boat and if you need some support or just a general chat about your business’s situation, we’re here to listen.