These are uncertain times for sellers. According to the most current predictions, the economy is continuing to deteriorate and will likely enter a recession by the end of this year. If these economic experts are right, now is the perfect opportunity for sellers to closely evaluate the internal operations of their Amazon businesses to see how recession-proof they are (or not).
The Amazon business model is not recession-proof as a whole. Too many issues will affect its general health and financial stability during a recession (inflation, broad-based cost rises, low customer confidence, etc.).
The looming recession (should it materialize) doesn’t have to spell doom for Amazon retailers. Sellers should take the time to learn about what takes place during a recession. Armed with this knowledge, they may develop cutting-edge and aggressive plans that drastically cut the risk of an ongoing recession on their companies.
The Effects of a Recession on Amazon Businesses
A recession may affect an Amazon business in several ways, including,
- In reaction to widespread economic uncertainty, customers are more likely to reduce their discretionary spending.
- Product makers will be forced to raise prices due to inflation and fixed expenses, which will pressure retailers to do the same, reducing profit margins.
- As specialized competition for the same viewers develops sharply, Amazon advertising prices rise, and profit margins are further squeezed.
- As businesses look for methods to replace lost revenue, the number of new Amazon sellers (competitors) is growing.
5 Ways to Make Your Amazon Business Recession-Proof
1. Invest in Marketing
Smart sellers up their Ad Spending to maintain a strong brand presence and to strengthen their relationship with their present consumers further when many firms lower their advertising expenses to save money during a recession. There will be fewer advertising efforts from specialized competitors due to others reducing back, boosting the likelihood that the vendor may increase their market share (often at a lower CPC). By making targeted marketing investments, sellers may grow their client base and reduce operational cost rises brought on by the recession.
2. Offer Incentives
In a downturn, sellers must be inventive and imaginative to boost sales. Offering product incentives encourages customers to purchase a seller’s goods even during difficult economic circumstances. Unless a consumer belongs to group 3 or 4 (the rich – don’t care), they will likely spend less during a recession (apart from on necessities), but they will also try to get the maximum purchasing power out of each dollar. When customers click the Buy button, they will experience less anxiety if they feel they are getting anything extra (added value) from the transaction.
Incentives are one of the simplest and least labor-intensive methods to improve the appeal of a seller’s goods, and they may be quite successful in increasing sales during a downturn. They draw in repeat clients and people searching for affordable substitutes or answers to their problems. Offering incentives like discounts, limited special pricing, “buy one, get one free,” a rewards program, and post-purchase bonuses encourage repeat business from current customers and is a tried-and-true strategy for attracting new clients.
To avoid changing customers’ expectations and their view of what constitutes “regular pricing,” sellers should be cautious about the quantity of special temporary price promotions and discounts they offer. When the economic recovery from the crisis is fully underway, those customers can vehemently oppose what they now perceive to be significant price rises as pricing points return to “normal.”
3. Prioritize Customer Service
An excellent way to ensure the long-term survival of an Amazon firm during a recession is to prioritize customer service. Client service is crucial for creating customer loyalty that results in repeat business, which is necessary for a company to thrive during a recession. Depending on the niche a seller has selected, acquiring new clients frequently costs more than retaining and growing a current customer base. In order to apply various techniques for resolving issues, sellers should concentrate on identifying the changes in the demands and priorities of their present clients brought on by the recession.
Excellent customer service begins by gaining critical insights into these areas, starting with Brand Analytics data, the Reviews and Questions sections of your listings, and any assistance you offer via Amazon’s compliance communication system. Surveys, website data, chat, and email are all excellent ways to gain in-depth knowledge about your consumers for non-Amazon customers. A key component of recession-proofing any Amazon firm is guaranteeing exceptional customer care and happiness. Additionally, it assists merchants in modifying their product choices and advertising to target the most receptive markets.
4. Reduce Excess Inventory
When demand is high, keeping extra stock on hand might aid vendors in avoiding stockouts. As a result, sellers require less inventory. To save money, sellers should calculate their minimal inventory requirements in relation to volume discounts and stick to those levels (e.g., FBA long-term storage fees).
5. Protect Your Supply Chain
Sellers should make their supply chains as efficient and adaptable as possible to quickly respond to the effects of rising fuel prices, shipping expenses, and storage fees, which can divert required funds from other crucial parts of the business, like PPC expenditures. To ensure that the most crucial items—those most in demand with customers—are given priority in case of a manufacturing bottleneck, they should let their suppliers know which products are more crucial to the company’s existence. To protect their inventory levels against unforeseen manufacturing delays or difficulties in international shipping operations, sellers can also look into alternate suppliers.
A recession will impact every Amazon seller’s business. Depending on the things they are selling, some will prosper. Others will struggle to maintain their afloat. No Amazon company must succumb to a recession (closing its doors forever). Businesses collapse when the economy is struggling because the owner doesn’t comprehend how the market changes.
The first step in recession-proofing an Amazon firm is for the owner to fight the impulse to sit back and wait to see what ‘really’ occurs during the slump. They assume control, aggressively seeking the information, insights, and data required to navigate the economic storm successfully.
With ex-Amazon experts as staff, SalesDuo has the expertise that no other firm has to increase businesses’ visibility and revenues. The team has tirelessly researched the top trends and strategies to recession-proof your e-commerce business. For more information, visit salesduo.com.