The Air in the Bubble: Overcoming Inflation Woes
Inflation is a topic on the mind of almost everyone, from consumers to merchants, government agencies to economists. Its impact on high-level macroeconomic markers is significant, and to families struggling to keep up with it while navigating toward a post-pandemic world, it can be a source of great stress.
For ecommerce merchants attempting to salvage a steady revenue stream, inflation is a bump in the road that seems to be worsening by the day. Finding that workable balance between meeting your obligations and realizing a decent profit, and avoid the Big Bleed that happens when skyrocketing cost-of-living issues hamper customer choice, can be daunting.
And it’s not in your imagination, nor is it a small point. From year to year March 2021 to March 2022, prices overall rose 10 percent globally. A gargantuan figure.
There are some workarounds you might try, and each is specific to a different industry, product mix, and business size. Candidly, the last thing most merchants want to do is raise prices. That may or may not be an option, but read on for some alternatives.
The obvious first steps:
Negotiate with your sources/vendors; or consider less spendy inventory.
Bundle items, combining similar products that work together and come closer to reflecting a lower wholesale cost.
Retain your best-selling products while sneaking in some lower-cost items, hoping to capitalize on loyal consumer history. This likely will require a careful examination of sales patterns.
Attach unavoidable price increases with incentives, such as a discount on future purchases or a bonus item thrown in.
The less obvious next steps:
Look extra closely at productivity. You may discover areas to be cut, temporarily minimized, or reworked altogether.
Discontinue generous offerings such as free shipping, while still keeping delivery below your cost.
Consider in-house marketing and communications to ax out all external ad costs.
Shift your product line dramatically if you think it could work for you. This requires a back-to-basics evaluation of what is do-able for you and tolerable to your client base.
Other possibilities may yield a surprisingly exuberant response from clients, including addressing the inflation issue head on with frank yet humorous language making mention of current conditions. Remember that they affect virtually all merchants, so you won’t need to create a tailored mea culpa. As you educate your customers on world and national geopolitical factors, supply chain crises, and other elements of changing commerce, they may invest more trust in you than they previously showed.
Above all, be honest. Don’t promise a quick return to affordability, but resist an open-ended, gloomy forecast. Assure them that you are not capitalizing on a phenomenon and attempting to line your pockets. Tell them you hope to keep them in the buying family and will adjust your pricing as it becomes feasible.