How to Make Your Ecommerce Brand Recession-Proof

In 2022, inflation in the United States hit a 40-year high, fears of a global recession are rampant, and ecommerce brands, already facing difficult headwinds, could be hit even harder by an economic slowdown. 

Even Amazon, long seen as a bellwether for the industry, has seen sluggish performance after its surge during the COVID-19 pandemic.

Economic downturns, though, don’t have to be all doom and gloom. Several ecommerce brands are able to survive—and thrive—during a recession. 

What is a recession?

‘Recession’ may be an inescapable buzzword right now, but knowing what it means is your first step to tackling any slowdowns your business comes across.

According to economists, a recession is simply when the economy stops growing and starts to shrink.

This shrinking is usually measured by the Gross Domestic Product (GDP), the value of all goods and services produced in a country. If GDP starts to fall, we have a recession.

In a severe recession that can last several months, though, more tangible metrics also start to decrease.

For example, recessions are often marked by lower incomes, employment, production, and, ultimately, sales. 

How do consumers react to these changes?

The prevailing consumer behavior usually involves saving money and consuming less. Interest rates drop as people are less likely to borrow money.

Many small business owners—especially ones from ecommerce brands and startups—view recessions with fear. An economic downturn can certainly make business tougher, but it doesn’t have to be a death blow. 

Here are some ways your online business can ride out an economic slowdown.

7 Ways to Survive an Economic Downturn

1. Automate routine tasks

Any company that does business online knows how powerful technology can be. Adopting automation software can liberate your workforce, simplify everyday activities, and boost productivity.

In a recession, though, automation’s greatest benefits are that it simultaneously lowers costs while driving revenue.

According to McKinsey, about half of the activities people are getting paid to do can be automated with technology that’s already on the market. Globally, this equates to trillions of dollars. 

This doesn’t mean automation eliminates jobs—it enhances them.

In ecommerce, automation streamlines costs and lets employees focus on more meaningful work.

For example, let’s take a look at customer service automation. 

Automating simple tasks, like answering customer FAQs, for support teams lets 77% of agents focus on more specialized requests.

Chatbots are especially effective customer service automation tools. Microsoft found chatbots successfully handle 79% of all customer issues.

What about increasing revenue?

Automation software can give customers personalized product recommendations, creating more chances to sell without any agent involvement. According to HubSpot, automated interactions like these make 90% of customers more likely to buy more and 93% of customers more likely to be repeat shoppers.

2. Streamline your tech stack   

Taking advantage of software is a step in the right direction, but you don’t want to overdo it. Many ecommerce tools perform similar tasks, and you may notice more than a few redundancies in your tech stack. 

If you have a surplus of add-ons, you risk limiting employee performance and complicating the customer journey.  

When selecting which tools to use, it’s best to have a clearly defined strategy—choosing software haphazardly is ineffective. The highest-performing teams are 3.2 times more likely than underperforming ones to employ a data-driven strategy around their tech stack.

Many ecommerce businesses operate at a fast pace and might not have the resources to carefully examine their tools. That’s why a business slowdown might be the perfect opportunity to give your entire ecommerce framework a thorough audit.

Returning to the example of customer service, several complementary tools actually perform identical functions. The differences between software dedicated to help desks, service desks, live chat, and conversational AI can often be blurred.

For help navigating the customer service landscape, view Zowie’s Ecosystem Map. See which tools are available, learn what each does, and decide which best suit your needs. 

Take a moment and review which tools you really need. This’ll streamline your ecommerce ecosystem and ensure you aren’t wasting any time, money, or other resources.

3. Find new sources of revenue

Another way to make it through a recession is to rethink your ecommerce business model. Your past ways of earning income may have dried up. 

A dip in consumer spending is one of the key indicators of a recession. If customers start spending less on your website, seeking out new sources of revenue can be a lifesaver.

Luckily, ecommerce brands have many tools at their disposal to improve their cash flow.

For instance, you can focus on upselling and cross-selling. Upselling is when a brand encourages customers to pay for a higher-priced alternative, upgrade, or add-on to a specific product. Cross-selling involves recommending complementary products to an existing purchase, persuading customers to purchase a bundle of goods instead of a single item.

Both techniques increase a brand’s average order value, letting your website generate more sales from existing customers. In a recession, finding new customers gets harder—and costlier.

Acquiring new customers is five times more expensive than retaining existing ones. 

Your current customers already know your brand and are more likely to become loyal, satisfied patrons. So when times get tough—focus on them.

In addition, you can unlock the full potential of your customer service and turn your support channels into sales channels.

How?

Resilient and forward-thinking ecommerce companies look at every customer engagement as a chance to sell. Often, it’s your customer service agents who are interacting most with your customers. These representatives can offer product recommendations to customers within conversations that are already taking place. 

If a customer asks about a product’s price, why not recommend related products when providing an answer? The customer has already shown buying intent, so they’re more likely to purchase additional products that have value. 

When done right, product recommendations bring significant revenue growth. At Amazon, for example, 35% of sales income comes from product suggestions customers encounter while shopping.  

4. Give customers a personal touch

In an economic downturn, customers want to feel like they’re putting every cent to good use. That’s why your ecommerce store can’t feel like just another online website.

The most effective way to stand out online is to deliver a personalized experience, giving shoppers tailored service based on past interactions with your brand. By tracking customer information, you can create unique offers relevant to each customer. 

Customers are already expecting this. According to Accenture, 67% of customers are willing to share personal info with brands as long as it adds tangible value.

What kind of personalization are we talking about?

Simply calling customers by their name creates a positive impression—it makes customers feel respected.

Moreover, it’s essential to offer customers personalized rewards. Nearly half of shoppers want special treatment for their brand loyalty, so take steps to strengthen your relationship.

Offer exclusive discounts, differentiated pricing, or early access to products.

Be sure your personalization is offered on every possible channel—email, social media, mobile apps, and even chat.

A chatbot can automatically present customers with relevant products based on earlier purchases. You don’t have to give all your customers the same standardized catalog. 

Give each shopper advice that speaks to them, and they’re more likely to keep doing business with you.

To see more ways you can customize your customer service, read Zowie’s What is Personalized Customer Service? blog post.

5. Ask for feedback

Listening to your customers is more important than ever during a recession. In ecommerce, there’s no better way to find out if you’re doing something well or poorly than by asking your shoppers. 

If your customers are highly engaged while they shop, they’ll buy 90% more often and spend 60% more.  

Keeping shoppers in the loop is also an effective way to gain more customers. According to HubSpot, referrals are the top source of new leads. It pays to communicate with your customers to give them a reason to recommend your brand.

Where can you ask for feedback?

You don’t want to interfere with the customer journey, so some convenient options are adding a pop-up to your website or asking shoppers for their opinions after completing an order or receiving a product.

For instant answers, requesting feedback over live chat is helpful. After resolving a customer’s question, you can ask how effective the assistance was and open the door for other comments. Your support agents will be able to act on the feedback immediately and provide further help if necessary. 

6. Move fully online

If you haven’t done so already, a recession may be your wake-up call to embrace ecommerce and completely move your business online.

In general, brick-and-mortar retail is less stable than ecommerce—overhead costs are higher, and keeping shelves stocked becomes more difficult.

Furthermore, customers become more sensitive to the costs associated with traditional retail during a recession—they start taking into account things like gas prices and the time it takes to get to a physical store.

Ecommerce has already shown that it can weather a recession better than brick-and-mortar retail. In both the Great Recession of 2008–2009 and the downturn brought about by the COVID-19 pandemic, ecommerce grew while offline sales declined.

On top of that, ecommerce is booming. By 2025, ecommerce sales are forecast to grow to $7.5T—with or without any recession. 

The online shopping experience is becoming quicker, safer, and simpler for customers and brands alike.

Accelerate your switch to ecommerce to ensure a smoother experience during an economic slump.

7. Reduce costs

Taking cost-cutting measures may seem like a no-brainer, but you don’t have to take the traditional route when looking to save money.

It’s possible to go through a recession without laying off staff members or scaling down your business.

One method to lower your costs across the board is to consider the direct-to-consumer (D2C or DTC) business model.

D2C brands sell their own products directly to the end customer via their own channels—typically through an ecommerce website.

How do D2C businesses save money?

They cut out the middleman, eliminating any costs tied to cooperating with retailers, wholesalers, or distributors. Their supply chain is greatly simplified as well.

To learn more about D2C ecommerce and the advantages of D2C brands over traditional businesses, check out our D2C vs. B2C Ecommerce blog post.

Another innovative way to lower costs is by automating your most routine activities. Nowhere is this more evident than in customer service.

Many companies view hiring support agents as nothing but an overhead cost that won’t contribute to higher revenue. On top of that, customer support often hinders growth since teams need to hire more agents to handle any upticks in demand.

Customer service automation addresses all of these concerns.

When you encounter a spike in customer questions, solutions like chatbots can handle the bulk of your repetitive questions. They remove any added strain on your human agents and let your team scale without hiring pressure.

Facing downturns head on

While recessions indicate that specific economic metrics are falling, they don’t automatically have to spell bad news for your ecommerce business. 

There are a number of steps you can take to protect yourself from the adverse effects of an economic downturn. If you follow these tips, you can even count yourself among the best-prepared ecommerce brands who know how to continuously use periods of lower business activity to their advantage.

If you’re an ecommerce brand looking to safeguard your business from economic downturns, customer service automation from Zowie can help. For more info, book a call today.