4 min read
Opinions expressed by Entrepreneur contributors are their own.
Success begets more success, but the current business and pandemic environment is also fraught with risks.
In Q2 of 2020, Amazon reported skyrocketing growth of $ 88.9 billion in revenue, while online grocery sales tripled year-over-year. But the Jeff Bezos-led company also said in early October that a staggering 20,000 workers got infected by Covid.
Almost twice as many employees now work from home than at the office, according to a June 2020 analysis by Stanford University. Charlie Munger, billionaire and vice chairman of Berkshire Hathaway, said in a public forum that life brings one or two extraordinary opportunities that one should fight hard for.
Ecommerce sites, online retailers and digital service providers can exploit the pandemic as a rare opportunity to capture significant, life-changing sales growth. Here are three tips for doing so in the new normal.
1. Offer more SKUs
More Stock Keeping Units, or SKUs, can complicate operations and lower margins. However, extra SKUs can always be discontinued if sell-through is low. Even if you sell merchandise at a break-even pace, a visitor may purchase other items that have attractive margins and thus, improve the bottom line. That’s why 7-Eleven and gas stations sell lottery tickets, which is a low-margin product. Gamblers and those who purchase lottery tickets tend to also buy milk, cigarettes and snacks.
Ecommerce businesses should reinvest part of newfound profits by offering more SKUs. Particularly work from home (WFH) products that are in high demand. This accomplishes a few business objectives by gaining market share and becoming a one-stop-shop in your niche. Getting entrenched also makes it difficult for competitors to dislodge your position.
With the ongoing pandemic, consumers have shifted to ecommerce when purchasing everyday goods and services. Businesses should examine what this means for their operations, as well as regulatory compliance.
There are age verification tools like AgeChecker.net that help retailers increase the sales of products like tobacco and alcohol, while keeping these out of the hands of children and/or unauthorized buyers. By requiring self-verification, the site prevents minors from buying cigarettes from your web store, so your business can comply with local laws.
2. Sell trending WFH products
The more things change, the more they stay the same. A timeless objective of any business is to understand what the customer wants and to deliver it profitably at a sensible cost.
To ride the wave of online demand, a business can seek and sell viral WFH products, as well as health-related supplies. For example, demand for DIY haircuts is up 766% and online church is up 544%, according to trends-tracker Glimpse. Other in-demand goods include home-gym equipment like resistance bands (512%), nail kits (431%) and TikTok lights (531%).
Managers and entrepreneurs must always keep in mind it’s all about giving what the customer wants based on today’s new circumstances.
Adapt to new shopper behaviors
According to McKinsey’s Covid-19 Global Consumer Sentiment survey, 75% of consumers have changed shopping behaviors because of the pandemic.
“Value, availability and quality or organic products were the main drivers for consumers trying a different brand,” the McKinsey study authors said. “Consumers intend to shift their spending largely to essentials, such as grocery and household supplies, and cut back on discretionary categories.”
What goods can your business offer that are considered great bargains? Do you offer free shipping to regular customers? Is your website optimized for mobile devices?
According to Adobe’s August 2020 Digital Economy Index, smartphones would be responsible for 50% of online spending by September 2020. And buy online, pickup in-store (BOPIS) in August saw 259% growth year-over-year. Does it make sense for your business to offer curbside pickup, in-store pickup and/or home delivery?
These days, consumers are mindful of their money, therefore, they’re trading down to acquire more value. Companies that seize the wave of WFH demand can drastically grow in revenue and profitability while reducing enterprise risk.