While some businesses are opening, and state guidelines are paving the way for that, e-commerce businesses are in a unique position – with both good and bad elements.
On the one hand, you don’t have to worry about opening up a brick and mortar with all of the precautions and social distancing guidelines that apply. On the other hand, lots of people have far less money to spend right now and will not be looking for more than the necessities. Purchases will be down.
And as a startup, you also have the added stressor of not having the cash reserves to easily make it through a crisis, such as the long-established “big boys” do. And investors are not as free and loose with their money as they were before this. During the recession of 2008, for example, startup funding all but dried up. In short, everyone is tightening the belt.
Fortunately, not in any small way due to the coronavirus crisis, the eCommerce markets are currently thriving and growing at unprecedented rates through going online and actively engaging a more international market. It is neither overly expensive nor challenging to begin doing business under COVID-19 and going online to weather the storm. Doing business during COVID-19, or even going online after the global pandemic has subsided should not be an exceptional challenge for the entrepreneurial spirit.
So, how do you survive the next 12-18 months until the economy begins to rebound and perhaps a vaccine and natural immunities are developed?
Here are some suggestions that may help your e-commerce business.
The Challenges For E-Commerce Businesses
1. Protect What Cash You Have on Hand
Households, during downtime, go through their budgets and find where they can cut expenses and still survive. They don’t eat steak; they plan driving to reduce gas use; they don’t buy any non-essentials. Vacation plans are canceled.
So, what can you do to preserve cash? If you don’t have at least a 12-month reserve, you’re going to have to be aggressive.
- This may mean moving out of your nice offices or negotiation with your landlord for a break until this is over.
- It may mean letting some staff go and taking on their roles yourself – longer hours for certain
- It may mean cutting salaries and convincing essential people to stay on even with the reductions. Most probably will rather than quit, if only to keep positions they really like.
- Look at outsourced contract work. What can be cut?
- With purchases down, marketing and sales departments will need to be pared down
- No travel for face-to-face meetups. Use video conferencing technology instead.
- Any employees who can work from home should do so. This will reduce utility costs in your office. While this may seem like minor savings at first, these small things all add up over time. Remember – households are adjusting thermostats and making sure that as little electricity is used as possible. Think of your business as a household in this respect.
The earlier you take these cost-savings steps, the better.
2. Don’t Waste Time or Money Trying to Raise Money
Investors have pulled back, and, if they are investing, they will be extremely selective, and amounts will be much smaller. If you have personal financial assets, you may have to infuse some cash into your business and cut back on your personal expenses. Remember – your goal is survival. What are you willing to sacrifice for that survival?
And if you have shareholders and/or equity investors, keep them informed of all the measures you are taking. They are far less likely to bail on you if they know you have a strong and aggressive plan.
3. Don’t Expect Your Contracts to be Honored
If you have existing contracts for purchases of your products and services, and they are not essential to those purchasers, you can probably expect cancellations or at least deferrals. Other businesses are in survival mode too. And they will exercise cancellation clauses. If you are in the middle of negotiations for the sale of your products to retailers, expect those to dry up for the time being.
Some Good News For E-commerce Businesses
There are some proactive measures you can take to keep sales revenue up as much as possible.
4. Can you shift any of your business to be Covid-19 related, or can you market your product as a solution to a problem that consumers face right now?
- Now that spring is here, lawn and garden supplies can be marketed as ways for house-bound consumers to get busy and active outside
- Home decorating and improvement products can be marketed as a solution to boredom too.
- Kitchenware can be a solution for those who are home and cooking more
- Consider a subscription-based service for a product that consumers use on a regular basis
- Can your product make it easier for people and their children to work from home? One concern for parents right now is the increased amount of time their children are spending online, and dangerous apps or sites they may be accessing. Software or apps that provide greater security and safeguards are in demand.
Get creative with your team and see what you can come up with to easily shift production or to take advantage of the situation in your marketing efforts.
Jill Jamieson, Marketing Director for Studicus, relates her company’s approach. “We knew early on that, as an academic and business writing service, we could be facing a loss of revenue. Students were no longer in school, instructors were modifying and simplifying their assignments, and companies were cutting back on their content needs. For students, we quickly expanded our service of help for homework assignments that were closer to what they were actually getting. For businesses, we began to offer deep discounts and assigned that work to our writers who were willing to take temporary pay cuts. So far, we remain afloat.”
5. Look for Non-Investor Cash
For those based in the US, the first round of relief funding from Congress left many small businesses out, especially e-commerce businesses. The second round, though, has attempted to correct that. See how you might qualify. Also, check out grants and loans through the SBA. You have nothing to lose but some time. If the cash you need is not exorbitant, there may even be several relatives will to help out.
Personal retirement plans can now be tapped into without penalties until the economic situation eases. And many of them have loan features too. Again, do what you have to do in order to survive. Things can be “righted” when this is all over.
6. Keep Your Nose to the News
Watch for economic news that shows non-essential purchases picking up. As this happens, you will want to get your marketing and sales department back up and running at a gradually higher pace and putting some of your cash in advertising, promotions, emails, etc. Already, some brick and mortars are opening their doors. But many are still hesitant to get out there. You can up your marketing and take advantage of the fact that shopping online with you carries no risk. If you were outsourcing your content marketing, you may want to pick that up again. Check out prices from some writing services that have creative copywriting departments – like Trust My Paper or Supreme Dissertations – or find freelancers who are hungry for work from sites such as Upwork or Freelancer. There may be some good bargains out there, as things begin to pick up.
Related to E-commerce: