13 Practical ways to Recession-proof your eCommerce business

The recent economic shifts, uncertainties, ups and downs in the stock market, and the war have shown clear signs of a looming recession in the next six months. 

There is no denying that digital brands have been affected.

eCommerce owners and small businesses are feeling the impact as they face declining sales and struggle to maintain performance during the economic slowdown. 

In this piece, we’ll reflect on some facts around recession and how it will likely impact the eCommerce industry.

Alongside, we’ll also throw light on why it might just be the right (though risky) time to take further steps in your eCommerce business.

Plus 13 nuanced strategies that you can put into action right away.

What is the impact of recession on eCommerce businesses? 

• As consumers try to save more to protect themselves from economic downturns, consumer spending will slow down. 
• Increase in competition because of the sheer number of eCommerce companies operating in the same market trying to maintain sales even as consumer spending takes a steep drop. 
• As retailers and suppliers adjust pricing to make up for decreased sales, the result could be inflation in prices. 
• With decreased interest rates but high loan requirements, it’ll be a difficult time to borrow money for general spending. 

Amid these uncertainties, the important questions to answer are:

“What does recession mean for your eCommerce store? How can you recession-proof your business and make it resilient when the market is constantly changing?” 

However, more and more statistics are emerging that eCommerce will continue to grow despite grappling with recession.

Here’s why you can face challenges from a recession-ridden market and yet, make the most of it if you make the right moves. 

Reasons you can make recession work in favor of your business

So here’s the billion dollar question, “if recession is all about prices getting inflated and consumers tightening their purse strings, how can it possibly work in the favor of eCommerce?”

Here are a few (very) compelling reasons why:

• More businesses are improving supply chain resilience (while a giant like American Eagle is looking to create a shared services supply chain model for retailers, smaller businesses are strategizing their supply chain efficiency by improving the capacity of existing warehouses, increasing the number of picked orders per day etc.)

• Social commerce purchases are at an all time high (and this is especially promising for eCommerce businesses that don’t have a store. (According to eMarketer, social commerce buyers in the US are to grow from 80.1 million in 2020 to 96.1 million in 2022)

• Cross-border expansion is becoming a real & heightened capability (with eCommerce platforms offering more functional features like multi-currency payments and apps that replace the need for various business functions such as customer support, shipping & fulfillment etc. Recent data is pointing to the fact that the global eCommerce market will be US $5.5 trillion in 2022)

However, the above can only be made a reality when certain selling strategies are firmly in place.

1. Reduce overhead costs (keep what’s absolutely essential)

It’s not news that an eCommerce store has fewer overhead costs compared to a brick-and-mortar setup. 

But that’s not to say that as an eCommerce business, you don’t have any overheads to think of. 

From how you hire and retain labor to how you do your delivery fulfillment to onboarding modern tech solutions, expenses can run you over (especially if you’re dealing with a difficult financial phase). 

In the midst of a recession, when your bottom line has to face more challenges than ever, here are a few steps that’ll help you keep your overheads in check:

• Automate recurring tasks

If your earlier approach was to rely on human labor, see where you can replace it with automation instead. 

Use the help of automation for critical aspects like reverse logistics (the process of returned products coming back to the warehouse). 

Automation also ensures lesser data errors occur because of misinformation between multiple platforms and marketplaces you may be using. 

• Switch up the way you do delivery fulfillment

A multi-carrier logistics option may be ideal during a recession, because you can make use of one carrier or another based on what kind of shipment (perishable or not) you’re delivering. 

Explore a number of different logistics providers if you do both regional and international deliveries.

Choosing an expert in either is instrumental in maintaining the effectiveness of your delivery windows. 

• Implement dropshipping

This is an assured way to do away with costs related to keeping a physical inventory. 

In dropshipping, retailers essentially forward product orders to suppliers, who then take the onus of shipping it from their warehouses. 

Especially during a recession, when scaling up without spending a lot is an important priority, dropshipping helps you access the advantage of multiple products across multiple suppliers. 

• Run inventory audits at regular intervals

The idea is to stay on top of your physical inventory, as this can help you assess what products you already have enough, what needs creating/reordering and what exists in surplus. 

Employ an audit strategy like cycle count so that you don’t have to stop business operations.

Cycle count allows you to audit a small batch of products at a time without disrupting business-as-usual. 

2. Focus on customer’s lifetime value (LTV) 

By now, you must be aware of how important repeat customers are to an eCommerce business. They increase profits from 25-95%. 

With customer acquisition getting more expensive, focus on increasing the customer lifetime value in eCommerce.

The reason is a downturn could even accelerate the entry of new competitors.

Increased market competition will further fragment the market share.

That’s why increasing the customer lifetime value is critical for a successful eCommerce brand. 

Some underutilized tips to increase your customer lifetime value worth trying are: 

• Find the right customer segment (ideally 20% of your customers would drive 80% of revenue)

Figure out who your most valuable customers are using the RFM (Recency, Frequency, Monetary) model approach. 

Implement behavior-based upsell or high-value subscriptions targeted toward these customers. 

• Add a freebie to the customer’s shopping cart when they’re making a purchase

Surprisingly, free samples have proven to boost sales by as much as 2000%. 

Also called reciprocity, shoppers may feel obligated to give your brand something when they receive a free sample. 

• Ask for feedback without interrupting shoppers

Getting customer feedback helps you optimize the areas that need improvement and increase the lifetime value. But avoid intrusive feedback requests.

Consider timing in terms of when to reach out for feedback. 

This could be a pop-up when the customer visits your site after completing a purchase and receiving the product.

Or a day after you helped them resolve a query. 

• Use smart bundles to increase the average order value

Upsell subscriptions in a subtle way by creating bundles and adding discounts to make the offer more appealing. 

Meditation and sleep headband brand Muse offers a discount on annual subscriptions. 

Get your customers to commit for at least a year, increasing their lifetime value instead of regular monthly subscriptions. 

• Build a customer-friendly loyalty program

68% of millennials are not likely to buy from brands that don’t have a good loyalty program. 

This shows the importance of a customer friendly-loyalty program in increasing the average customer lifetime value in eCommerce. 

Focus on highlighting the benefits of the program. It should highlight every detail, must be easy to understand and users can join quickly. 

Be sure to communicate how customers can redeem their points, the way Sephora does. 

3.  Work on moving underperforming products

If you’ve got products sitting on the shelves that aren’t moving, clear them out.

It’s okay if you only recoup the wholesale cost spent on the product. Cash in the bank is any day better than dust on the shelves. 

eCommerce product analytics gives you actionable insights on how to let go of slow-selling products quickly. 

Here’s how you can do so: 

• Create urgency

While social proof messages can be added to fast-selling products, “nearly gone or only two left” can be used to drive shoppers to make quick decisions for slow-selling products. 

• Make sections based on popular attributes

Suppose sustainable mattresses have a higher click rate than feathered mattresses.

Make a subcategory “sustainable bedroom products” making it easier for customers to find attributes they like. 

• Make seasonal buying more attractive

If your product sales are spiking based on a particular season, promote them accordingly on those days or add a discount to stand out from competitors. 

• Leverage the local context for the right messaging

If you’ve figured that customers in Germany respond to “waterproof” messaging, serve them product recommendations that highlight your waterproof range. 

• Make social proof drive confidence

Use social proof (best seller product badge, two brought in five minutes notification, and welcome to the family exit-intent popup) to drive more purchases. 

• Feature products where they’d be more visible

For example, place the slow-selling inventory on the homepage with product badges to bring extra attention to these products. 

4. Optimize pricing (stress on incentives & visual appeal)

Overall, consumer spending tends to decline during periods of uncertainty.

To offset this, as an eCommerce retailer, you will have to find new ways to provide more immediate value to customers. 

A Harvard Business Review experiment found that the right pricing strategies can improve profits and drive revenues faster than other growth levers.

For every 1% improvement in the pricing, businesses can increase profits by 11.1%.  

During a low revenue period, lean on price optimization so that even when your sales slow down, you can maintain positive margins. 

Try out the following price anchoring strategies in eCommerce:

• Don’t price similar products exactly the same

For example, clothing retailers price shirts differently based on whether the shirt has a solid color or is patterned. 

This eCommerce pricing strategy prevents customers from deliberating whether they like the solid or pattern version better. 

If the patterned shirt costs more, the buyer would like the design more than the solid version, making it worth the additional expense.

• Choose a price point that ends in 9 (for example $1.99)  

Also called charm pricing, a study found that “prices that end in 9” were even able to outsell lower prices for the exact same product. 

Customers tend to associate prices that end in 9 with bargains. 

The psychology behind this is what is called the “left digit bias’ - where the customer is disproportionately influenced by the digits on the left and pays little attention to what’s on the right.

So, for example, when the see a price like $12.99 (which is really almost $13) they notice only‘12’ and perceive a much greater price difference. 

• Use the buy one get one (BOGO) deal to move less popular inventory at a faster rate  

People are more willing to purchase an item or even pay more than they normally would when they know they are getting something free in return. 

However, not every BOGO deal involves getting something for free. 

You can use other discount offers like: 

“Buy one, get one 50% off.”

“Buy one, get 40% off on your next purchase.” 

Offering another product at a reduced price can still be an effective way to boost your eCommerce sales. 

• Highlight the price differences visually  

When you run a sale, place the sale price next to the original price. 

Going a step further, use a different size and color to show the sale price. 

When you differentiate the sale price from the original price using a different color and smaller font, the consumer perceives the difference between the two prices to be even greater, resulting in more purchases. 

Overall, consumer spending tends to decline during periods of uncertainty. 

To offset this, as an eCommerce retailer, you will have to find new ways to provide more immediate value to customers. 

5. Make shoppers’ lives easy (eliminate friction)

For a flawless purchase experience, work on the customer friction points. Friction happens when the customer’s flow is disrupted and they are distracted or discouraged from making a purchase, thereby improving checkout conversions. 

Ways to eliminate friction in your eCommerce store are: 

• Introduce progress bars for mobile checkout

Right below the header, allow customers to backtrack, offer visual confirmation of progress, and maintain visual continuity.

• Personalize checkout with pre-filled forms

When customers are excited to purchase, they don’t want to waste time filling out lengthy checkout forms. 

Auto filling of forms prevents formatting errors like writing the phone number in a different format. 

• Offer last-minute promo codes on the checkout page for better checkout completion rates

If customers are hesitant to purchase a product, offering a discount at the checkout may help seal the deal. 

Ensure that the promo codes are easily visible and can be applied quickly. 

• Introduce urgency on the checkout page to prompt them to buy the product now

Urgency helps overcome overthinking and drives quick action. 

In ecommerce, show your customers limited product availability or a lack of time to complete purchases faster. 

Rebellious has an “Order before midnight” tab that adds an extra layer of urgency, with the reward being an early delivery. 

That said, analyze the daily buys and views over some time to manage sales and track trends. 

6. De-risk purchases

75% of online shoppers want to know the return policy before they purchase a product.

And 15% of shoppers abandon the cart when the return policy is unclear.

At a time when your customers are getting all the more hesitant about purchasing non-essential products, de-risk purchases are an underrated conversion rate optimization idea for eCommerce.

It will be one of the key decision points on their path to purchase. 

Lay out the return and exchange policies in an easy-to-find way either in the FAQs or as a separate page to overcome customer objections. 

Here are a few tips to de-risk purchases: 

• Offer a free sample with every order

Let customers choose the sample rather than forcing unnecessary products. 

Or offer complementary products. Suppose your brand sells skincare products.

If the customer has purchased lipstick, you could add a cleanser oil sample. 

• Provide free trial

If you sell products less prone to damage, try what Warby Parker does. 

They allow customers to try-on products at home for a limited period of 5 days. 

This way, your customers can use a product and make an informed decision.  

• Include free returns

Offer free returns, eliminate restocking fees and be upfront about shipping charges on the return. 

For example, Austin Bazaar mentions that returns are completely free for customers.

Suppose there was an accident or mistake with the order, they would even pay for the shipping costs. 

7. Decrease cognitive load/Improve website UX

Did you know that 82% of top-grossing US and European eCommerce websites have poor UX performance? 

Stand out from the competition by optimizing your website and product page design. 

Here’s how to reduce the cognitive effort for your customers and boost conversions for your eCommerce store with improved website UX. 

• Reduce the number of options to fight analysis paralysis

Either reduce the number of options or present them well. 

Consider grouping multiple options in umbrella categories so that the customer doesn't get overwhelmed by seeing them all together. 

Strive for a minimum number of clicks on the way of choosing and buying wherever possible. 

• Improve the mobile experience by making it seamless for users to search for the right product

When users are searching for something in your eCommerce store, you don’t want to show them “Couldn’t find what you were looking for.” 

Instead, you can add - typo-tolerant search, auto-complete suggestions, synonym search terms, related product searches and personalize search suggestions based on previous purchase history. 

This eCommerce strategy increases your mobile conversion rates. 

• Avoid decision delays with quicker load times

57% of shoppers will abandon a site if the page doesn’t load within 3 seconds. 

And what’s worse, 80% of those people will never come back. 

So, as a part of your eCommerce website user experience, faster pages lead to a better user experience and people are more likely to purchase from you. 

Tips to load your eCommerce site faster: 

- Reduce image sizes 

- Remove redundant code 

- Avoid sliders on the homepage and opt for banners 

- Keep pop-ups to a minimum 

- Remove broken links 

• Partner with other brands to improve the experience

When it comes to vendors, most probably, they’re struggling as well during times of economic stress.

If there are overlapping supply chains and inventory management efforts, consider partnering with them as a cost-saving option. 

Think of the strategic and financial gains along with improved experience by leveraging the expertise of complementary brands. 

The Honest Company partnered with suppliers and vendors to initially launch a set of 17 products as opposed to a single offering to establish its brand and market fit. 

The thought beyond the multi-product launch was that parents looking for chemical and irritant-free diapers would also be interested in chemical-free shampoos and so on. 

Here's a read you can get more out of: 18 UX hacks to reduce cognitive load in eCommerce

8. Build on brand & marketing to deepen CX

In the absence of a brick-and-mortar setup, most eCommerce establishments have to grapple with the challenging task of being perceived as trustworthy and reliable. 

During a recessionary phase, this challenge only increases because customers are watchful of their discretionary funds more than ever. 

And this is why as an eCommerce brand fighting to gain or retain competitive advantage, you’ll have to think beyond selling and acquiring customers. 

According to an HBR study, companies that are able to hold the scales between cutting costs in the moment and making smart investments for the near future, do really well post-recession. 

And that strategic branding & marketing spending during a recession actually helps such companies regain strength and discover new ground once the worst is over. 

Since spending on branding & marketing is an offensive cost at a time like this, it might be ideal to pin it down to the why behind the spending. 

Here are two great reasons why:

• Innovating on and deepening CX can inspire existing customers to part with their money after the recession gets over

• Improved CX naturally lends to a better brand overall, which can then be used as an anchor to attract and acquire new customers across existing and newer markets

Looking to make your branding & marketing strategy hold you good over the challenges of a recession? Here are some to-dos. 

• Deep-dive into the purchase behavior of your target audience

Recession is bound to take a toll on purchase behavior.

A lot of it has to do more with financial insecurity than people actually feeling the pinch in the present tense. 

But what are the aspects to practically look into? Here’s a quick list:

‍- Have they switched brands? If yes, how are the newer alternatives different from the old ones? 

- Which brands are they still clinging to and why? Do those brands have anything in common? 

- What kind of offers and discounts are attracting them? (This will also give you a clue about what they’re being pulled to buy or consider buying)

If you’re able to answer these seemingly simple questions, you will have gained at least some headway into the headspace of the consumer you’re targeting. 

• Provide value based on changes in consumer preferences

To make your branding & marketing strategy keep up, you’ll have to create real value that’s in line with the changing consumer preferences. 

Or better, you’ll have to disrupt in a way that customers can learn to have new preferences.

Just like Warby Parker did in their iconic move during the 2010 recession. 

The eyeglasses brand decided to remove the multi-layer friction associated with buying glasses online back then - by sending customers multiple pairs of glasses out of which the customer could choose to keep what they liked. 

This led to the brand’s products getting sold out in 48 hours within launching, with a bonus of 20, 000 customers registering in the waiting list. 

• Play on your brand USP to connect with the context

For old customers to retain their faith and for new ones to put their belief in, eCommerce brands need to show up for themselves during a recessionary phase. 

And this often means continuing to grow your brand without the expectation that people will buy immediately. 

This is where value-based marketing comes into play.

If during a normal financial phase, it’s wise to speak about the features of your products, during a recession, it comes down to the value your products can create. 

Here are a few ways to do it:

- Emphasize on the core idea behind your brand.

This in turn, can inspire what you say about your products and the benefits you highlight.

If you can make your customers partake in this core idea, it’s likely they will choose you over a competitor. 

One look at Sleep Foundation’s homepage, and one knows they’re really interested in helping people sleep better - in a number of varied ways. 

- Develop communication that builds awareness and trust

In eCommerce, the reciprocity principle has secured a high and mighty place.

It has ensured brands are able to convert customers when they commit to delivering value. 

And one way to do this is to create communication that doesn’t just push transactional messaging. 

Instead, it keeps the customer at the center and delivers real value around awareness and trust.

Like a well-researched and written eBook or lead magnet.

- Build consistency into your communication

Even if you get the relevancy of your brand messaging (followed by actions, of course) right during a recession, it’s not enough.

To amp it up, you’ll need to be consistent as well. 

For example, if you’re driving the core idea behind your brand, ensure you weave it into your product personalization/recommendations, every time you send them out. 

9. Assure customers (build more trust)

Chances are, customers buying from you for the first time may be worried about the product quality.

Customer reviews are a form of social proof that makes people confident about their purchasing decisions. 

The two ways to assure customers of the product quality are: 

• Show real-life purchases and satisfaction with the product 

REI, a brand selling outdoor wear, has customer reviews below each product. Notice how they go a step ahead and add the badge “Verified Purchaser” for added credibility. 

Also, include a scale for ratings. Ratings enable potential customers to quickly analyze the quality. 

• Provide size charts and measurements of each product

Similar to REI, if you’re selling products wherein sizing could be an issue, a size chart assists the online shopper. 

To help buyers choose the right size, REI has a shoe size chart that the buyer can refer to. 

10. Revisit the checkout experience 

Research shows that nearly 81% of website users abandon their purchases in retail, fashion, travel, and utilities. 

The high cart abandonment in eCommerce costs brands $260 billion in loss due to checkout flaws. 

Here’s how you can improve the eCommerce checkout experience to maximize your ROI: 

• Partner with multiple payment apps

As per Baymard, the lack of payment options is one of the main reasons why buyers abandon their shopping carts. 

As more consumers purchase online now than ever, payment channels have turned into conversion funnels themselves. 

Start by researching the most popular payment method in the country you are targeting. 

For example, in Asia, consumers prefer purchasing with mobile phones rather than desktops.

In Germany, consumers prefer paying by invoice rather than credit card whereas in the UK debit and credit cards are most popular. 

Do read up: 10 Sure-Shot Ways to Boost Your eCommerce ROI

Also, consider the age and gender you are targeting: younger generations might prefer the Buy Now and Pay Later or Apple Pay option while older generations might prefer a bank transfer or credit card. 

Offering more payment methods will only help increase your eCommerce conversion rates. 

• Highlight checkout errors with relevant messages

There could be many technical bugs preventing bugs from checking out. 

For example, the form field requires MM/YY for credit card expiration while the customer is entering YY/MM. 

As an eCommerce seller, notify people when they make a mistake in the checkout form. 

If visitors can't figure out what to do next, they will leave. 

Sure, mistakes are bound to happen and you need to ensure each field has an appropriate error message. 

This involves three things: 

- Let users know when they make a mistake

‍Zappos does so, along with asking for additional information (like the area code) that people may forget to add. 

- Make errors prominent

In the above example, Zappos highlights the error using red color, for customers to easily spot the exact field where they’ve entered the wrong information. 

- Ensure your error messages are easy to understand and helpful

Petco tells users exactly what went wrong as seen in the Address bar. Especially useful when the visitor is not aware of what exactly is wrong with their input. 

• Automate discounts and coupon codes to apply at checkout easily 

Customers who checked out on Shopify sites with a discount coupon automatically applied were 1.8 times more likely to place an order than without a discount. 

In addition, they checked out 25 seconds faster with an automatic discount compared to manually having to enter or search for a discount code.

Plus, there’s already a discount applied to their cart. 

This means the customer does not leave the checkout to hunt for a discount code. Nor does she have to email that they couldn’t find the code you sent. The smoother experience could potentially lead to higher conversion rates. 

Let’s take the example of Bath and Body Works. 

During a Buy 2 Get 1 Free sale, in the checkout form, the price of the third item was crossed out and the word “Free” appeared. 

The same reflects in the total price column. 

• Design for auto-sync across devices

Mobile checkout optimization is extremely important when it comes to increasing conversions to your eCommerce store. 

Research shows that although 50% of users browse on mobile but orders are 24% higher on desktop.

This means you need to optimize for auto-sync across devices. Allow your users to save items to cart across devices. 

The prerequisite for this is signing up. Convey the benefits of why they should sign in.

Customers can checkout easily without having to find their favorite products in your store again. 

Here’s how FLOS communicates this on its wishlist page, encouraging users to sign in so that their saved items can be synced. 

Alternatively, customers can transfer from one device to another using a shared link.

Make link sharing easier - it could be a tap to copy on the URL bar or a share icon placed at the top of the page. 

Try adding UTM parameters or unique IDs to your links. 

Each link is unique to the customer and you can customize recommendations to suit their behavior on your site regardless of whether they shop on desktop or mobile. 

As a part of your product page UX design, improving the checkout experience optimizes for both new and repeat conversions. 

12. Promote cross-sell specific reviews

A study by Trustpilot found that nine out of ten customers read reviews before buying a product.

Adding reviews and star ratings from customers who have bought the cross-sell items can convince shoppers to add them to the cart. 

Some ways to offer cross-sell specific reviews in your eCommerce store are: 

• Add ratings and reviews from products customers have bought together

Recommend products with at least 4 stars if you are looking to cross-sell on product pages. 

• Highlight similar products to complement the main purchase

Target has a section of “frequently bought together items” and “complete the set" option that shows other pieces of furniture similar to the ones the customer has in the shopping cart. 

• Feature better-reviewed products in the suggestion section

Wayfair’s cross-selling involves the phrase “You may also need” under each product on their website.

What’s important to know here is that these products have almost 21 times greater reviews. 

• Cross-sell with the help of ‘sale’ 

If you have products in your inventory that are not being sold, offer discounted rewards in the form of coupon codes. 

Lastly, remember to not go overboard with the pricing. Recommend products that are within the buyer’s budget. Pitch products in the range of 10-50% cost of the products they select. Anything beyond would either overwhelm them or drive their attention away. 

We think you'll find this really relevant: eCommerce Product Recommendations: Strategies, Examples, Do's/Don'ts

13. Gauge demand (and scope out competition)

The road to bankruptcy is paved when you have great products that no one is purchasing. As an eCommerce seller, before launching new products or stocking more, gauge the demand. 

One way to do so is by getting good product reviews. This includes filtering through reviews posted on your website, social media (Google, Facebook, Instagram, or Pinterest), and third-party listings. Give these highly recommended products more screen time. 

When shoppers visit your page and find highly rated products at the top of the page, it builds trust and they’re more likely to purchase from your business. 

In addition, an email marketing strategy to collect customer feedback on products can give deeper insights into what your customers think of your product. 

Ways to gather customer feedback using email marketing: 

• Ask for product feedback immediately after the customer has bought your product.
• Offer an incentive (like a discount on their next purchase) in exchange for detailed feedback.
• Interview customers via phone or with exit surveys. 

Another way to gauge what’s popular: analyze Google Trends:

See who is selling the same product, at what price, and the offers they are running and make your offer better than theirs. 

Preparedness is critical for your eCommerce business 

While there is no telling what challenges and opportunities the future might bring, you should be prepared for a potential recession. Whether it hits in the next six months or this year, implementing the measures outlined before a recession can drive your eCommerce business’s success and resilience for the future. Streamline your daily operations and strengthen your brand, to reduce the risk of getting blindsided. 

The recent economic shifts, uncertainties, ups and downs in the stock market, and the war have shown clear signs of a looming recession in the next six months. 

There is no denying that digital brands have been affected. eCommerce owners and small businesses are feeling the impact as they face declining sales and struggle to maintain performance during the economic slowdown.