5 steps to staying the course, survival…and getting to 2024 in good shape – just like good dating & relationships!
By Rob Godwin – Managing Director or Future Ecom, Founding Director of Lovehoney.com.au, board roles, charity and boxing champ
How do you control the insanity of cyber season? I was approached by a leading academic and friend to asked me my views on current retails environment…my quote was “we screwed it…we have trained the consumer to wait for sales, and we only have ourselves to blame”. But the madness of this sales period to Christmas is upon us and is longer than ever. Click Frenzy have moved to end of October, you have singles day on 11th November, Amazon/Afterpay Day, and then the finale in Black Friday/Cyber Monday. And then Xmas sales…. Plus…to make matters worse, most ecommerce companies have ordered flat for 2023 peak season to the same period last year, and we have potential for more interest rates rises, significantly erosion of consumer confidence and spending, and for a lot of business’ with store locations have less foot traffic …arrhh (reach for a large class of red wine and a Valium). So how do you control your pricing, margin, shipping and customer service in this period of discounting? Here we go…
1. Pricing & Margin
Most retailers (but not all) will be discounting during this period but treat this like a date with someone you really like!! Your not going to do everything on date 1 and offer to marry them the next day!! So, keep some things in reserve
- Pace yourself – tier up the discounts in stages – don’t go “all in” straight away – build up the anticipation, suspense, and climax.
- Have a pricing plan which will peak in the key days and moments during this long sales window
- Mix up the hero product and discounts – sometimes you can get some negative feedback from customers who bought one day and next week it’s another 10% off. You can’t avoid this at times, so mix up the main featured stock & discounting levels
- Critically know your margin on your main sellers and clearance lines. What will be the impact on your profit?. There is no point in the medium / long term if you are not making a net positive margin aka profit!
- So do your numbers before the sales period and understand the impact on margin & profit and own the prices – don’t just hope it will be ok (check out Paul Waddy’s work on these areas on his emails The Side Hustle – straight forward and awesome content https://linktr.ee/paulwaddy)
2. Planning & Stock
Given you know the pricing tiers and what discounts you will apply and when, you need stock to sell! Like a second date – you put more effort into the planning. Ensuring you are wearing something nice, and location is spot on! Just like planning stock – start to dazzle and shine! Right products at the right time
- It’s a 101 no brainer but have the stock to sell and be confident of how much you have. Ensure you are confident on your core selling products and the quantity available
- If in doubt, do a stock take pre sales period. You have to know the quantity of main sale items and ensure you know all the clearance lines
- Run some stock cover reports and work out what your anticipated sales could be, so you end up with the optimal stock cover post sales
- Sales period is a great way to clear old, dead, or slow-moving stock. Get rid of it first time and go hard…don’t fluff – this is the time to convert dead stock, and reinvest the money back into core sellers coming into 2024
3. Shipping, Tracking & Thresholds
In my various roles I have heard some horror stories of the time it has taken to ships and deliver orders post cyber (1-2 months – OMG!). No…no…no! The business spends huge money in getting the new/returning customers to the website, converted them, and don’t follow through. Like meeting the love of your life and after many successful dates arranging to meet their parents and being 2 hours late for dinner. Don’t blow it
- Data data data – know your numbers. Know how many anticipated orders, how many staff you will need to pick and pack those orders and get them out of the warehouse/stores and into your loving customers arms
- Using a good shipping partner, that has consistent delivery times (even during peak) so you can ship with confidence
- Share this data/shipping ETAs/tracking with your customers. There is real FOMO by not knowing where your customer orders, so give them the information they are craving
- Thresholds – everyone loves something for free – but nothing is for free. If you see bottleneck in logistics, whether this is through your operational issues or your logistics partners, use thresholds to your advantage – upgrade the orders to express if you are being late. Tier your shipping to increase AOV by trading off road and air express
4. Customer Service & Loyalty at every stage
Place your customers at the centre of everything you do. Even in this sales frenzy, they are the reason why you are in business. So, maintaining great customer service and loyalty to your brand by proactively managing your customers. Look at it like when you meet a great partner (they tick all the boxes – you are smitten), but the footy is on, and they want to go to their annoying BFF party. You know by going to that party you will score some serious brownie points & loyalty for the future!
- Get things right first time – similar to points 1-3 around pricing (reduce friction) stock (reducing cancelling and refunding orders from “inaccurate missing” stock) and providing real messaging around deliveries
- Stick to the plan and be clear – if you say to the customer “sale must end in 12 hours” – end it in 12 hours. Don’t create friction by extended the sales with deeper discounts – all you are doing is reducing loyalty and training the customer to wait for deeper discounting
- Early entry for VIPs or members and countdown messaging eg – this is a great reward for joining email lists and giving value and anticipation for new releases or sales, so customers commit and convert – great examples with LSKD, Culture Kings or Geedup
5. Thank your customers
Don’t get me wrong – it’s never always smooth sailing and you will never get it 100% right. It’s like a crazy ex-partner – you cant control them at times and look back and say “where did it all go wrong”. But you have to look ahead….just like a positive progressive relationship (and customers you have fulfilled)…its time to tell them you love ‘em! It can be as simple as
- Thanking them – whether it’s a flyer in the box or an email simply saying you appreciate their loyalty and orders – this is simple and goes a long way
- Following up with asking for feedback – Did we do ok? Did you like the product? Did you get it on time? Incentive to leave a review
- Stepping up the communication to increase AOF (average order frequency) – “thank you for your business – here is a gift with purchase or % off next order”, or some inducement to increase AOF whilst still making a controlled and profitable margin
We are now at Xmas. You have survived sales madness. You have controlled your margin and made some profit. And your customers have had a great experience, and you have optimal stock levels, and got rid of dead stock. This is the hope, but there will be some macro economic effect you cant control. Sales might carry on throughout Xmas and into boxing day (help!). But at least by doing points 1-5 you can control your controllables. And maybe have a new outlook for 2024 (and continue the nice new relationship with your new partner!!).
Rob ‘Bobsy’ Godwin
Managing Director of Future Ecom
Top 50 People in E-Commerce
Rob is a retail expert and an award-winning e-commerce director with over 18 years of experience in creating and establishing market-leading companies. He is the founder and managing director of Future Ecom, a service provider that develops and delivers strategies for sales, marketing, and operations for leading omni-channel retailers.