Since the Covid-19 lockdown, increased demand and delays in the supply chain have led to increased inflation. This is reflected in the rise in the prices of raw materials, suppliers and products sold directly to the public. Inflation can also lead to shortages of certain items as storage and transport costs also increase.
In this context, although the most appropriate response by an e-commerce business may appear to be to raise its prices, this is not always the most beneficial strategy. An indiscriminate increase in prices can lead to loss of customers and erosion of the brand image. Therefore, it is crucial to have detailed market information and to adapt the pricing strategy consistently to the current situation. From Minderest, we bring you tips to run your store or brand smoothly despite this context of greater instability.
Products that suffer higher inflation
Towards the end of 2021 and at the beginning of 2022, the products that have seen the most significant price increases are:
- Consumer staples: food, beverages, and household products.
- Durable Consumer Goods: appliances, electronic products, such as mobile phones, tablets, and cars, mainly due to the shortage of parts and raw materials.
If your business belongs to one of these sectors, or you notice increased costs, you can use the following guidelines to improve its performance.
Adapt your e-commerce business or brand to cope with inflation
1.- Evaluate and adjust your pricing strategy
As mentioned earlier, an exponential price increase may damage the business. Despite this, you can assess small increases by carrying out an in-depth study of the demand and the behaviour of your buyer personas. One of the keys will be to increase the value of high-end items aimed at a less price-sensitive audience. This way, you can maintain your profit margin, even if the production cost has increased. If you don’t already have one, it may be time to create and launch a new collection of higher quality, higher-priced products.
But for any of the pricing strategies to be successful, accurate information about the competition’s prices is essential. If the price difference is noticeable, users can choose to buy from competitor brands. Therefore, you could lose a considerable volume of customers in the medium and long term.
2.- Strengthen your customer acquisition strategy
By conducting an in-depth study of your customer data you can design new lead magnet campaigns to increase your web traffic. Thereby indirectly improving your conversion rate. You can create more attractive marketing campaigns to reach new audiences, for example, through social media if you target a young audience. In this sense, social media and digital channels have demonstrated a greater return on investment than conventional advertising formats, such as television adverts.
3.- Find new suppliers
Finally, it is advisable to research new supplier prices and times to assess possible changes in your company’s operation. A strategic review can help identify other suppliers with better services and prices that fit your needs.
An effective way to adapt the business to changes in the market is to have a robust pricing tool to help manage and analyse a large volume of your company’s and the competition’s data. Automated software facilitates decision-making based on supply and demand conditions. Overall, applying technology solutions can help create more effective and more profitable operating models that contribute to business growth.