Covid-19 Update: Big Challenges, Bigger Insights & Good News for E-commerce Businesses
There is a famous quote in the stock market. When everyone is talking about a certain new strategy or subject, then it becomes too good for its own good.
I still remember that the shares of Shopify are valued at $25 per share at the start of the year 2016. At that point in time, Shopify isn't being talked that much but once affiliates and gurus started promoting Shopify during mid-2016, suddenly everybody started doing Shopify and guess what, the stocks skyrocketed.
By the time people want to start buying Shopify stocks, it has become too expensive to purchase. The early bird purchasers are the ones to benefit in the end.
This can happen in internet marketing.
You’re looking for a product to promote.
Imagine one YouTuber or Instagram Influencer is recommending a hot product for you to promote. Guess what? It’s too late and saturated.
People identified it was hot months before the exploding period, and already milked the profit. And now you’re getting the small bits and pieces.
You can still make money, of course, but it would be an uphill battle.
I always believe in this saying; when the sun sets, the moon rises. Simply put, there is always a new opportunity in-waiting once you missed a previous opportunity.
This Covid-19 has taken a toll on many businesses. What I used to think that is profitable business is now in complete red when I looked at my surroundings.
And what I thought that I won't be doing back 10 years ago ended up being very profitable for me.
I give you a quick update on how I’ve been navigating Covid-19 in my businesses, what challenges I’ve been facing, and what my plans are going forward.
My Business Strategy and Current Challenges So Far
As the overall head of my business, my initial response to Covid-19 was to do what I believe every business should do to protect itself.
And that is to improve my cash position. The more money your business has on hand, the safer it will be.
So to do that, my team ran a 3-day sale to our past buyers and email list. Notice that I did not opt for paid ads. It was a relatively small promotion, but it was enough to generate a decent 5-figure(not the best) for this email campaign and strengthen our position for these 2 months.
The bad news, however, one of our suppliers was partially shut down due to a Covid-19 outbreak. They are the first line of defense that makes our products due to their massive output supply, and without those, we can’t acquire new customers because that’s what people buy on our front end.
For your information, our main supplier had close to 3 months of pre-ready stocks in our inventory. They're still able to ship out our products but unable to produce new ones for the time being.
Fortunately, we have a list of different suppliers in different locations across the world so we were still able to fulfill orders (even though it will affect the shipping time).
I'm being pondered with 2 options in my mind.
Option 1: Operate at full capacity and sell out of our inventory while we still can?
Option 2: Or, do we throttle back and extend the inventory that we have? Aka limiting the orders per month.
It is important to take note that the situations here are very real. These are real business issues that one has to decide or take that will either make or break your own business. Anyone wantrepreneurs who decided to "try" e-commerce will be facing a huge shock.
Current Global E-commerce Situation and Global Buyer Behavior.
But while all this was happening, I was getting really interesting insight into the e-commerce landscape. It has come to my attention that there is actually a spike in sales from March onwards. I would like to point out that on average, we are processing 5-figure orders in the month of March alone. Before that, we are hitting an average of 4-figures orders from the start of the year.
Here’s what this data tells me about the e-commerce landscape:
While it’s true that Covid has put some of us in a tight spot — one clear example is the fulfillment of orders for my case — the good news is that there is a growing demand for online shopping during these pandemic periods.
I can come up with 2 possible theories in this phenomenon.
As more and more people around the world are urged to stay at home/work from home in these unfortunate pandemic periods, more people are turning into online shopping instead. (Let's face it; when you're stuck at home doing absolutely nothing or working at home [distractions], the urge to shop online eventually kicks in.)
Older generations and Gen-Y, neither of whom have fully adopted the technology of e-commerce and don’t shop online as much as younger demographics, are now starting to coming online. And I think they’re going to stay.
This is going to speed up the e-commerce growth rate across the globe. (As of 2019, e-commerce transactions were at 17.9% of total commerce transactions.)
Big Picture: This is Great for Us
On the bigger picture, this is great news for us. Another thing to take note of is ad costs have decreased, and now they’re even lower after the pandemic crisis started. Why?
A big reason behind this is that most brick and mortar businesses are out of the ad bidding auction. Yes, we are in a recession, but demand hasn’t dried up — it’s just been reallocated. People who sell things like luggage might be out of luck, but markets like home improvement, pet supplies, supplements, and tactical gear are all up.
So even if you’re struggling right now (like I am), you can still look forward to a lot of opportunities when we come out on the other side of this.
Personally, I don’t expect the ad markets to rebound quickly, as global leaders will slowly open up their economy as well as implementing certain measures on our daily lives. This in-turn further translates that we’ll have a good amount of time to advertise at these discounted rates.
On the whole, this is great for us. (Meaning: Obviously this is awful in a lot of ways, but there are positives.)
My Business Plan Going Forward
Yes, I will have to slow down my business to the point where my business awareness pillar is, so I can still serve my loyal customers instead of actively looking for new customers. This also includes slowing down on my ad spend.
My strategy right now is to slow down to 4-figures a day in revenue, which will cover my overhead, keep my team employed(I don't have a big team actually) and give me a little profit while extending 3 months of inventory to 5 months of inventory. At the same time, I will be applying for a government grant for Covid-19 business aid in my local country of residence.
Now, this is a pretty conservative decision on my part: A large part of this mainly attributes to production and inventory issues. My main supplier told me that they should be fully operational in about 2 months, so I could keep selling at my normal rate and bet on restocking then.
But I thought about it, and by nature that I'm a conservative strategist, I’m not willing to take the risk. I have to keep my team employed. They are the ones that brought me to where I am today, and if something unexpected happened and I wasn’t able to restock…I would have to rely on my other suppliers for production instead.
If you guys are wondering, the original purpose of having more than one supplier for my business is mainly to tackle shipping time in certain parts of the world. Unexpectantly, it turns out to be a lifesaver for my business in order to process orders as an alternative line of defense.
Stay Ahead of the Curve
I shared my thoughts and strategies on how to deal with my own business during this unfortunate pandemic period.
If you already have an existing business, take my business as an example – it can help you to spot new opportunities. Maybe you can expand into a new product line.