How to Recession Proof Your Ecommerce Business
Many ecommerce businesses will not survive the looming and inevitable recession. The COVID-19 pandemic turned the world upside down and pushed consumer shopping to online marketplaces. Brick-and-mortar businesses suffered, and shoppers across the globe shifted their shopping habits from in-person to online. Ecommerce sales skyrocketed 43% ($244.2 billion) in 2020 during the first year of the pandemic, rising from $571.2 billion in 2019 to $815.4 billion in 2020.
Although many ecommerce businesses thrived during this period, the inevitable recession in 2022 has crushed many online brands. Whether it’s supply chain issues, increased gas prices, or inflation, consumers are tightening their wallets, and ecommerce brands must get savvy if they want to survive.
Brands must de-risk their P&L, drive superior growth with predictable costs, and optimize their entire ecommerce operation without expensive upfront costs. Trying to handle it on your own using outsourced marketing agencies, DIY platforms like Shopify, or SaaS solutions is complicated, expensive, and inefficient. Fortunately, there’s a radically different and superior approach called Commerce-as-a-Service (CaaS) that arms ecommerce brands with the tech, resources, and flexibility to grow and recession-proof their business.
Nogin offers a pre-integrated enterprise ecommerce solution at scale. You can use what you need and achieve the benefits of enterprise commerce technologies without the up-front and ongoing investments in innovation. Plug into our full-stack ecommerce platform that contains the latest ecommerce technology innovation to deliver enterprise-scale results to smaller brands so they can scale their business profitably.
Learn more about the recession’s impact on ecommerce businesses and six ways our Commerce-as-a-Service (CaaS) solutions will help you thrive while your competition suffers.
What Impact Does a Recession Have on Ecommerce Businesses?
There are many ways a recession impacts ecommerce businesses. During this current cycle, brands must prepare for the following:
- Consumers will begin spending less to protect themselves from economic uncertainty.
- Inflation and energy costs will cause suppliers to increase their prices, forcing retailers to increase their prices, which may lower sales.
- The competition in online marketplaces will increase due to ecommerce brands in similar markets trying to reach paying customers and maintain revenue goals. Due to competition for the same audiences, social media advertising and PPC costs will rise, further reducing profit margins.
- Businesses will have trouble borrowing money due to high loan requirements.
Brands will have to adjust and modify their approach to how they run their ecommerce business. However, many conventional solutions aren’t really solutions at all. Ecommerce brands often outsource their marketing to agencies, but unfortunately, it’s both expensive to pay their retainers and advertising costs.
Many brands need to upgrade their storefront and replatform to enterprise-level tech but cannot afford the absorbent upfront costs and wait a year or two to complete the migration. (Not to mention train their staff and get up to speed on the new platform.)
They need affordable ecommerce 3pl fulfillment but can’t find a provider that offers comparable shipping rates to compete with Amazon and other big retailers. Most of all, they need research and development to guide their efforts and understand the best strategies that convert users, increase their ROAS, and meet their ecommerce KPI goals.
They need a smarter solution. They need Nogin.
6 Ways Nogin Recession-Proofs Your Ecommerce Business
Commerce-as-a-Service (CaaS) enables brands to focus on growing their brand without headaches. Clients on our Nogin Commerce platform gain the best enterprise-class tech and resources to scale their business profitably without the expensive upfront cost. Let’s dive into six ways Nogin helps brands not only survive through a recession but thrive!
1. Never Replatform Again
SMB and enterprise SaaS both have their disadvantages. Small SMBs may be suitable for smaller brands, but as they grow, they will eventually need better, full-stack resolutions to elevate their storefront and keep up with the competition. Brands that have outgrown their SMB are forced to replatform on enterprise SaaS. Although it provides them with better tech to power their ecommerce channels, it is a costly investment, takes 1-2 years to implement, and brands will have to retrain their team.
Nogin simplified things. Our clients can migrate on our platform between 1-3 months and access the full-stack enterprise tech that beats other enterprise solutions like Magento or Salesforce. Our headless commerce platform offers the flexibility and security you need to elevate your ecommerce channels and experience to an enterprise level.
Investing the lion’s share of your budget to replatform your storefront during or preparing for a recession is risky. Brands need fast results and a sufficient return on their investment, but since the typical migration process takes more than a year to complete, brands will be stuck in the interim and hope their investment pays off.
We use a value-based pricing model to enable our clients to access the tech, resources, and managed services they need without the upfront charges. Our clients can quickly and seamlessly increase profitability while lowering operating costs thanks to our proprietary tech infrastructure.
You’ll never outgrow our platform. Suppose you’re trying to stretch Shopify or considering upgrading to enterprise software. In that case, we can just plug your front end into our full-stack platform for all the additional functionality you need in a single solution. No more stitching together a bunch of plug-ins and trying to make them work together.
2. AI, Machine Learning, and Smart Algorithms
During a recession, ecommerce businesses need to reconsider how they do marketing. Typical advertising agencies are expensive and require frequent supervision to ensure they are showcasing your brand in the right light. More importantly, they are hitting your ROAS goals.
Clients migrated on our Commerce-as-a-Service (CaaS) platform can finally ditch the marketing agency and achieve much better results. Our smart tech features advanced Artificial Intelligence (AI) and machine learning to deliver the best-in-class ecommerce marketing automation.
It’s like having a marketing agency work for you 24/7 without human error and constantly testing messaging and refining campaigns without expensive manual oversight. Our marketing automation technology delivers personalized customer journeys for each visitor. It will leverage the best ecommerce conversion funnels, product listing strategies, retail pricing strategies, and more to provide superior marketing results that increase revenue and lower customer acquisition costs.
Free up internal or external marketing costs and maximize your budget for profitability. Marketing automation is the future of ecommerce. It’s the most scalable solution to entice qualified leads through personalized offers, content, and interactions to drive conversions.
3. Continuous Research and Development
Due to continuous research and development, big retailers like Amazon are at the top of the ecommerce world. They analyze all the customer interactions for each product on Amazon, and the information guides strategies to optimize their platform for better customer experience and profitability.
Nogin delivers comparative research and development capabilities. Powered by our Luminate network, all the data from our clients’ storefronts is analyzed. Our smart tech uses the insights to deliver continuous optimizations across all brands under the Nogin banner.
Independent brands do not have the budgets to fund research and development to improve their storefront. They can only rely on the data from their marketing campaigns and analytics to find strategies to improve their business. Our CaaS suite allows each brand to gain the insights they need to stay ahead of the competition.
4. Derisk Your P&L
Since we charge a percentage of your revenue, we share the risks as well as the rewards, protecting your profits in economic uncertainty. We can get you to break even in 60-75 days with zero up-front costs vs. spending millions on a 12 to 18-month migration or upgrade project with no profit in sight.
Your cash-to-cash cycle will be much faster than if you try to invest in and ramp up a world-class site yourself. Nogin’s modern technology provides an immediate fix to your business problems and prevents revenue fatigue from an aging platform through continuous innovation.
Our technology was built to deliver data-driven outcomes for your operations, focused on customer acquisition costs, lifetime value, and conversion. By constantly testing across many brands and the $1B in annual gross merchandise value (GMV) that we process, Nogin technology and best practices will improve your P&L.
5. Affordable Fulfillment with Smart Ship
Free shipping is the bane of most independent ecommerce brands. Amazon Prime offers free, two-day shipping on Prime items, and retailers pay Amazon to market on their platform under the Amazon banner. Shipping, warehousing, fulfillment, and marketing costs severely affect the brand’s profit margins as they struggle to find a realistic way to compete with big retailers.
Nogin has its own distribution network of fulfillment centers across the country. We can help our clients save on fulfillment, returns, free shipping, and marketing costs to improve profit margins. Our smart tech also helps reduce the use of discounts and promotions to entice customers while still funneling them to convert.
6. One Stop Shop For Managed Services
With our Nogin Commerce platform and world-class expert services, we can handle whatever parts of the ecommerce lifecycle you need, from the buy button to the doorstep and back again:
- Website development and continual R&D
- Content management
- Digital marketing services
- Order management
- Customer data management
- Customer service
- Reverse logistics
Still Unsure About Intelligent Commerce? Check Out the Proof Behind CaaS and Why It’s the Best Way to Do Ecommerce
If you want to recession-proof your business and instantly become more profitable, it starts with a more intelligent approach. Learn more about the research and data behind a CaaS business model and download the Coresight Research Reports below: