Insights to empower 2023 ecommerce strategies
Discover four tips retailers and advertisers can use to boost conversion, improve ROAS (Return on Ad Spend), optimize price, and build successful ecommerce strategies in 2023
Discover four tips retailers and advertisers can use to boost conversion, improve ROAS (Return on Ad Spend), optimize price, and build successful ecommerce strategies in 2023
The economy in 2020 was in a volatile state, primarily due to the pandemic. In November 2020, despite rising Covid cases, retailers were providing SALE offers on 13% of ads and special promotions on only 7% of ads. On the other hand, consumer spending growth was recorded at 9%.
Fast-forward to 2021 – The economy was recovering from COVID that was evident in consumer spending growth of 13.5%. With a slightly eased supply chain and better economic conditions, November holidays in 2021 saw 14% growth in special offers, which had grown twice as much compared to 2020. Furthermore, SALE offers were seen on 12% of ads which was slightly lower than the previous year.
However, in 2022, the Russia-Ukraine war coupled with unfathomable COVID rise in manufacturing nation like China impacted the economic indicators once again. With rising inflation, consumer spending had fallen drastically to mere growth rate of 6%-8%. For this year’s November Holiday, 60% of consumers mentioned discounts and promotions playing a huge role in their purchasing decisions.
Surprisingly, during November 2022, there was a drop with only 8% focused on special promotion ads. However, SALE offer was in a rise visible in 15% of ads.
A similar trend was seen in average pricing in Google Shopping ads that is, turbulent economy was reflecting in lower average price in 2020 and 2022 compared to 2021 – when the economy was flourishing.
As we enter 2023, we expect to continue heading into a recession.
According to a monthly survey conducted by Bloomberg, the likelihood of a US recession in 2023 jumped to a whopping 70% – as a series of Federal Reserve interest hikes drove fears of a stagnant economy. To make matters worse, a rise in US unemployment throughout the year has also been predicted to cause more pain in the labor market.
On the contrary, to remain competitive in the market, gross margin in retail is expected to go down. In this paradigm, pressure will rise on spending like advertising. Consumers will start scouting for cheaper products causing retailers and advertisers to provide low-priced products to win market share. Therefore, the road ahead for retailers is going to be bumpy. Per UBS analyst report, 50,000 store closures in the US is expected over the next 5 years. News of mega-stores like Bed Bath & Beyond potentially going to bankruptcy has emerged.
Based on our 2020 and 2022 economic analysis, retailers most likely will have unsold inventories to clear during the 2023 November Holidays. That said, consumers will see more SALE ads over special promotions, alongside noticing a drop in average pricing in shopping ads.
Consumer spending, which has been decreasing in the last 3 years, will most likely fall in 2023 as well. Discounts, Promotions, and cheaper prices are the only ways to attract customers to stretch their wallets.
Despite the bleak outlook, retailers utilizing marketing intelligence for their pricing, advertising, and promotions will most likely survive and gain an edge in 2023. Here are a few tips for retailers and advertisers to succeed in 2023 –
Trust plays an integral role in converting business. To ensure a high conversion rate, it is imperative to build a customer’s trust in your eCommerce ecosystem. It is fair to say that online shoppers are often reluctant to make a purchase due to uncertainty on an unfamiliar channel or brand or product. For an eCommerce business, gaining trust is crucial as customers are unable to physically see the product. Businesses must focus on optimizing trustworthiness as it will have tremendous impact in the conversion. That being said, trust is a psychological state that can be easily influenced.
Here are the ways to optimize your ecommerce trustworthiness.
Here are six ways to achieve this –
To be on top of the game, retailers must have insights into current market pricing to ensure optimum pricing to beat competitors. The approach taken for dynamic pricing strategies to penetrate while maximizing margin from the market will be critical for growth.
Consumers will always be gazing for promotions. In this adverse economic situation, a strategic promotion plan will help optimize advertising and conversions.
As the pandemic-riddled period comes to an end, innovation becomes a key factor for survival in the volatile market of today. Furthermore, with a shift in the retail landscape consumer expectations and demands will be a leading force in 2023.
Retailers and advertisers must remain flexible, adaptive, and affordable to get an edge against competitors to maximize their market share. They should use a unified marketing intelligence solution that showcases them versus competition in the eyes of the shoppers on the digital shelves. We recommend retailers use a data-driven approach to developing their marketing strategies to improve their chances of success in 2023.
Prasanna Dhungel co-founded and runs GrowByData, which powers performance marketing for leading brands such as Crocs and top agencies like Merkle. GrowByData offers marketing intelligence for search, marketplace, and product management to win new revenue, boost marketing performance and manage brand compliance.
Prasanna also advises executives, board & investors on data strategy, growth, and product. He has advised leading firms such as Melinda & Bill Gates Foundation, Athena Health, and Apellis Pharma.
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