Coronavirus, or COVID-19, has been declared a global pandemic and is having an unprecedented impact on individuals and our economy at large. Times are uncertain, and while we don’t have all the answers, we’re doing everything we can to offer guidance to our customers and small businesses around the world.
As retailers are forced to close their doors to combat further COVID-19 outbreak, one of the biggest concerns (especially among “non-essentials” retailers), is how to compensate for lost in-store revenue.
Below, we'll share a list of resources, along with advice from our in-house experts and partners, that share immediate steps retailers can take to mitigate cash flow constraints, respond to declines in revenue, and redeploy digital marketing spend. You'll also find examples of the steps other businesses have taken in response to COVID-19.
- How to inject cash flow into your business
- Strategies to boost online sales
- Revisit your paid marketing strategy
- How Shopify can help
How to inject cash flow into your business
1. Promote gift cards
Gift cards provide retailers with an immediate infusion of cash and (in most cases) ensure that a customer will return to their business in the future. For businesses with especially thin margins, gift cards can help you stay afloat until the crisis passes.
To further incentivize customers, you can discount gift cards, or even collaborate with complementary local businesses to create co-marketing opportunities that can help you acquire new customers. Finally, to reduce the risk of human contact, you should consider a digital gift card program to include in your social media and email marketing campaigns.
Update from Shopify
Physical and digital gift cards are now available for Shopify merchants on all plans.
Learn how to create a gift card2. Build a pre-order strategy
Customers understand that it’s an especially challenging time for local retailers. Community-based initiatives have taken off to support local small businesses and help them lock down cash. One approach has been to outright ask customers to pre-order popular products––either by paying a deposit or the full amount.
3. Discount underperforming stock
Non-essential retail will likely see a decline in demand, so businesses in this category are vulnerable to oversupply. Retailers’ main goal in the short term (4-6 weeks) is to make sure they aren’t sitting on cash held up in inventory or deadstock. Even well-run companies can have 20-30% of inventory as deadstock, so now is the time to address it.
- Use your inventory management and/or reporting apps to perform an ABC inventory analysis to prioritize products by how much value they create for your business. A-grade items are the most valuable, B-grade items are the “middle of the road” products, and C-grade items are the low-value products that don’t individually contribute much value, but collectively account for the hundreds of small transactions.
- Reduce carrying costs by selling off C-grade products. Consider heavily discounting, bundling, or even selling these products to liquidation retailers. This might seem counterintuitive to your business, but it will provide you with much-needed cash flow and leave room for stock that moves.
NOTE: The COVID-19 situation is developing rapidly, so be cautious of relying on historical sales data to dictate upcoming purchase orders.
4. Extend payables with suppliers
The other side of cash flow is reducing expenses. One way to hold onto working capital is to take longer to pay suppliers. To preserve the integrity (and longevity) of supplier relationships, we recommend retailers work with their suppliers as soon as possible to establish an agreement they both can live with in the short term.
5. Pause standing orders with suppliers
Depending on current demand patterns, and the type of business they run, some retailers may want to slow production down to avoid being stuck with inventory they can’t move. If this applies to you, rethink standing orders for raw materials with suppliers, and press pause on any auto-replenishing algorithms until you know more. This way, you can push back future payments. The sooner you can cancel or defer the order, the better for your supplier relationship.
6. Cut shipping costs
Shipping costs can eat away at your margins, so if you’re looking to cut back, we recommend the following:
- Manually fulfill orders where possible.
- Skip the fancy packaging.
Strategies to boost online sales
As consumers are social distancing and working from home, they’re spending even more time online than ever before. Our recommendation would be to focus on what you can do with your online store and digital marketing to compensate for reduced foot traffic.
Now is the time to revisit your marketing spend and improve the effectiveness of your virtual communications; treat your homepage like your storefront, and transition some of your physical store experience onto your product pages and social media channels. And don’t forget about pay-per-click channels like search and display.
TIP: If you’ve closed up shop, change your Yelp listings and Google Places info to direct customers to your online store.
1. Reach out to your high-value customers
Since roughly 20% of your customers contribute 80% of your revenue, consider prioritizing your high-value customers to ensure their lifetime loyalty.
Visitors on your website will have questions related to shipment and deliveries, timeline for your website to resume sales, how sell is your facility sanitised and more. Provide Whatsapp chat option on the website so they can easily connect with your support team who can help address the queries. You can install free Whatsapp chat plugin for your website here. If you do not have a customer support resource, you can use Shopify’s Facebook messenger channel alternatively to send automated message responses to customers’ questions. Please find the tutorial here. This channel will add Messenger Message Us button on your website. After you add the Messenger sales channel in your Shopify admin, your customers can opt in at checkout to receive Messenger updates from your store. If you are already using our Facebook Messenger channel and you wish to send any marketing message or important update to your existing customers in bulk (the ones who had subscribed to receiving updates on Messenger), you can install this app.
2. Adapt your marketing messaging
During the coming weeks, brands need to be sensitive to consumers’ needs and rethink their marketing and advertising. That might mean pausing certain campaigns for certain products, and adjusting the copy and creative on ads to better speak to the realities of the COVID-19 pandemic. For example, you may not want to advertise luggage campaigns with “wanderlust” messaging when there’s a global travel advisory in effect.
However, brands should be cautious of pivoting too far away from their core brand messaging, or worse yet, coming off as opportunistic. Below are some examples of brands who made simple adjustments to their messaging to “read the cultural room” while remaining authentic:
3. Create “social experiences” on social media
In the absence of “IRL experiences”, customers who are in self-isolation are increasingly looking to social media for content and connection. Brands should get creative about how they leverage their social media presence.
From virtual showrooms to live-streamed yoga classes, brands are getting creative with their social media channels and tapping into their already-loyal audiences.
4. Offer free shipping or local pickup and delivery
Shipping cost is a barrier for online shoppers, so if you can, consider offering free shipping. Another option to avoid shipping costs is to offer “curbside pickup”. In other words, local customers can purchase a product online and pick it up from your store (even if you’re not technically open).
Recommended app: Zapiet
5. Extend your return and exchange policy
On the topic of sensitivity, empathizing with customers’ uncertainty can go a long way. In light of store closures, returns and exchanges become more challenging and could prohibit online purchases. Simply put, people don’t want to be stuck with a product they don’t like.
Extending your return and exchange policy in acknowledgment of the current climate could alleviate buyer doubt and incentivize online sales.
Revisit your paid marketing strategy
Digital marketing opens up many opportunities to reach customers where they spend their time online. But with diminished cash flow, it might be a good time to rethink your paid marketing mix, spend on tactics where you can see the highest return on investment, and take advantage of the daily and lifetime budget control options available through paid advertising platforms to control your spend.
Use retargeting ads to reach your customers
Facebook advertising can help you reach new customers through the custom audiences that you create, which consist of your past customers or social media fans—people who already know and love your business.
You can upload a customer list to Facebook’s Ads Manager and use the platform to engage with your most loyal customers, highlighting gift cards, pre-orders, or other offers we’ve covered in this article.
Show up for intentional shoppers with Google Smart Shopping campaigns
While some advertising can come across as interruptive during this time, search advertising helps you show up specifically for customers who are actively looking for your products. The Google Shopping app makes it easier for online shoppers to find your brand across YouTube, Google Search, and Gmail.
Google Shopping is relatively simple to set up. You can sync products to the Google Merchant Center, set a budget, then let Google optimize the campaign, so products show up when people search for them across Google’s network.
Hire Shopify Experts to ramp up your online business
Gift cards are now available on all plans
Since gift cards can be a powerful tool for retail businesses to help their cash flow when in-store selling is tough, we’re making the feature temporarily available on all Shopify plans (previously only available on the Shopify plan or higher).
If you’re not on Shopify yet, get started with a free trial today.