If you’re a retailer or a store owner that’s had to adjust to a new way of doing business, then rest assured that you’re not alone. There’s understandable anxiety about tomorrow as social distancing and lockdown guidelines force businesses to pivot.
COVID-19 has had a far-reaching impact on internet retailers, the economy, and consumer spending habits. As a business owner, you might have had to completely rethink your business model. After all, retailers deemed “non-essential” have been forced to shut their doors.
At Shopify, we want to see merchants succeed and we understand the importance of catering to customers, wherever they may be in the world.
In this resource, we’ll try and discuss ways that you can improve the cash flow of your business, strategies to boost your brand’s online sales, and ways to take care of your store and yourself.
How to Improve Your Cash Flow
The availability of cash is perhaps the single most important factor determining the health of your business. After all, you need cash in your bank account to pay suppliers, creditors, buy new stock, pay your staff, invest in marketing, and other business overheads.
Without robust cash flow, you might have to borrow money to keep your business afloat and that’s a situation you probably want to avoid in the short to medium-term.
1. Clear under-performing stock
Non-essential retail will witness a decline in demand as people cut back on discretionary spending and tighten their wallets in light of the uncertain economic environment. A quick win is to reduce deadstock, thereby generating much-needed cash flow and avoiding expensive inventory management costs.
Inventory management and reporting apps like Shopify’s Stocky can automatically identify and prioritize products based on their value to your business. Stocky does this by categorizing your products in “A”, “B”, and “C” categories.
An “ABC analysis” is based on the Pareto Principle and holds that 20% of your stock, referred to as category “A”, will account for 70% of sales. Stock in category “B” might consist of as much as 30% of inventory but will draw in 20% of sales. And category “C” stock commands up to 50% of total inventory, but only contributes 10% of sales.
We recommend that you heavily discount category “C” products as they’re the ones that have the least value to your business. Selling them at low or perhaps zero markups will still free up dead capital and allow you to reallocate precious cash to your best-performing SKUs.
At the same time, it might be worthwhile to renegotiate payment terms with your suppliers. If you had already placed orders expecting a spring and summer demand spike, then you might want to hold off on that until the situation stabilizes. Pause incoming orders until you have a clearer view of your business.
Stocky is currently free on the Shopify (mid-tier) plan but use your intuition if you don’t have it installed on your store yet. As an entrepreneur you know what stock has historically performed the best and has the highest turnover. Similarly, you’re aware of idle inventory and wwhat’s best for your business based on historical sales data.
You can also use Shopify’s cash flow calculator to help come up with a dollar amount that you need to keep your business humming along.
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2. Promote gift cards
Your regular and returning customers are invested in helping you succeed. Gift cards are an excellent method to tap into your brand’s goodwill by giving customers a risk-free option to support you today with a promise to purchase at a later date.
Times are tough for everybody and customers understand. Many of them wish to support their local businesses and are inspired by a spirit of community and giving back. Don’t be afraid to capitalize on this newfound sense of purpose.
Shopify has enabled gift cards on all membership tiers. The in-built function allows you to create different kinds of denominations, an ability to deliver them over email, and the possibility of redeeming them at a later date.
Another method of clearing out under-performing stock is to offer it for free with any gift card purchase. You can enable this by using the automatic discount functionality in the discount section.
3. Reduce your shipping costs
As a start, use all the existing packaging materials you own as opposed to placing orders for more. Once you have exhausted your stock, consider using the free packaging material offered by most mail carriers.
Best practices say that international buyers should be offered at least two shipping options:
- A low cost or free (above a minimum order amount) shipping option
- A more expensive but faster shipping option
Your options should be clearly communicated in your shipping policy page. Not only will this help buyers understand shipping times and costs, it will also serve to boost trust and confidence in their purchasing decision.
An example of a shipping policy page on Shopify merchant Slickieslaces
Personalization is also a great method to drive brand loyalty and get your customers even more invested in your business. Hand-written notes with each order add a touch of customization; your note can also encourage them to take an action such as sharing a picture of their order on social media or spreading the word about the business with friends and family.
Your note can include a referral code, encouraging your customers to refer products. Research shows that 83% of customers are willing to refer products they like, but only 29% of them actually engage in the process. What’s more, referral marketing generates 3-5X higher conversion rates than other channels. Apps like ReferralCandy can help you explore this opportunity.
4. Make use of government support programs
Businesses are the lifeblood of any economy and governments around the world are keen to support them as much as possible in these times. In Singapore, for example, the Singapore Government Business Rebates program allows qualifying businesses to claim the following credits:
- Jobs support: A rebate of 8% of the wages, up to a monthly wage cap of $3,600, for three months (provided by July 2020).
- Wage credit: The government will co-fund wage increases for Singaporean employees earning a gross monthly wage of up to $5,000.
- Corporate income tax rebate: A 25% rebate of tax payable, capped at $15,000 per company.
- Property tax rebate: A 15% property tax rebate for qualifying commercial properties.
The Singapore government measures were announced during a budget speech and reflects the policy for the financial year from 1st April 2020 to 31st March 2021.
Here’s a list of government support programs for businesses affected by COVID-19.
Strategies to boost online sales
As consumers shift their buying preferences to the internet, your online presence and digital communication is now instrumental to the health of your business.
What’s more, with lockdown and circuit breaker measures currently in place across most of Southeast Asia, online platforms such as Facebook have witnessed record surges in traffic. Your customers are glued to their screens these days, so it’s a great targeting opportunity
Let’s go over some best practices to supercharge your online communication and digital presence strategies.
1. Optimize your website
Your website is the digital representation of your brand. If you have a physical store, customers assume that you have an online presence too. This is a great time to roll up your sleeves and ensure that everything is up to date and optimized on your website.
As a first step, you must ensure that all the products you have for sale are available online. Some retailers earmark certain products as only available in-store so it’s in your best interest to make sure everything on your website is up-to-date. With this, your customers have complete visibility into everything you sell.
At the same time, make sure to remove products from your website that you no longer sell or those products that are sold out.
Professional product pages are essential to communicate your brand as a legitimate business so your photography should come across as such. Consider including lifestyle images together with product images as customers need to visualize what the products might look like once they’re shipped to them. While important in all verticals, this is especially true in fashion, lifestyle, and beauty.
An example of a landing page from Shopify merchant Sojao
Always use the top visual assets on your product page. Remember that the goal is to make it as vivid as possible for your customer so that they are able to envision the product as if it were like in the real world.
2. Build your website for mobile-friendliness
69% of Southeast Asian internet users made a purchase with their mobile phones in 2019 and B2C online retail in the region is projected to swell to $53 billion in 2023, accounting for 6.5% of all retail sales.
As a business owner in Southeast Asia, you’re probably already aware of the mobile-first dynamic at play. Hence, if your site isn’t optimized for mobile you’re missing out on a crucial source of sales. As your customers spend more time at home due to lockdown, they’re definitely browsing the internet on their phones. You must cater to this opportunity.
As a first step, check your website for mobile-friendliness using this tool by Google. Next, you should also check that all your contact and support information is up to date.
Key things including your return policy, shipping policy, and other key information should be easily found so customers can put any anxieties to rest and commit to a purchase.
3. Communicate clearly and communicate often
Frequent and clear communication about your business is crucial for trust and visibility. Customers wishing to find out more information will first land on your website or social media accounts. Make sure all active accounts such as Facebook, Instagram, or Snapchat are frequently updated with information on things like operational hours, shipping, curbside pickup (if applicable), and customer support options.
You can also send out an email to your existing customer database informing them of the same.
If you neglect communication, you might find a surge in support tickets or queries via live chat which can take hours to clear.
Other ways to leverage social media include:
- Updating your social media bios so that customers know what’s going on.
- Recommending ways for customers to support you by encouraging a call to action.
- Experiment with new ways to interact with your customers such as contests, live events, or unique hashtags.
Social media is a great method to drive organic visibility and sales, but it’s also necessary to extract as much value as possible from your paid acquisition strategy.
Since you’re looking to curb spending as much as possible, it’s important to examine the health of your existing digital marketing campaigns. Turn off underperforming campaigns and reallocate those resources to campaigns with the highest return on investment.
Consider using retargeting campaigns as they focus on customers that have already transacted with you in the past and, hence, are familiar with your business.
At the same time, you can upload custom lists to your Facebook ad manager and search for lookalike audiences. This way you target both existing followers as well as others similar to them in other markets, providing your business with a valuable growth opportunity.
Don’t promote products that might be deemed as insensitive during these times, such as those tailored for travel or vacation needs. Repositioning products relevant to at-home use might also work in your favor.
The Google Shopping app makes it easier for consumers to find your products and shop across Youtube, Google Search and Gmail. It’s easy to set up and you can sync products to the Google Merchant Center, set a budget, and let Google optimize the campaign so that your products show up when people search for them across Google’s network.
If you’re new to advertising with Google, you can get $100 of ad credit when you spend $25. That’s a good way to familiarize yourself with the product.
Whether you’re a seasoned advertiser or new to it, now is a great time to evaluate your digital strategy.
4. Experiment and think out-of-the-box
Additional strategies to optimize online sales can assist in boosting revenue and ensure a healthy stock turnover. Start by emailing saved carts or initiating an abandoned checkout campaign. That way you can encourage users interested in your products to complete the transaction.
To reach high-value customers, you can also consider using Endear, a customer relationship management app and a messaging app all in one. It allows you to stay in touch with your customers by text and by email. Right now, Shopify users can try Endear for free for 30 days and then avail a 50% discount for six months.
A loyalty program is also a powerful method to get your customers invested in your business by increasing both retention and revenue.
As we mentioned earlier, ReferralCandy can help you incorporate a loyalty and referral marketing campaign if you don’t already have one set up. Marsello is another option you can consider. Regardless of the app you pick, they can assist in the following things:
- Encourage your customers to share about your brand
- Encourage your customers to refer you to a friend
- Drive customers to complete purchases
Customers are often discouraged to complete purchases if they have to shell out for a shipping fee, so you might want to consider implementing curbside pickup if that’s an option for you. This encourages users to buy online and pick up safely from your storefront location, at a distance from delivery staff.
Zapiet can help you coordinate curbside pickup and local delivery. Customers love the flexibility to define pickup times as it slots into their schedule rather than the other way around. Zapiet can also integrate with Grab delivery and other on-demand courier services to make delivery and pickup seamless. It’s also offering Shopify customers an extended 45-day free trial.
If you can, another worthwhile tactic is to reduce the minimum order spend to qualify for free shipping. Customers love free shipping and they perceive its value to be 2 to 3 times higher than the actual dollar amount. Some may also boost their basket size just to qualify for free shipping as they believe they’re saving money overall.
Also, don’t forget to prominently display the shipping policy on your website to encourage trust and clarity.
5. Empathize with your customers
It’s a difficult time all around, and consumers don’t want to be stuck with a product that they don’t need or might not use. Since returns and exchanges are a difficult proposition due to the closure of stores and delayed shipping timelines, extending your return policy can go a long way in addressing possible concerns.
If your customers are confident that they’ll be able to return their products if the need arises, they’ll have far more incentive to engage in the purchase.
So, if your regular return and exchange window is 30 days then it might be worth extending that by a couple of weeks. This gives off the perception that you’re treating your customers as human and that you care about their interests too.
To summarize, in order to incentivize online sales you can do the following:
- Optimize your website
- Communicate with your customers clearly and frequently
- Adapt your marketing strategy
- Drive your in-store customers online
Take care of your store and yourself
Since you have more time on your hands, you could invest this opportunity to remodel and refresh the look of your physical store. Now is the time to do a deep clean, revamp your store shelves, and organize the cash wrap. You can also perform a stock take to update and reconfirm your existing inventory levels.
Stocky can help you reorganize stock levels; after the manual stock take is over, simply input the parameters on the app and it’ll sync with your online store.
If there are any new operational flows or improvements you’d like to work on, this could be a good time to implement them. These include exploring new apps that help you sell in new ways or rethinking sales goals for your staff. This time can also be utilized to train staff in new processes that they otherwise might not have been able to learn.
Take this time to check in with your friends, family, staff, and members of the community too. Try to establish a daily routine, make sure you get some exercise every day and be as social as you possibly can (even from home).
Double down on your creativity
Selling on marketplaces is a popular option in Southeast Asia, but the tactic runs counter to the opportunities that lie in building your own brand and developing a community of fans that are invested in your success.
The only way to stand out in a marketplace is to constantly invest in promoted listings. While this could help you get short-term visibility, it won’t allow you to differentiate yourself from the rest. The tactics we mentioned earlier such as promoting gift cards, building an active social media presence, and offering curbside pickup are difficult to achieve if you rely solely on marketplaces for your sales.
We understand the creativity of marketing tactics is important, especially during leaner times like these. A popular way of promoting products is through specific Facebook communities such as those that discuss maternity needs, for example.
Facebook is the most popular social channel in countries like Singapore, Indonesia, Philippines, Vietnam, Thailand, and Malaysia. Merchants selling internationally will find that Facebook works well in markets like the United States, Australia, and the United Kingdom too.
Another method is to sell without the need to stock massive volumes of inventory. Shopify plugin Oberlo, for example, can help you add products to your ecommerce store. Whenever you make a sale, Oberlo will connect the order with the supplier who then proceeds to fulfill and ship it to the eventual customer. This way you avoid most of the operational hassles and are able to stay lean without incurring large overhead expenditures.
Another way to prevent overstocking is to only make as much as the market demands. For example, Singaporean designer toy and art collectible brand MightyJaxx sells exclusively through pre-order. Not only does that drive exclusivity, but it also prevents overstocking.
These are uncertain times, but we’re here to help. Reach out to us at Shopify.com.sg/covid19 for resources, tips, and general advice on how best to position your business.
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