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 for immediate steps retailers can take to mitigate cash flow constraints, respond to declines in revenue, and strategies to boost online sales.
- How to inject cash flow into your business
- Strategies to boost online sales
- How ShipGooder 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.
2. 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. You can get free packaging from all major couriers in the United States (USPS, DHL Express)
- Use ShipGooder.com. We’ve negotiated competitive rates for you with major carriers. Plus, you can print your own labels at home or at your store, and schedule pickups with USPS and DHL Express via ShipGooder.com. Please ensure you read the information posted under our Help area, COVID-19 section, to keep informed on our various partners.
- Set up Local Shipping. When customers are close to your business, you can offer a “local delivery” option. Local shipping rates will be automatically applied at checkout to customers in your selected zone.
7. Apply for government relief
Taking on more debt is typically a last resort, but governments around the world are rolling out financial relief measures to support small businesses impacted by the COVID-19 pandemic. We encourage you to review what your regional government is offering and if you’re eligible.
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.
Apps like Endear act as a customer relationship management system and a messaging platform, all in one. It’ll keep you and your staff productive while working remotely, allowing you to stay in touch with your customers via text message and email. You can send personalized recommendations and lookbooks that include links to purchase online.
Finally, consider adding live chat to your online store to replicate the 1:1 personalized service customers are used to having in-store.
2. 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.
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.
How ShipGooder can help
Don’t hesitate to reach out to our Support team
Our support team is working 9:00 am to 5:00 pm EST to support our customers in any way that they need.