December 3, 2023

Build stronger brands and reduce reliance on social networks

E-commerce companies were It was once considered almost indomitable because it grew unfettered and saw record profits. But recently, they are challenging a new market that is being shaped by three major trends: stalled online shopping growth, the impact of the latest iOS privacy updates on social media customer acquisition strategies (which drives costs up) and macroeconomic uncertainty.

While these factors are largely beyond the control of retailers, we see quite a few startups that have adapted by solidifying their relationships with existing customers and building their organic brand.

In this post, we’ll delve deeper into the key trends and their impact on e-commerce, as well as the many tactics businesses can implement to continue thriving in this new retail climate.

New Retail Challenge

First, e-commerce growth as a percentage of total sales worldwide has not continued to remain as strong as expected after the pandemic. statista Reports show that e-commerce accounted for 12.9% of total US retail sales in the fourth quarter of 2021, down from 13.6% a year earlier. It’s possible that a few quarters of growth has been pushed forward and is now back on the original path, albeit still high.

Most brands will find it difficult to stimulate growth through customer acquisition in 2022.

At the same time, customer acquisition costs have skyrocketed due to recent iOS updates as Apple continues to implement and ramp up privacy features. Devices running the new operating system have limited third-party tracking capabilities that platforms like Facebook (or Instagram) rely on.

Brands can no longer reach the level of broad audience targeting and optimization capabilities previously available, with brands seeing lower performance and higher total acquisition costs, leading many to shift spending away from these platforms.

Finally, a new threat is fast approaching and clouding the e-commerce landscape: macroeconomic uncertainty with a potential decline in discretionary spending. This is already evident in the lackluster earnings from major retailers like Target and Walmart, as we see a mix of nondiscretionary revenue accelerating due to inflation while sales of discretionary items slow.

What can be done to combat these threats? There are two primary courses of action that e-commerce businesses should focus on: (1) solidify – making existing customers stay longer and spend more, and (2) build a stronger brand – reduce reliance on social networks to naturally increase customer acquisition and conversion rates.

mobilize existing customers

The first step is to reduce the rate of change and increase the average order value (AOV). This helps brands protect conversion and achieve expectations while balancing profitable acquisitions with lower conversions due to significant changes in the industry (eg, increased acquisition costs and supply chain issues).

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