Maelstrom Ahead! Weathering the eCommerce Storm

By Andrew Chan, Co-Founder & CMO, AfterShip 

The eCommerce boom that was being fuelled by lockdown shopping has gone well and truly silent. And to make the future even more concerning, we’re bracing for a recession and rising inflation is making consumers think twice before clicking the buy button. All of which pave the way for an uncertain couple of years for retailers. It’s not entirely hopeless, though. If brands take the time to understand the bigger picture (and the trends behind it), they’ll discover plenty of tools and resilience to weather the storm.

Many of the brands and retailers that I work with are going to start 2023 in the same way: overstocked. To meet demand during the pandemic, production was put into overdrive, but then orders dropped off a cliff that was much closer than it appeared to be. Warehouses and storage facilities are now overflowing with inventory, and retailers are watching their storage costs spiral.

The logical step to get goods moving is to offer deeper discounts and extended sales (something we’re seeing over BFCM and the holidays). Even with those actions, experts are forecasting that inflation will outpace growth—and still would if sales increased by 5% YoY”

Despite the maelstrom of challenges that 2023 will bring, if brands take the time to understand the bigger picture (and the trends behind it), they’ll discover plenty of tools and resilience to weather the storm.

It’s likely that early adopters of new sales channels will be the first to see revitalized demand. Think social media services like TikTok Shop, which is currently being trialed in North America. It’s already clear that where TikTok goes, Facebook, Twitter, and Instagram are likely to follow.

As 2023 begins and sales continue to sag for online sales, brick-and-mortar sales will continue to rise in the new year. Interestingly, this returning foot traffic has created a buzz in DTC circles. Traditionally online-only brands are looking towards others that have made the jump offline, such as AllBirds and Parachute. Though this isn’t without danger. With rent prices rising, this expansion is only in the cards for those with significant investment, exceptionally healthy balance sheets, or a strong appetite for risk.

It’s not just adventurous retailers that are taking a gamble though. Those who remain laser-focused on eCommerce will have more to overcome than just shoppers who’d prefer to buy in-store. As inflation bites, merchants will see their carriers and 3PLs quietly increasing rates across the board.

This will pose an early strategic quandary for those in fulfillment. Will they decide to switch carriers now or wait to judge performance over peak season? Another option may be to add more carriers to fall back on if volume caps affect shipments with already established carrier choices.

In 2023 there are software solutions to enhance every part of the customer experience while also saving on costs, time, and resources. If one piece of software can do 10 people’s jobs, then it becomes virtually impossible to refuse. After all, cutting staff doesn’t magically cut workload.

Ultimately, despite the maelstrom of challenges that 2023 will bring, the classic eCommerce tenets will remain true. If customers have a memorable experience and receive excellent service, they’ll shop again. To achieve that, retailers must turn towards tech and automation.


JAN 2023