Between macro-economic factors, a rollercoaster last two years and the unfortunate lack of a crystal ball, planning season is proving to be extra challenging for manufacturers looking into 2023.
Most manufacturers are tasked with figuring out how to do more with less, from investments to resources to strategy. And in times of uncertainty, prioritization is key. Brands must find the areas of focus that will drive the highest impact and highest revenue—at a lower cost. And, it’s important not to favor short-term approaches that sacrifice the long-term strategies you’ve built.
The five strategies outlined here will help manufacturers drive both short-and long-term impact for their ecommerce business. As you put together a roadmap for the year ahead, consider implementing these to get the biggest proverbial bang for your buck.
1. Create and use a never-out list.
A never-out list is a list of your top 100 products, or however many make up 80% of your online sales. Having a never-out list is impactful because it gives you a clear view of the products that mean the most to your online business and can help you guide investments and decision making.
Use your never-out list to allocate capital disproportionately to the items on it. The idea is to make sure they are—wait for it—never out of stock. It’s not just about ensuring these products are available to customers, but to protect your standing with retailers. Going out of stock is poison to an ecommerce business and doing so can set you back much further than a few missed sales.
When you have to prioritize, a never-out list makes it really easy to see where you should focus.
2. Take a surgical approach to pricing.
Rather than considering a blanket increase or decrease for your entire catalog, take a more surgical approach: going SKU by SKU to determine the right pricing move to make.
Pricing isn’t a set-it-and-forget-it strategy, especially after the volatility the home furnishings industry has experienced in 2022 and 2021. Many brands are priced at their peak and considering if and how prices can be lowered to avoid pricing themselves out of the market all together.
To ensure your most important products don’t lose their relevance, start with your top 25 best-sellers and work your way down. You could also consider the price sensitivity thresholds of your assortment and streamline it that way, i.e. products over $250 get X adjustment and prices under get Y adjustment.
No matter how you decide to go about it, your pricing strategy likely needs a closer look to ensure you’re in a good place for 2023.
3. Revisit your promotional strategy.
Promotions are the key growth driver in ecommerce right now, and brands need to approach their 2023 calendars competitively.
When demand was through the roof at the height of pandemic online shopping, brands didn’t need to focus on promotions as much. But this was an anomaly—not the new normal.
With slowed consumer spending and inventory surpluses, brands need to return to promotions to compete for the customer’s wallet and move product. And if you’re on the fence about how to handle your pricing strategy right now, think of promotions as a temporary price reduction that will allow you to stay competitive without making any heavy-lift or long-lasting changes.
The move away from promotions during high demand was an anomaly—not the new normal.
When thinking about your promotional calendar for 2023, brands should first do the foundational work to determine the guardrails for your brand. What can your retail partners discount down to? How much wholesale support can you provide? What’s the ideal timing for your brand’s promotions?
It’s also important to maintain an open mind about what promotions mean for your brand. Stay open to the opportunities that retailers can offer to experiment and see what works promotionally. This experimentation is how you find new ways of driving growth.
4. Diversify your retailer portfolio.
Being concentrated too heavily with any one retail partner is a risk for your business. With so much unknown going forward, diversifying your partnerships helps balance your business and ensure you have avenues to cover you in different scenarios.
For example, when stock outages were running rampant, there were some retailers who would take backorders—thus allowing manufacturers to still have sales come through—and there were ones who took out-of-stock product off the website entirely—leaving no opportunity for a sale.
Working with different types of retailers who bring different benefits and capabilities to the table is what makes a strong portfolio. At BrandJump, we’ve seen many brands have success with home improvement stores, specialty retailers or smaller stores that didn’t feel like a good match at first, but have ended up being fruitful partnerships for both.
The takeaway? Evaluate your retailer partnerships, for both the good and the bad.
5. Perfect your product content.
You didn’t think we’d have a list about driving ecommerce growth without this one, did you? Product content is one we talk about a lot, but it’s because it’s mighty important—and many brands’ content is lacking when it comes to reaching the online customer.
No matter what the economic environment, improving product content will improve your sales. Content is king, and online, its what replaces an in-store experience for customers.
Getting your product content up to snuff doesn’t have to be an overwhelming undertaking. Again, start with those top 25 SKUs and make sure they each have the content needed for an A+ digital presence. That includes:
- Silo imagery from all angles
- Compelling lifestyle imagery
- Scale drawings
- Robust product details and data
If your retail partners have additional content opportunities like space to tell your brand story or add enhanced content modules, be sure you are taking advantage of those as well.
Despite the external factors that make planning for the coming year challenging, it’s still important for manufacturers to be intentional in driving success across online channels. Finding the right opportunities and most meaningful areas of focus will support your ecommerce business both in the near future and for continued long-term success.
