How to Recession-Proof your Ecommerce Business
June 13, 2022
June 13, 2022
You may have noticed a changing tide in the economy: Inflation is up, supply chains are broken, and quarterly earning reports are pointing to a recession on the horizon. Experts and economists are ringing alarm bells. And, while all recessions aren’t created equal—household balance sheets are high, the labor market is tight, this is not 2008 all over again—many signs point to some reduced consumer spending. For ecommerce businesses that means less revenue and media spends to acquire new customers in a time where acquisition costs have never been higher.
At Tadpull, we’ve been building resilient businesses that are stable in the face of challenges—from rising ad costs to IOS tracking changes, global pandemics to supply chain failures—for a decade. We design shock absorbers for ecommerce businesses, so when the environment or the economy changes, your business can handle it. And we’re here to help you through today’s changing world, too. Here’s how we think about creating businesses that not just survive but thrive in a recessionary environment and beyond.
Anybody can run ads. Not any firm can help a business acquire a profitable customer who is going to generate cash year in, year out. We think of marketing and eCommerce as an index fund. We’re not placing a huge bet in one basket or putting all your money into crypto. You can’t survive on social media ads alone. That might work for a while, but when Apple changes how attribution works and the sugar high dies off, your business will be left scrambling. And traffic via paid media is a volatile strategy: Great while it lasts but you need to replace that traffic (and revenue) when it dries up. (And it will. Trust us.) Or consider a third way: SEO. Brands that rank for a variety of terms using sketchy tactics can suddenly find themselves buried in the search results with their revenue sinking as well.
Instead, we look at your business and its goals, then intelligently and efficiently spread your traffic sources across the eCommerce ecosystem: SEO, email, SMS, paid ads, and more. This diversity is key to a business that remains stable in the throes of consumer uncertainty (and is more valuable to investors).Our north star is your healthy balance of traffic. We’re not in it for a quick hit to juice your traffic for a quarter; we work on multi-year journeys.
With our proprietary eCommerce software, The Pond, we tailor the traffic balance specifically for each client’s growth plans. A well-balanced strategy and approach to driving traffic will help eCommerce businesses weather the storm during uncertain market times and volatility—and with our nuanced understanding of your business, finance goals, and marketing strategy we can tweak on the fly as quickly as micro and macro market conditions change.
We helped Mack’s Prairie Wings, a company founded in 1944 in rural Arkansas, transform their datasets and incredible brand into an omnichannel behemoth. We set up specific guardrails around ads as one way to profitably grow their eCommerce. We built a level of trust with the CFO over the years and worked closely with her on the advertising strategy. That strategy was laser-focused on profit. We had very specific margin goals when it came to running ads using ERP financial data and AI. If a product wasn’t profitable to a certain threshold, we fine-tuned the model not to run an ad again.
How does that strategy recession-proof a business? In the background, we worked closely with the Mack’s PW team to further refine their hundreds of thousands of SKUs for search engines to understand and rank their items. Over time, this combined with a growing and carefully curated email and SMS list has resulted in high-quality traffic flowing day in and day out without the volatility of paid media disrupting profit.
When you’re looking down the barrel of a recession—in the middle of a global supply chain disruption—you have to consider inventory and cash. What’s in stock? What’s stuck in a shipping container at a port? What are your products that sell well? What are the margins on every SKU you sell? What generates cash consistently?
For example, a company might have something that not only sells really well but has great margins. It’s the first thing customers buy—and, we know from our Pond user data, that they sometimes buy this other product along with it. We’ll use AI to predict what product the customer should buy next, then leverage email and SMS to earn this sale without running an ad (thus keeping costs low and extending lifetime profitability of a customer).
We’re pretty creative at using the power of data science, and we’ve spent a decade in the trenches scaling online businesses alongside CFOs and eCommerce Managers. If the pandemic supply-chain issues have taught us anything, it’s that businesses need ways to move what they have and to do it cost-effectively by relying on more than pure paid media.
At Tadpull, we’re in it for the long haul with our clients. We see ourselves more as integral financial partners than hired agency guns who flip switches in an ad account. Ultimately, building a recession-proof business comes down to a diverse balance of traffic sources and tweaking the mix based on what works, what doesn’t, and what’s in stock. That’s a lot of variables to manage and the reason our software is so powerful for handling this complexity.
When a recession is looming, it’s easy for eCommerce companies to get spooked about what the next quarter might look like. With Tadpull, you can rest assured that your traffic mix is strategic, diverse, and built to withstand the shocks and volatility of an uncertain economy.