Pandemic Sends Online Retail On The Wild Rollercoaster Ride

- Anand Katakwar

July 26, 2022

During 2020 and 2021 most online stores faced exponential rise in orders. In fact, the median online sale growth for the five years leading up to the pandemic was 14.2%, and 2019's uptick was 14.3%. And when digital revenue in 2021 is compared with 2019, online spending soared by 50.5%


While food and many other essential supplies had a big spike, still the apparel and fashion industry accounted for 29.5% of all ecommerce sales in 2021. Fashion will have its almost one third expected market share going forward also.  The global fast fashion market size is expected to grow from $91.23 billion in 2021 to $99.23 billion in 2022 at a compound annual growth rate (CAGR) of 8.8%. The fast-fashion market is expected to grow to $133.43 billion in 2026 at a CAGR of 7.7%.


Customers, who would have taken years to make transition from physical only retail to, all found themselves buying from online retailers out of compulsion. Five years or more of growth happened in the blink of a year. Many ecommerce stores found themselves unable to fulfill all the orders because of inventory procurement, shipping and handling or other logistics challenges.


From first two years on exponential growth of 2020s, fast forward to mid 2022. A few top analysts are pin-pointing to inventory buildup as the biggest problem that is and will happen in the recession which is unfolding with hyperinflation in coming times.

On one side is the much larger customer base and growth forecast of future of ecommerce industry. On the other side is this recession unfolding. Are there worse times to come or with everyone so pessimistic about near future this is the bottom?


What should online retailers do, in these fast changing times?


Situations have changed so fast. When orders went up exponentially fulfillment became problem. When inventory was replenished now overstocking has become problem.


Importance of adjusting business strategy as per the changing needs of a business is always important. Now that factor has become highlighted. Fast changing situations demand faster changing decision making and execution of the decision made. Implementing optimal business strategy and utilizing advancements in technology to execute all steps of retail life cycle in an automated manner to achieve the objectives is a critical need now.


Let us start by listing down the tasks and challenges that retailers face,


1. Product selection and Inventory Management:

This is most fundamental aspect of retail which brick-and-mortar as well as online retailers always faced. Demand forecasting and accordingly selecting the best products to meet demand is fundamental aspect of retail business.  Product churn rate, how fast your one single product or all products combined together are able to sell out determines not only the growth in revenue but is also profits.

Products sitting on shelf for long period of time result into poor ROI.

With such a wild fluctuation in demand of recent times and what is happening now. It is important to mitigate the risk of inventory on hand. Drop shipment has flourished in recent times. Manufacturers and aggregators are providing APIs which one can use to download all possible products from a multiple brands. Even standards to make this uniform like Promo Standards has come up. To mitigate the risk of wild fluctuations in demand as well as to optimize return on investment a retailer must evaluate is drop shipment an option for the business. Some of the successful retailers those who have even built a good brand are completely doing a successful business on drop shipment mode.



2. Increase return on ad spent (ROAS) via razor sharp targeting on online channels like Face book, Instagram and Google. Intelligent system like Enalito can find out exactly which of the customers are interested in buying a product to promote. Even for a new product hybrid recommender systems can zero down on the customers most likely to buy the product. All the look-alikes of these customers out of millions of subscribers of Face book can be targeted to achieve multifold increase in ROAS.


While all successful online retailers in the long run grow the loyal customer base, online advertisements is also a must and are used by even the topmost brands in retail today.


3. Second and subsequent repeat purchase reminders: Once with online advertisement, a new customer has purchased from your store. Making an existing one purchase customer buy a second time becomes important in the journey of increasing repeat purchasers of the store. A good segmentation system along with all other KPIs also tracks Latency (time between two purchases) and is able to identify all such customers who should be targeted for second purchase with email and other channel communication.

4. Reduce customer churn rate: Identify customers at risk and automate your marketing to ensure they don't stop buying and are served with only the most relevant offers for them.


5. Treat your VIPs well: From most loyal customers who have been with your store for longest time, to most frequent buyers of recent times all customers important to your store. Those who deserve VIP treatment should be identified and recognized with personalized communication and offers. Word of mouth and organic growth is the best way to build long term branding.


6. Convert visitors into buyers: Pay attention to any interest shown in products. Any one window shopping or browsing on your site is showing interest in your products. Communicate with them. Automated sending of emails to those who looked but did not buy containing exactly those products they shown interest into and others of their interest has potential to make additional sales.



An AI based advanced marketing and user journey tool like Enalito can help online retailers with all the above and many more goals. Automating many aspects of Omni-channel customer engagement. Providing the ability to easily find out and adjust the business strategy as per the changing needs of unfolding market dynamics.