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November 17, 2025
Content Manager, Bizrate Insights
Updated 11/25: The following blog is adapted from Bizrate Insights’ past library of white papers and guides that we’ve made publicly available. Enjoy!
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1. Fine-tune Your Advertising Methods
2. Develop Additional Marketing Strategies
3. Have Backup Money at the Ready
4. Let Go of Things That Aren’t Serving You
7. Become a Trusted Authority Voice
9. Provide Additional Value for Your Customers
10. Learn More About Your Customers
Digital Solutions to Empower Ecommerce Growth
Is a recession imminent? Federal Reserve Chairman Jerome Powell conceded recently that a U.S. recession is a possibility. Earlier this summer the Federal Reserve raised interest rates in the U.S. by 75 basis points, marking the biggest increase in 28 years. This change is intended to control rampant inflation, which reached a new peak of 8.6 percent in May. Inflation has remained high throughout 2022, raising concerns about a recession.
The gross domestic product (GDP) is another metric economists use to gauge economic growth. The U.S. GDP dropped by 1.4 percent in the first quarter of 2022, likely due to the combined effects of a spike in COVID-19 cases and the war in Ukraine. Economists define a recession as a drop in the GDP for two consecutive quarters, although the National Bureau of Economic Research (NBER) usually makes the official call.
While this hasn’t happened yet, many ecommerce companies are already experiencing significant disruptions in their supply chain and declining sales as consumers focus on necessities.
A recent Bizrate Insights survey of 1,300 shoppers told us that they are at least somewhat concerned about a potential recession.
With so much uncertainty in a volatile economy like today’s, it’s important that your ecommerce business is prepared. The following 10 tips can help your ecommerce business brace for a potential recession.
Many Ecommerce business owners have shifted their advertising spend in recent years and greatly increased their advertising on social media. Many of these campaigns have generated millions of comments, likes and shares, making them highly successful. However, social media users are starting to leave established platforms like Facebook for new platforms that are more specialized towards a particular demographic.In addition, these users are consuming media in formats that place less emphasis on sidebars, which is where social media ads typically appear.
The cost effectiveness of traditional social media advertising is dropping due to increased competition combined with the possibility of a recession, which is driving prices higher. Furthermore, a greater portion of the intended audience might not even see the ads due to the new media formats. These changes don’t mean you should completely stop advertising on these platforms. Instead, you should shift your efforts from your current methods towards those commanding greater user attention.
Stories are particularly popular with Millennials, who are also a prime demographic for many ecommerce businesses. Their influence on the economy continues to increase, causing many platforms to look for ways of monetizing stories with paid advertising. However, your company can establish a presence with followers by conducting an unpaid organic campaign based on stories. This new format is usually cheaper than more mature advertising methods that are further along in their life cycle because story campaigns can move more quickly.
The cost effectiveness of traditional social media advertising is dropping due to increased competition combined with the possibility of a recession, which is driving prices higher.
New marketing strategies can help ensure your business is reaching the maximum number of potential customers, which is particularly important during economic slowdowns. If you haven’t already done so, you should incorporate artificial intelligence (AI) tools such as sales-focused chatbots into your store to make smarter personalized offers, especially cross-sells. This feature provides your customers with a positive experience that will keep them coming back, even when money is tight.
Amazon pay-per-click (PPC) ads appear in Google search results, making it one of the most cost-effective ways of advertising for this large, recession-resistant market. However, competition for these ads is currently heating up. Major influencers may be out of reach for many small ecommerce businesses, but they’re having great success with micro-influencers who only have a few thousand followers at most. Marketing livestreams can be an attractive alternative to simple video ads on Facebook or YouTube. Vlogs can also help advertising efforts go viral.
A great way to bolster revenue is by strengthening relationships with existing customers. The person most likely to buy from you is a person who has already bought from you. To increase the customer lifetime value, look into subscription models and loyalty programs.
These options are only a few of the marketing strategies you can use to reach more customers. We also recommend you keep up with successful ecommerce trends being implemented by other merchants. The key point here is to be creative in keeping your ecommerce business ahead of the trends that everyone else is already doing. The more you can stay ahead of these trends, the stronger your position will be during a recession.
The possibility of falling sales makes it especially important to save money when you expect a recession. Six months of operating expenses is the minimum you should have to cope with an economic downturn, although this is often unrealistic for a small business. Nevertheless, you should work towards this level of savings as quickly as you can, even if it remains a long-term goal for now.
A line of credit (LOC) for your business is another option, which you’ll want to obtain before you need it. Lenders naturally tighten their purse strings when the economy is slow, making it more difficult to obtain credit.
Bear in mind that an LOC doesn’t cost anything until you use it, so you have nothing to lose by getting it in advance.
Furthermore, the interest rate of an LOC is usually much less than that of a credit card, which should be your last resort for paying for operating expenses if revenue drops.
Say goodbye to anything that isn’t helping your business, whether it’s a product line, customer or employee. For example, getting rid of a high-maintenance customer or employee with poor productivity will reduce your revenue in the short term, but it will also provide you with more time to gain new customers and develop new product lines in the long run.
The same principle can apply if you offer a product that isn’t part of your core business. In this case, the product may provide a smaller profit due to the additional effort needed to sell and ship it. Dropping this product could actually increase your revenue if it allows you to focus on your core product lines.
Ecommerce involves many small, hidden costs that can cause you to sell products that aren’t as profitable as you think.
Only by carefully analyzing their true cost can you distinguish between products that are important to your business and those that are holding your business back.
It’s better to reduce your product line than to fail at weathering the storm if a recession does hit.
You have many levers that can control your business, so you shouldn’t let fear keep you from making the changes your business needs to survive. In order to determine what works and what doesn’t, you should be constantly measuring the various aspects of your ecommerce business. We invite you to look at our recently-published list of the 24 Key Performance Indicators an ecommerce site owner should consider monitoring.
Excessive inventory is one of the most common causes of poor cash flow in a product-based business.
This often occurs due to a lack of attention, but a looming recession is a good time to correct this problem. If you have merchandise that isn’t moving, you need to mark it down and get it out of the warehouse. Don’t get emotionally attached to your inventory, even if you only recoup the wholesale cost. After all, it’s better to get some cash for a product when the alternative is for it to collect dust on the shelves.
Many ecommerce businesses use drop-shipping to avoid the cost of warehouse storage.
It’s tempting to expand aggressively when the economy is strong, but this strategy can prevent you from having the resources needed to survive when it slows down. Keep your operations lean to ensure you can survive setbacks, especially when you’re just starting out. It’s vital to reduce overhead and fixed costs during this period if you want to remain competitive.
You can also reduce your overhead by outsourcing tasks like accounting and marketing to external agencies. The cost of an advertising agency’s services may prove considerably lower than that of hiring full-time employees.
The on-demand quality of working with freelancers can also cut costs for services that don’t require a full-time workload, since they only charge for the time you need them.
In comparison, employees are a constant expense regardless of their workload. Reducing your overhead means you don’t need to sell as many products to earn a profit. You may also be able to remain profitable by lowering prices when sales slow, although ecommerce businesses typically have a thin margin to begin with. If you choose this strategy, ensure you maintain your service quality so you don’t lose customers.
Your expertise may benefit your customers. In the course of running your business you’ve learned about the industry, and you can probably provide useful advice. You can turn this knowledge into content. Good content creates demand for your products and services by entertaining and educating your audience. This allows you to position your company as a thought leader in ecommerce, establishing a high level of trust from your target audience.
Content also helps create need in your customers outside their regular purchase behavior, which is vital for maintaining revenue during periods of reduced spending.
From a customer perspective, content costs nothing for them to consume, leading to a higher volume of traffic for your website.
The creation of quality content requires dedicated effort. The essential components of
a good content strategy are: an understanding of who your audience is and what problems they’re seeking to solve, a topic expert (yourself, and/or other leaders within your team), a content writer to capture the know-how and turn it into good content, a content calendar that leads you to produce good content consistently, and channels of distribution for the content—either on your company site or off-site channels such as LinkedIn, Substack, etc.
Successful businesses are built on a strong brand, which customers will value even more in a recession. An easily recognized identity helps you form an emotional connection with customers at a time when they may be reluctant to buy. You should also ensure your actions, messaging and value proposition reflect your brand purpose at a time when customers are giving greater thought towards making purchases.
The core of your brand should never deviate from its stated mission, although you may need to change your messaging to reflect current events. For example, you still need to show how your products are better than that of your competitors, even when you differentiate with them on factors like price or quality.
Customers are less willing to make purchases during a recession, especially when it comes to discretionary spending. In these cases, you need to provide value for your customers to maintain sales. A 2020 study by McKinsey showed
70 percent of customers were expecting to change their spending habits for at least four months after areas began lifting stay-at-home restrictions.
These changes primarily affect brick-and-mortar retailers, but consumer spending generally declines overall during economic uncertainty. Offsetting this trend requires ecommerce retailers to provide greater immediate value for their customers.
For example, you could offer special discounts or sales on products during periods of low revenue. You could also waive shipping fees or add free products to orders. All of these strategies can help relieve customer anxiety at the point of sale (POS). Ecommerce businesses should focus on their existing customers when adding value, as a study by Harvard Business Review shows that it costs five times more to acquire new customers than it does to retain existing ones.
Understanding your customer better is always sound advice in businesses. During a recession, when retaining customers is paramount, this understanding becomes essential. This is where Analytics tools are often useful for analyzing customer behavior and deriving useful insights from it. This knowledge lets you continue adding products that they’ll continue to buy, even when their own budgets get tight. Knowing what customers want and what they’re willing to spend means you can maintain the right inventory without buying more or less than what you need. You can also communicate with customers more effectively when you understand them. This capability lets you reach them at an emotional level, which is where most customers make their purchase decisions. Only when they’ve already made that choice do people typically attempt to justify it with logic.
The current economy may or may not turn into a recession, but most experts point to a slowdown in the near future. Additionally, the global pandemic has given ecommerce a boost for the past two years, but shoppers are beginning to turn to brick-and-mortar stores once again, creating more competition. We strongly recommend you prepare your business for a recession now, while conditions are still relatively favorable. While you may not be able to predict every economic change, these steps should greatly reduce your chances of getting blindsided.
Developing a winning ecommerce marketing strategy can feel overwhelming when you’re trying to grow your small business or startup. But with the right tools at the right price, your growing business can create a plan that aligns with your target objectives and maximizes ROI.
Bizrate Insights’ business intelligence tools empower growth and support SMBs and startups looking for an easy-to-use solution to help make informed decisions. Talk to us today about our free survey solutions and find out how you can use them to build better customer relationships, enhance brand awareness, and achieve long-term growth.
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