The Surprising Effect of Inflation on the Ecommerce Industry

It’s no secret that inflation is on the rise, and it has been for quite some time. Consumers are feeling the effects of price increases at the gas pump, in grocery stores, and in the retail sector. 

While we’ve largely emerged from the recession that hit in early 2020, the rate of growth for eCommerce has begun to slow. Between December 2021 and January 2022, overall sales increased 3.8%, indicating significant growth – but since then, they’ve slowed down. The difference in month-over-month retail sales between February and March was only 0.3%, but between March and April, it was up nearly 1%

One report on consumer spending trends in 2022 found that 72% of consumers are making an effort to spend less because of inflation. Take Netflix as an example – the streaming service lost over 200,000 subscribers in the first 2 months of the year alone. As the average Joe looks for ways to cut back, frivolous purchases will be the first to go, and retail is no exception. 

However…that doesn’t seem to be happening. 

Shoppers are still buying goods, both in-store and online. Despite inflation, retail sales now are at 92% of what they were in April 2019, bouncing back after experiencing the decline brought on by the pandemic. While consumer trends are different from what they were back then, they’re gaining momentum, and brands and retailers alike shouldn’t be overly concerned with where things are headed. Here’s a little bit of cautious optimism: according to recently released government data, the Consumer Price Index, which rose .8% in February and 1.2% in March – a record 16-year high – slowed in April to gain only .3%

A recent Axios article revealed that while sticker shock that’s come along with inflation might be, well, shocking, it’s generally not enough to deter people from paying for things. Prices nowadays are dynamic enough that consumers don’t necessarily know when the cost of something goes up, or how much it’s risen. 

The bottom line is that consumers haven’t stopped buying. While some retailers and brands have experienced relative lulls in revenue, credit card usage is up, and Americans are still taking to the internet and the stores to continue shopping. Retail sales jumped nearly 1% from March to April, so while prices have steadily risen, consumer culture remains relatively strong. 

In this time of sort-of certainty, there are different strategies that brands can take to ensure relevancy as consumer habits shift. First, understanding exactly what it is that shoppers want, and delivering on those wants, should be a brand’s first priority. Over the last few years, interest in sustainable styles has jumped, so brands that pay attention to this – and not just around Earth Day – will do well. Brands like Fair Harbor, UpWest and Ahimsa do just that, by committing to environmentally-friendly practices as a core tenet of their business. Second, keep open communication and transparency with consumers. Nowadays, a customer’s experience is worth its weight in gold, and ensuring a pain-free shopping and buying journey needs to be a central part of any brand’s strategy. And lastly, and perhaps most obviously, have sensitivity to pricing. Brands are often cautioned against knee-jerk discounts during times of economic uncertainty, but there’s a middle ground that can be taken. 

To help to ensure efficiency, balance operating and expansion costs, and maintain growth, Cymbio offers an automation platform that automates all eCommerce operations between brands and their retail partners. For tricky times like these, keeping potentially costly errors at bay is crucial. If your brand is searching for a solution that will streamline complex processes into an affordable solution that enables simplified scaling, book a demo now and see how we can help you achieve your brand’s dreams. 

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