Surviving a Downturn: 26 Ideas for eCommerce Stores (Inspired from 3 Global Brands)

Gallup’s Economic Confidence Index has a thing or two to say about how the economy is turning downwards in 2022. 

Whereas in March and April, it was -39, in May, it displayed a record -45. 

Consumer confidence hasn’t been this low since the 2009 recession. 

But what does this turn of events mean for an eCommerce business?

Here are a few inevitable scenarios during an economic downturn:

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• Assessing cash reserves and which parts of the business are contributing right away

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• Reviewing tools and technology to figure what’s absolutely necessary and what can contribute towards CX

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• Reviewing the marketing strategy to align with the changing concerns of the target audience 

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• Assessing existing business partnerships for what and how they’re contributing to the bottom line

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• Getting a realistic picture of product inventory and assessing what parts will sell faster than others 

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• Getting a real-time performance picture of online and offline channels and which ones are drawing customers in the downturn context

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Having said that, the opportunities are real, even if it becomes tough for most businesses to manifest them. 

And this is why we thought, why not look at how some of the big brands have negotiated economic downturns and come out stronger on the other side - despite the obvious challenges. 

Here are 3 stories on what the following global brands got right and what any eCommerce business, small or large, can learn and put into practice right away. 

1. LEGO

Founded in 1932, by Ole Kirk Christiansen, Lego began when Christiansen started making wooden toys in his Billund workshop.

The brand name comes from two words: “leg godt” - which essentially means “play well”. 

In 2008, when the global financial crisis hit, LEGO was hit as well.

They found themselves limited to the North American market, with major competition from Mattel and Hasbro in the European market. 

But this was in a way history repeating itself, because LEGO’s initiation happened during the Great Depression that began in Denmark in 1929 and lasted till 1939. 

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What LEGO did right 

• Search for a deeper philosophy

During the economic crisis in the 1930’s, Ole Christiansen saw sense in continuing to produce wooden toys despite other parts of his business not doing well.

He sought support from the National Association for Danish Enterprise. 

But more importantly, he worked hard to understand the deeper philosophy that would eventually make his brand a worldwide name:

‍the healthy development of children. 

• Search for improved financial hygiene

After LEGO began to suffer from financial setbacks starting 2003, their then

finance head Jesper Oveson decided the company needed to look at its finances

more closely. As a result, they began to:

• set financial targets
• reduced product-to-market time
• managed cash flows
• improved price points of their most profitable products

What we can learn from them

- Focus more on products that are doing well

Lego's classic product lines did exceedingly well during the 2008 recession and consistently met customer expectations.

65% of a company’s business comes from existing customers.

And it comes as no surprise that existing customers are the reason that your well-performing products continue to, well, perform. 

What you can do:

• Make sure to create a new category for these “bestsellers” in your primary navigation on your homepage

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• Showcase these products as part of your personalized product recommendations (on the basis of categories being searched)

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• Send refill/top-up notifications to existing customers (especially those who have already purchased these products repeatedly)

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• Run a super short limited time sale (for example, for a 12 hour period) to attract existing and new customers (ensure to communicate about this as well)

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- Streamline processes, operations and production

Whereas Lego made 13, 000 different pieces to be used across their products at one point of time, then CEO Jorgen Vik Knudsdorp brought it down to 6000.

What you can do:

• Give up on warehouse storage in case it’s becoming financially unwieldy - opt for a dropshipping model instead

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• Outsource the most expensive functions of your business - this could include functions such as finance, marketing and IT. (especially helpful if you’re immediately looking at downsizing - 74% companies outsource IT and 39% outsource HR)

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• Review redundancies in your tech stack and get rid of tools and software that are not impacting your business in a major way immediately

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- Ensure your brand story gets highlighted 

Lego is known to have kept their brand story at the heart of all their efforts.

Whether it’s the trivia about the brand’s original brick design never having changed or bringing out the many universes Lego products create through

the “Beyond the Brick” YouTube channel - the brand has been on top of their story. 

What you can do:

• Feature a separate “our story” section in your primary navigation. Remember, your customers buy from you because somewhere they believe you’re a brand that can match their values (and not just create great products). 

This is how vegan brand Allplants does it - highlighting the belief that drives the brand, how their menu is differentiated and how they feature the best chefs and nutritionists. 

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• Bring in your brand narrative across your homepage and product pages. Because this has a big role to play in customers feeling pulled to click on those CTAs. 

One eCommerce brand that does a phenomenal job at this is Death Wish Coffee. 

2. Starbucks

Founded way back in 1971, Starbucks is now a household name in the coffee business and is often considered to be the driver of the second coffee wave. 

The brand, which first became known for its artisanal roasted beans, later gained glory for offering varied coffee experiences across more than 80 countries. 

2008 saw the coffee giant tottering because customers were beginning to make choices that were not in the favor of Starbucks:

They were opting for cheaper coffee, and didn’t much care if an experience followed or not. 

Howard Schultz who had taken a break as the CEO for 8 years, came back and resumed his prior position at this time to find:

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• Starbucks was facing stiff competition from McDonald’s, which had begun setting up coffee shops

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• Starbucks so caught up with expansion that the actual coffee and cafe experience had suffered a setback

What Starbucks did right

Instead of aggressively going after branding to salvage how the business was suffering in the eyes of people, Starbucks took another approach. 

They decided to build connections using the power of tech. 

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They encouraged an environment where employees and customers were free to share ideas and feedback aimed at the growth of the brand. 

And thus the “My Starbucks Idea” was born, which allowed customers to be part of an online community, sharing ideas with each other and feedback with the brand. 

This helped many sub-communities of like-minded coffee lovers to come together. 

Soon after, they took to social media to market this move so that more people who may not even have heard about it, could join in. 

What we can learn from them

- Get to know your target market all over again

Like Starbucks did - despite a loyal fan base the brand realized it was unable to get to the heart of why customers were buying less.

What you can do:

• Assess changed behavior for each market segment (this will help you create product value-adds and communication differently)

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• Consider both demographics (age, gender, ethnicity, background, family etc.) and psychographics (values, behaviors, lifestyle, personality, interests etc.)

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• Identify niche markets (in case you identify an underserved target audience, you can figure out which products to promote to them)

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• Track your competition to see how relevant their positioning is in the context of the downturn and identify gaps you can potentially utilize

- Use social media strategically for image management

‍Apart from creating hundreds of initiatives that led to a richer customer experience, the Starbucks ensured it used social channels to talk about it in precise yet creative ways.

What you can do:

• Funnel down to the most important areas of interest for your target audience at the moment and see how you can create relevant ads within that context

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• Create a powerful differentiation for your brand (remember that during an economic downturn, people trust value-based marketing more) and then use this to engage with new and old customers

3. Warby Parker

Founded in 2010 by four friends who went to business school together (Andy Hunt, Dave Gilboa, Jeff Raider and Neil Blumenthal), Warby Parker has changed the game in the prescription eyewear category. 

The category was dictated by sky-high prices, lack of ease when it came to trial options and a fixed perception that quality eyewear could only come at a high price. 

By fixing a set price ($95) and offering home trials, Warby Parker disrupted a category that was till then inflexible and limited in terms of CX. 

The reason why we love this story is because they launched in the cloud of a downturn (which started in 2008), and yet, managed to make the most of it. 

What Warby Parker did right

• Deeply looked into the existing problem

Warby Parker ensured they knew the category they were tackling really well. 

What they did even better was to keep the immediate context (the downturn at the time) to make a successful launch. 

• Created a brand experience (to back the brand story)

A great brand isn’t just made through excellent creative. 

It’s made because someone is thinking of how it can help people lead better lives. 

And they use this value to create a richer experience for the customers. 

Just like Warby Parker did. 

• Made the customer top priority

While selling during an economic crisis, any business’ best bet is really the people who will buy. 

Warby Parker has taken this seriously -  they’ve even reached out to the larger global community by collaborating with NGOs and following the “donate a pair” approach. 

The brand has proved that prioritizing the customer can multiply the dividends quickly. 

What we can learn from them

- Create a replicable model of customer experience

Warby Parker’s model of customer experience was: opt for a home trial, try out several options, pay up from the comfort of home and receive your order as soon as possible. 

This was so standardized that the brand didn’t have to think twice about what their customer experience should look like. 

What you can do:

• Focus on reducing customer frustration by improving the precision of your answers to their queries (this can be done by enhancing your FAQ section to include more details and also by training customer support personnel not just to get to answers but also to ask the right questions)

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• Interpret feedback more closely to make immediate improvements (for example, if customers are consistently complaining that your live chat function is hard to spot, you’ll have to pay attention to this part of site optimization)

- Take baby steps towards expansion

Warby Parker made their first year sales target within three weeks of launching. 

But that didn’t drive them to expand at an aggressive pace. 

They took the physical store route only in 2010. 

What you can do:

• Weed out inconsistent customers. Though it may seem intuitive to hold on to every customer who has bought from you once, during a recession you’ll have to be more precise. This way you can redirect your marketing spend towards those with higher chances of buying from you. 

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• Invest in improving your digital touchpoints, one by one. For example, if you have an eCommerce website, based on TA behavior, see if coming up with a basic, functional app would be the next best step. 

How your brand can apply these lessons 

- Understand recession psychology

If you’re reading this, how to restore consumer confidence during a downturn may be one of the topmost things on your mind. 

For one, uncertainty is real. And this means consumers are likely to make less and less space for non-essentials. 

Like Lego, you may need to pay attention to how your brand and products are being perceived by consumers. 

Since Lego was able to establish their identity as a long-lasting toy company, it was able to attract customers even during the 2008 downturn. 

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- Understand your target audience contextually

The point is to narrow down your focus on target audience behavior, now that they’re challenged financially. 

Conduct research and interviews and gather data to understand:

• Why are certain customers continuing to engage with your brand?

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• Who has abruptly stopped engaging with your brand and can you create a profile given their common tendencies?

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• Who among your TA is continuing to engage with your marketing efforts but not spending anymore? 

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It’s good to remember that while recession is the larger backdrop, it may or may not have to do with the changing behaviors of certain customer segments. 

- Understand what your brand and product can do (within the context)

One approach is to look at recession as a time to tide through the crisis. 

The other could be to keep looking out for opportunities. 

This is where analyzing "why" your brand exists can help. 

(Remember how Warby Parker did it? Check the story above if you’ve scrolled past it.)

For example, do you think your low-priced products have a better chance at earning the customer’s approval?

If yes, what more can you do to drive value through them?