In times of recession, it is often quoted that the Chinese word for “crisis” consists of two characters, signifying “danger” and “opportunity”. In fact, the second character is a component of the Chinese word for “opportunity” but has many meanings and, in isolation, means something like “point of change.”

And it is precisely this double meaning that is the essence of what can be done in a recession. While certain opportunities appear, in order to use them, some changes to what you do in eCommerce need to be implemented. This is due to shoppers’ attitudes shifting from a positive, optimistic mood to a more negative one, full of uncertainty and caution.

The Opportunities

Here are 3 key opportunities and biases of shoppers, affecting both B2C and B2B purchasers. We will examine in more detail how they can be exploited through eCommerce offerings.

In good times, people think positively, both in private and in business. They make plans for development and growth; they look for products and services that will help them achieve more.

In bad times, the thinking shifts to loss aversion. Uncertainty and stress ignite the perceived need to make savings. Naturally, market factors such as inflation along with all kinds of budget reductions – both in companies and in private households – call for searching for offers that allow savings to be generated.

People will buy something if the perceived value of a product or service is higher to them than its perceived price. After all, we part with our cash only when we want to exchange it for something that is worth more to us. However, our focus on value or price may shift depending on our mood:

• in a positive mood we focus on getting the highest value at an acceptable price
• in a negative mood we focus on getting acceptable value at the lowest price

It may then appear that the very same product – let’s say it’s a printer – in times of economic boom, is sold through emphasizing its high efficiency, such as fast printing . However, in an economic downturn, the very same product may appear more attractive when savings are underlined, even if it’s in terms of time, let alone money.

Any communication about savings is music to the ears of shoppers immersed in uncertainty. This is additionally fuelled by the next factor, which is…

2. An increased sense of urgency

In the business world, if a company is not certain about its revenues for a particular year, savings need to be implemented as soon as possible. In such circumstances, a search for alternative, more cost-efficient service and product providers gains pressure. The KPIs become oriented towards tangible savings that are generated instantly. Of critical value is not only the size of the saving, but also the pace of implementation of the alternative solution.

Similarly, individual shoppers often feel the need to revise their usual shopping basket and look for less costly products and services in order to save for what they need most or just “to make ends meet”. This draws our attention to eCommerce. The pandemic fostered its growth – as many traditional stores were effectively out of business in the shorter or longer term. Now, the economic pressures of recession will once again increase interest in eCommerce, as more consumers search for better prices on products and services sold online. Add to this “subscribe and save” offers and savings that arise through buying bundles of items – and your products can start selling even better than before. Especially if you also use…

3. “The Lipstick Effect”

As Leonard Lauder, the chair of Estée Lauder noted – sales of products such as lipsticks actually went up in an economic downturn. Hence the notion of “the lipstick effect” – it means thinking such as “If I can’t buy a new dress, let me at least get a new lipstick.”

Of course, it is not just about lipsticks and not just about women’s products. During a recession, consumers begin spending money on small indulgences – it may also mean spending more on sweets, liquor, or other products or services if big-ticket goods suddenly become out of reach.

ECommerce stores and marketplaces offer ascending sorting by price – which often reveals cheaper products. These then become the replacements for the premium branded products the consumer used to buy previously. Also, during times of crisis, human irrationalities show up in the assortment purchased. Remember the toilet paper frenzy from the beginning of the pandemic?

The “Points of Change” for eCommerce

How can eCommerce benefit from these opportunities? And, going back to the “point of change” meaning of the Chinese sign – what changes can be helpful or even necessary to this end?

Content

In eCommerce, product content (imagery, descriptions, videos, enhanced content) can be a great vehicle of communication for addressing the critical concerns mentioned above. Here are the fundamental principles:

1. Ensure that your product content (imagery, descriptions, videos, etc.) includes practical and pragmatic information and clearly communicates key product benefits and performance.

People under stress and on the watch for savings need even more assurance that the products they are about to buy are genuine and of good quality. They need to know that the products will perform their intended functions and that they will not fail. Otherwise, all the money spent would be lost – even though they may feel more secure while buying online, as product returns in eCommerce may often seem easier to complete than in a traditional store. This may be seen as another advantage of digital commerce vs. traditional.

2. Ensure that your product content is even more clear and understandable than in the good times.

A sense of urgency, stress, and an overall poor mood can deprive consumers of patience and the willingness to spend a long time understanding the complexities of products or services. Refrain from using redundancies, empty buzzwords, and “flowery” language – be precise, concise, specific and to the point both in descriptions and imagery. This doesn’t mean resigning from communicating the product benefits. It’s just making sure that those benefits are clear for someone you can imagine as having many difficulties in their life. You don’t want to add to their struggles by forcing them to go through a jungle of jargon expressions or meanders of ambiguity.

3. Whenever possible, include a message implying savings that can be generated through the purchase.

Avoid “cheap tricks” – e.g., showing that the price is reduced from amounts that were never meant to be the “real” price of the product. Shoppers hate being fooled. Additionally, such practices are restricted e.g., in EU by The #Omnibus Directive.

However, if you are making a genuinely great price promotion, offering a price which is extremely low in relation to the value provided, or guaranteeing the lowest price for a specific product, then it is worth mentioning, mainly through D2C channels. Remember that in a negative mood, people focus on price, and savings – even if marginal – can trigger a purchase.

Additionally, if you focus on savings and think creatively, you may come up with compelling points which might have been omitted in “regular” communication. Maybe buying your product means a shopper will not have to buy several additional things? Maybe it is more durable than other products from this category? Maybe it works faster and solves the shoppers’ problem sooner than similar products on the market? This may make your offer look much more attractive than the competition.

Assortment & Offering

1. Include low-priced items as an entry point to your assortment to make use of the “lipstick effect.”

If you already have products such as the quoted “lipstick” or similar ones, that’s great. But if you don’t, think about creating them. Even car manufacturers are now selling small merchandise items such as sets of glasses. Small-size items or sample packs can become the first point of shopper contact with your product. They may work as a foot in the door. Once consumers start with this, there is a chance they’ll come back for more. Particularly if you also…

2. Offer attractive product bundles.

This provides the perfect opportunity to demonstrate savings through a combination of products sold together at a reasonable price. In fact, shoppers might unintentionally omit some of these items while completing their usual shopping list or they may be unwilling to try them separately – while in a bundle, they may get additional exposure.

In eCommerce you also have an opportunity for creating “virtual bundles.” For example, on Amazon there is a Virtual Product Bundles tool which allows for the creation of product bundles with multiple ASINs. Two to five complementary ASINs can be bundled together and then sold from a single product detail page. This gives the brand owners an opportunity to offer product bundles without having to pre-pack them together or change the FBA inbound inventory. 

3. Create and emphasize subscription offerings.

When you win customers not just for a single purchase, but for repetitive purchases, you get their loyalty and a more stable source of revenue. Therefore, every conversion of a viewer into not just a one-off buyer, but into a subscriber, is actually the equivalent of having a loyalty program implemented. Again, eCommerce is perfect for this type of activity, because it is simply so much easier for a customer to subscribe online to a regular delivery from the comfort of home rather than doing it in a traditional store or at a booth somewhere. Bearing in mind the savings focus, this is a win-win for both the shopper and the seller.

Returning to those Chinese characters, we do indeed find ourselves once again at a “point of change.” The opportunities that result need to be acted on, and the time for that action is now.

Article written by Tadeusz Zorawski.

If you’re looking to learn more about eCommerce optimization, please contact tadeusz.zorawski@molecularbbdo.com – we at MolecularBBDO would love to give you a helping hand with your eCommerce operations.