When it rains, it rains: COVID, store closures, supply chain issues, labor shortages, inflation, and now a likely economic downturn. The challenges faced by retailers continue to present themselves.
In recent months, we’ve seen major retail brands around the world replace their CFOs in the face of these issues, including giant brands like Wayfair, Walmart, Old Navy, The Hudson Bay and Lowe’s. These new CFOs are under increased pressure to take advantage of already thin margins and a bleak economic outlook.
Through the use of data and technologies such as artificial intelligence, retailers have the ability to move the needle. Here are three things retailers can do today to prepare for a tough economic environment:
1. Fixed product discovery
Retailers with a better website experience perform much better. Their conversion rates and AOV are higher and they can invest more in digital marketing, profitably.
The most important element of a better e-commerce experience is product research. Econsultancy has found that shoppers using the site’s search bar convert to a rate five to six times higher than their non-search engine counterparts.
Unfortunately, according to the Baymard Institute, most e-commerce experiences are “…so poor that 31% of all product research tasks ended in vain when test subjects tried to use search and…70% of search engines are unable to return relevant results for product type synonyms – forcing users to search using the exact same lingo as the site, while 34% of sites do not return useful results when users search for a model number or misspell a single character in the title of the product.
Correcting the search means providing relevant results whether people are calling it by another name, spelling it wrong, or looking for products with multiple meanings. It is not scalable to think that you are going to solve this problem with rules, dictionaries and a thesaurus. Powered by AI Search learns from past buyer behaviors to disambiguate queries by determining what users really wanted versus what they typed.
It also means providing personalized results for each customer, even when visiting an e-commerce site anonymously. That’s why it’s essential that your search leverages AI to modify results based on the real-time behavior of every customer on the site.
2. Focus on profits
Providing a great online experience is essential, but not sufficient. It is also essential to maximize profitable growth. The days of revenue growth at all costs are over and every retailer needs to focus on e-commerce profitability.
To do this, retailers need to use their data on product margins and shipping costs to surface and recommend the most relevant products consumers want to buy while maximizing profitability, which only AI can do.
An additional challenge brands face is the lack of customer and product data needed to deliver a personalized shopping experience. Often customers leave anonymously – we call these “cold buyers”. Fortunately, with advances in AI technology, personalized recommendations can still be achieved with minimal data.
3. Minimize returns
While most retailers are thrilled that shoppers can buy three pairs of pants in different colors and sizes, the joy is short-lived when the consumer returns two of the three pairs.
Every year, American companies collectively spend around $50 billion on product returns – a challenge for brands of all sizes. The bad news doesn’t stop there: these returned items are responsible for huge amounts of landfill waste and27 million tons of carbon dioxide emissions each year.
Product returns are not only the fault of the consumers on the purchase, sometimes the products purchased are due to the retailer’s inability to take them through a customer journey that provides them with information and access to the right products and content.
[Read more: Navigating Returns: Strategies to Avoid a Logistical Nightmare]
Buyers regularly receive inaccurate product descriptions, poor quality images, irrelevant search results, lack of accurate customer reviews and size charts, and lack of videos and support guides designed to educate and guide. Irrelevant and ineffective experiences on a retailer’s website further compound the product return problem. It’s gotten so bad that some retailers like Zara are now charging for returns.
According recent search, 43% of NRF’s top 100 US e-commerce sites already charge for returns. However, this can be a risky strategy and is not a surefire way to recoup lost returns. If executed poorly, the introduction of these fees can lead to angry and unhappy customers.