Yesterday was scary. Over 60,000 job cuts…75,000, according to the NYTimes.
Catepillar = 20,000, Home Depot = 7,000, Sprint = 8,000, Texas Instruments = 3,400, Pfizer = 19,000, GM = 2,000
Layoffs –> Consumers spending less –> Companies making less money –> More layoffs. Could be a viscious cycle.
In the retail sector alone, since January 6 of this year, I’ve tracked at least 53,000 layoffs and 1102 store closings.* Circuit City & Home Depot obviously make up a majority of those layoffs (41,000), but don’t forget about Saks, Williams Sonoma, and Goody’s. And the layoffs/closings are reaching the other side of the pond, with Pro Cook and Fortnum & Mason announcing layoffs and store closings in the last couple days. See Retail Carnage for a more complete picture.
So why is all this happening? Yes, it does come down to consumers spending less and retailers not having any transparency into how bad the recession will get, but this is also due to the credit crunch. When credit was easy to come by, many retailers went on a spending spree, opening up another store on every corner. Now they are left with lots of stores, few buyers, and no prospect of borrowing money to get through the next 9 months (the slow non-holiday shopping season).
So what’s a merchant to do? There are no easy answers. And while online is not THE answer – look, if everyone is spending less, ecommerce sales are going to be hit hard as well – it is part of the answer. Now is the time for retailers to beef up their online marketing teams.
While some of the best retailers grok ecommerce, there are still at lest 100,000 online retailers who can improve their potential for success by working smarter, not harder. By going back to basics. That starts with being on the right ecommerce platform (ECP) and making proper use of an analytics package. It still confounds me how many merchants can’t do simple tasks on their ECP or don’t know what success metrics to be tracking. Creating an online presence is now easy. Getting up on Google AdWords is a snap. But just getting up and running is never enough.
I obviously think the shopping engines should be part of most merchants’ online marketing arsenal, but SingleFeed is not shy about turning merchants away because they’re not ready for the channel (and some changes we’re implementing soon reflect this position).
I personally always recommend that an online retailer start their online marketing activities with, email, SEO, and PPC. Many times, affiliate programs should be next.
Because the shopping engines aren’t at the top of most merchants’ online marketing lists (not even mine!), there’s a chance that they will be first on the chopping block when etailers begin to cut spend. Running SingleFeed and being the analyst for the industy, I’m obviously fairly biased, but I beleive that merchants need to make sure they’re not being trigger happy, cutting a marketing channel which is producing great results or has that potential.
The shopping engines are definitely partly to blame if merchants cut the channel quickly (everything from not providing APIs to increasing minimum click rates and deposits to non-existent daily spend limits to everything that ChannelAdvisor laid out in their Wish List series – this list could go on and on and on), but merchants also need to make sure they make an informed decision.
So before you stop listing on PriceGrabber, Shopzilla, and Become.com, I’d recommend that you really dig into your shopping engine campaigns. For a couple days, put the same effort into the shopping engines that you put into SEO or PPC Management. Lean on your data feed management partner a bit if you’re on a full service program – yes, some data feed providers have cut back their account management teams as part of larger layoffs, but that means that they are going to work harder to keep their existing clients happy.
And do the same thing for all your online marketing activities, basically reviewing your entire ecommerce practice piece by piece. Put together a crack team of your best and brightest from different departments to uncover inefficiencies, recommend improvements, and then get out of their way so they can make the improvements. There are a ton of moving parts to every ecommerce business. When was the last time you did a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of billing flexibility (Paypal, Google Checkout), marketing communications, product reviews and ratings, loyalty, etc?
Assuming that you have a good understanding of your success metrics and are making strong use of an analytics platform (which hopefully isn’t failing you), I know you’ll uncover some incredible opportunities to profitably grow your ecommerce business.
*”at least” because some announcements contained just store closing numbers or just layoff numbers.
Posted by Brian Smith 
