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How product businesses are adapting to the sudden impact of COVID-19

by Danny Ing
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The coronavirus is already affecting product businesses in serious ways. Retail and wholesale business owners can take steps to minimize the impact.

We’ve seen wholesalers and retailers feel the impact of COVID-19 almost as fast as it spread. By April 9, 33% of the world’s population was under some form of lockdown, and businesses saw store closures and supply chain disruptions.

At first, many businesses saw their sales spike in mid-March as consumers got ready for a long stay at home. Among our customers, for example, March sales in Australia grew by 30% over December in the lead up to the country’s March 23 lockdown. The UK, which had national restrictions in place by March 26, saw a 15% increase. In New Zealand, which went into lockdown on March 25, there was a 10% increase. The US, where 32 states imposed restrictions by March 31, also saw a 10% increase. 

We saw these spikes in the industries you’d expect: food and beverage, health, pharmaceuticals, biotech, general merchandise, hardware, and safety supplies all went up in March. Unfortunately, we also observed rapid declines in the furniture, automotive and marine, and beauty categories.

But the spike is over, and in April the world entered a phase of uncertainty, not knowing when economies will reopen or how much consumers can or will wish to spend. In times like these, retailers and wholesalers can adapt by taking important steps to prepare for a post-COVID world and minimize a longer-term negative impact on their business.  

5 ways to adapt your business to minimize COVID-19 impacts

We’ve seen retailers and wholesalers face similar disruptions before. Over the last decade, they had to adapt to new challenges, like eCommerce and Amazon. We’ve seen companies thrive by diversifying their product selections, widening their customer base and evolving their businesses rather than putting all their eggs in one basket and maintaining the status quo.

1. Diversify sales channels to broaden customer-base

Switching focus to a sales channel where customers are more likely to buy from you is something you can do right now. A closed-down brick and mortar retailer, as a simplistic example, can quickly set up an online shop or sell through an online marketplace to off-set the drop in local sales. This immediately widens your customer base too.

A single sales channel is risky if that channel gets disrupted. I interviewed one customer recently who was able to quickly shift his channel focus when Amazon stopped taking orders for non-essential items due to COVID-19. (Watch the interview). 

2. Diversify your products to create more appeal

Similarly, a broader product range can attract more customers, but this, of course, takes more time and planning. If you sell variations of the same product, such as a consumer model and a professional model, you can help balance the impact of COVID-19 on sales by focusing on where the demand is rising. In a time of mass-lockdowns and closed businesses, demand for a consumer version of a product may go up as demand for the professional version decreases. 

Another tactic for the coming months is to introduce new products that complement your existing product range. The right complementary products can add to your overall brand appeal or create opportunities to bundle related products, giving your customers more value for their dollar. It’s critical to understand your customers’ mindset—what they’re looking for, what they're prepared to spend—in order to keep your inventory in line with actual demand. It’s also important to stay true to your brand proposition as you make these changes.

3. Prepare to innovate  

You may see an opportunity in the longer term to evolve your business in a new direction. Adding a new sales channel is simple in itself, but it will have a run-on impact on the way you manage your stock and fulfill orders. It also may require a change to your relationship with suppliers, including your current terms of trade. The same might apply to selling to new kinds of customers, such as when a wholesaler increases its direct-to-consumer business.

Whatever that evolution is, you have to be agile enough to quickly change how you operate your business. This can include creating new products, or new pricing tiers for wholesale and retail channels. It can affect everything from how you market your products to how your distribution functions.

4. Make your business evolution possible

Whether we’re talking about immediate or long-term steps, changing your business requires resilience in your operations. While you consider ways to evolve, you need to be sure you have the processes, tools and insights to get you there. Diversifying your business certainly adds complexity, so it is important to have a solid foundation in place. If you’re used to selling through a single channel, a second channel can increase the time it takes to process orders and keep stock up to date. Things like accurate stock visibility, automated order processes and simplified purchasing all help make your evolution possible.

5. Know your customer

One of the most important things you can do and continue to do is to understand your customers. Right now, retailers and wholesalers must keep their finger on the pulse to know what their customers are going through. The current situation will continue to change as the COVID-19 pandemic unfolds over the next year. The pre-lockdown panic purchasing gave way to increased spending on products for getting through the long weeks at home. During these lockdowns, many governments have only allowed essential goods to be purchased. This will change again after restrictions are lifted and as slowing economies change customers’ concerns. Understanding your customers’ feelings and priorities will help you to stay relevant to their evolving needs and wants. 

How Cin7 can help

We’ve built our inventory management solution to empower product businesses to survive and thrive in our fast-changing world. With extensive sales channel integration, workflow automation, real-time inventory and extensive reporting, Cin7 gives product brands the resilience to evolve their business in challenging times. Schedule a call with our team to learn what Cin7 can do for you.