8 Reasons You Should Open An E-commerce Store During A Recession
In 2008, when the economy was plummeting, e-commerce grew 11%. You could even say it was a roaring success.
According to eMarketer, the global e-commerce market is anticipated to reach $5.5 trillion by the end of 2022.
Does the idea of starting an e-commerce store in a recession sound crazy now? After all, aren't recessions supposed to be bad for business? Well, yes and no.
While it's true that some challenges come with running an online shop during a recession, there are also many benefits: Lower overhead costs and the potential for higher profit margins among them.
If you’re still on the fence, here are eight reasons why you should open an e-commerce store during a recession.
The rise of e-commerce 🚀
The rise of the internet has led to an unprecedented boom in e-commerce. According to Statistica, the growth rate of the worldwide e-commerce industry is expected to reach $4 trillion by 2025.
That's a considerable amount.
And it's not just big companies benefiting from this boom; small businesses can also reap some benefits from participating in e-commerce.
In fact, according to research conducted by Shopify on a sample group of 1 million online stores, "out of all categories studied, there was no correlation between store size and performance" (Shopify).
Now's the best time to start and get ahead of the game.
Despite many industries having been negatively affected by the economic downturn that started around 2007, the growth rate for online retailing has continued with little interruption (Statista).
While there has been some slowdown over the past year due to consumers tightening their purse strings because of financial woes and economic uncertainty (and maybe even fears), most experts agree that e-commerce will continue to grow.
Lower startup costs relative to brick-and-mortar stores
Starting an e-commerce store is a great way to get your business, especially if you have little capital. Instead of spending thousands of dollars on storefronts and inventory, you can start small with just a few products listed on a basic website.
If you make sales, it makes sense for you to expand your product line later. Start with what works and see where it takes you—you don’t need to aim for immediate expansion when starting an e-commerce store during a recession.
A great time to test the waters
One of the best times to start a business is during an economic downturn.
Why?
Less competition, and most importantly, you can test your idea without as much risk.
Preparing your product for the market takes time and money; if you spend money on manufacturing or developing the website, why not try it out before committing?
Whether your product is physical, like clothing, or digital, like software; there are ways for anyone with an entrepreneurial mindset (and some tech savvy) to launch a project.
You can also use this time to test your market by pitching ideas for new products and services and testing competitors' offerings.
Your customers will appreciate that you stay open.
According to The Guardian, e-commerce is one of the fastest-growing industries in the world.
When you're in business during difficult times, keep in mind that many customers are willing to spend money if they can find something they need.
If your competitors close their doors during hard times (or never opened them), then consumers may choose where to spend their money because they know someone out there cares about them.
Takeaway: Don't assume that all customers have stopped spending money on goods; instead, think strategically about how best to reach them with your unique product line or service offerings.
Internet sales continue to rise every year, bringing with it steady opportunities for entrepreneurs.
Get ahead of your competition.
Being first to market can give you a massive advantage over your competitors, especially in a recession.
If you are the first to offer a product, service, or business model and do it well, then you have an opportunity to establish yourself as the go-to provider of that product or service.
Being first is vital because it means that you give your customers the opportunity to know and trust your brand before anyone else gets started in your niche. It also gives you time to build customer loyalty before anyone else comes along with something similar.
Even if there's no recession going on and all of your competitors are thriving, they will still be affected by one (as we saw during the 2008 financial crisis).
In fact, being ready with new ideas will set you up for success when the next recession hits.
Being first isn't always about introducing completely new products or services; sometimes, it's about being among the first adopters.
Take advantage of innovation
It's not just the economy that has changed. The way people shop, live, work and think has also been impacted by e-commerce.
The average person spends over half their waking hours online—that's a lot of time on your phone or laptop.
They shop online more than ever before; it's convenient, easy, and fast.
Further, since businesses know that people want what they want when they want it (and sometimes even faster), businesses are changing the way they do things so that shoppers can get what they need when they need it.
Entrepreneurship is one of the best ways to bounce back from economic recession and rising unemployment.
Build your brand while others stand idly by
Branding is a long-term strategy that can provide you with a ready-made audience.
If you're starting an e-commerce store during a recession, you'll have an advantage over the competition: You can build your brand while others stand idly by and wait for economic conditions to improve.
As consumers become more cautious about spending money on discretionary items like clothing and jewelry, they are forced to look for alternative ways to find value in their purchases.
Typically, this means looking for brands that offer quality at reasonable prices.
Getting into e-commerce now means you'll be ready to take advantage of changing market conditions.
There are many reasons to start an e-commerce store during a recession, but one of the best is that you'll be ahead of the pack when economic conditions change.
The best time to start an e-commerce business was last week, but if you're reading this substack, the best time to start is now!
Starting an online business now means that when better times come and consumers want to buy more stuff on the Internet (spoiler alert: they will), you'll be ready to take advantage of changing market conditions.
When consumers feel good about themselves and their finances again, they'll start shopping online like never before.
Use this time to ensure your brand is already established as a trusted source for quality products at great prices with fast delivery times and excellent customer service.
Fortunately, I have plenty of resources to help: 👇
What Is Shopify and How Do I Use It to Start My E-commerce Business?
How to Launch a Profitable E-commerce Store from Scratch
How to Pick Profitable Products for Your New E-commerce Store
How To Forecast Sales During A Recession (And Smile While You're At It!)
How To Create A Shopify Store From Scratch Without Technical Skills
Super Easy E-Commerce Niche Ideas for 2022
Final thought
Are you ready to open your e-commerce store? Remember, you can gain valuable experience by starting early and making mistakes now.
As a result, the lessons you learn will pay off when times get better again later down the road.
Until next time, frens, happy selling! 🌞