Charles Darwin’s notion of “adapt or die” may seem like the specific challenge businesses faced in 2020. However, not only were the losses of 2020 not distributed equally, adaptation didn’t always translate into success. The hard hit restaurant, travel, and hospitality industries adjusted and dodged their way through lockdowns but the nature of the pandemic made breaking even, much less getting ahead, nearly impossible.
On the other hand, businesses with products and services adaptable to e-commerce found themselves with a different problem. Promotions and marketing brought eager buyers to their online stores but many brands were unprepared for the demand. While they captured initial sales, they struggled to fulfill goods and expectations, disappointing customers with backorders or slow delivery. So if willingness to change wasn’t the silver bullet for 2020 businesses, what explains the record-breaking online sales so many experienced?
Rather than adaptation, some have wondered if this year’s e-commerce winners were just at the right place at the right time. The reality is much less mysterious. In fact, companies who experienced the most gains made important financial decisions around when to spend and what to cut.
Marketing as Disaster Plan
Many businesses who found online prosperity this year already had great marketing. From on-going social media presence to robust email marketing budgets, these brands had consumer attention long before they doubled down on e-commerce.
Their on-going efforts allowed them to do things that wouldn’t make sense for some companies. Nike, for example, actually cut spending on marketing during the pandemic in order to focus their efforts on fulfillment, helping them to meet increased online demand.
The Overboard Principle
Smaller brands found success for other reasons. Instead of a slim marketing budget, we saw our clients reducing overall offerings by focusing on core products with high consumer demand and dumping others that weren’t selling. For some businesses, employees not pulling their weight were the thing to go, with management redistributing workloads or with owner-operators doing the work themselves.
The Direct Return
In the consumer product industry, retail closures meant an unplanned end to the middle man. This shift greatly boosted direct to customer sales, resulting in higher margins for businesses used to trading more profit for stability. Those able to sell more and fill orders were able to make up the difference despite the lost sales from in-store purchases.
The Big Takeaway for the Growth-Minded E-Commerce Enterprise
From mega brands to small business, there’s no doubt that the e-commerce space saw tremendous gains in 2020. But more importantly, it was consumers who adapted most. In the last year, online shopping was up 37% from the previous year.
And it’s this shift that businesses need to address as they plan how to spend additional earnings in a very irregular year. Because as the economy recovers, many shoppers will continue to make the most of their accelerated online buying IQs.
If your business sold more this year than in the past few years combined, make sure you’ve carefully measured your success [VO1] before you decide what to do with your earnings. Because while hindsight may be 2020, the relentlessness of this year has taught us a few contradictory lessons: you can’t anticipate every setback or disaster, this year could be the best thing to ever happen to your business, and there will be no return tickets.