Coronavirus, or COVID-19, has been declared a global pandemic and is having an unprecedented impact on individuals and our economy at large. Times are uncertain, and while we don’t have all the answers, we’re doing everything we can to offer guidance to our customers and small businesses around the world.
As retailers are forced to close their doors to combat further COVID-19 outbreak, one of the biggest concerns (especially among “non-essentials” retailers), is how to compensate for lost in-store revenue.
Below, we'll share a list of resources, along with advice from our in-house experts and partners, that share immediate steps retailers can take to mitigate cash flow constraints, respond to declines in revenue, and redeploy digital marketing spend. You'll also find examples of the steps other businesses have taken in response to COVID-19.
How to inject cash flow into your business
1. Promote gift cards
Gift cards provide retailers with an immediate infusion of cash and (in most cases) ensure that a customer will return to their business in the future. For businesses with especially thin margins, gift cards can help you stay afloat until the crisis passes.
To further incentivize customers, you can discount gift cards, or even collaborate with complementary local businesses to create co-marketing opportunities that can help you acquire new customers. Finally, to reduce the risk of human contact, you should consider a digital gift card program to include in your social media and email marketing campaigns.
2. Build a pre-order strategy
Customers understand that it’s an especially challenging time for local retailers. Community-based initiatives have taken off to support local small businesses and help them lock down cash. One approach has been to outright ask customers to pre-order popular products—either by paying a deposit or the full amount.
3. Discount underperforming stock
Non-essential retail will likely see a decline in demand, so businesses in this category are vulnerable to oversupply. Retailers’ main goal in the short term (4-6 weeks) is to make sure they aren’t sitting on cash held up in inventory or deadstock. Even well-run companies can have 20-30% of inventory as deadstock, so now is the time to address it.
Use your inventory management and/or reporting apps to perform an ABC inventory analysis to prioritize products by how much value they create for your business. A-grade items are the most valuable, B-grade items are the “middle of the road” products, and C-grade items are the low-value products that don’t individually contribute much value, but collectively account for the hundreds of small transactions.
Reduce carrying costs by selling off C-grade products. Consider heavily discounting, bundling, or even selling these products to liquidation retailers. This might seem counterintuitive to your business, but it will provide you with much-needed cash flow and leave room for stock that moves.
4. Extend payables with suppliers
The other side of cash flow is reducing expenses. One way to hold onto working capital is to take longer to pay suppliers. To preserve the integrity (and longevity) of supplier relationships, we recommend retailers work with their suppliers as soon as possible to establish an agreement they both can live with in the short term.
5. Pause standing orders with suppliers
Depending on current demand patterns, and the type of business they run, some retailers may want to slow production down to avoid being stuck with inventory they can’t move. If this applies to you, rethink standing orders for raw materials with suppliers, and press pause on any auto-replenishing algorithms until you know more. This way, you can push back future payments. The sooner you can cancel or defer the order, the better for your supplier relationship.
6. Apply for government relief
Taking on more debt is typically a last resort, but governments around the world are rolling out financial relief measures to support small businesses impacted by the COVID-19 pandemic. We’ve organized a list of the government-led financial relief programs available for SMBs, including those in North America. We'll update this list daily, and we encourage you to review what your regional government is offering and if you're eligible.
Revisit your paid marketing strategy
Digital marketing opens up many opportunities to reach customers where they spend their time online. But with diminished cash flow, it might be a good time to rethink your paid marketing mix, spend on tactics where you can see the highest return on investment, and take advantage of the daily and lifetime budget control options available through paid advertising platforms to control your spend.
1. Use retargeting ads to reach your customers
Facebook advertising can help you reach new customers through the custom audiences that you create, which consist of your past customers or social media fans—people who already know and love your business.
You can upload a customer list to Facebook’s Ads Manager and use the platform to engage with your most loyal customers, highlighting gift cards, pre-orders, or other offers we’ve covered in this article.
2. Sell on Instagram
Over the last two weeks, influencer agency, Obviously, found a 76 percent increase in daily accumulated likes on Instagram #ad posts, and a 22 percent increase in Instagram campaign impressions from last quarter. With such a highly-engaged audience, Instagram can make your brand more discoverable by existing and future customers.
Build a shoppable Instagram feed. IG shopping feature integration allows businesses to tag products and lets users purchase them directly within the app. Plugins like Shoppable Instagram Galleries makes it easier than ever for your business to make sales.
Run Instagram story ads. Video stories have become a great way for businesses to make deeper connections and show off their brand’s personality. Make sure to include product links so viewers can make a purchase directly from their app.
3. Show up for intentional shoppers with Google Smart Shopping campaigns
While some advertising can come across as interruptive during this time, search advertising helps you show up specifically for customers who are actively looking for your products. The Google Shopping app makes it easier for online shoppers to find your brand across YouTube, Google Search, and Gmail.
Google Shopping is relatively simple to set up. You can sync products to the Google Merchant Center, set a budget, then let Google optimize the campaign, so products show up when people search for them across Google’s network.