9 December 2011

Business

Online Business and the Euro Debt Crisis

Quantitative easing is the name of the game this week as the Bank of England announced yesterday amidst worries about business confidence that it would pump £75 billion into the UK economy in an attempt to keep the country afloat.

That news came as the UK’s largest supermarket chain, Tesco, also published its fourth quarterly drop in sales. The pressures of the euro debt crisis therefore are having a significant impact on the economic recovery the UK coalition government are eager to bring about, as Chancellor of the Exchequer, George Osborne, also admitted this week that should the euro-zone eventually break up, it would cause years of economic hardship for all. In a pivotal decision announced this morning, David Cameron also vetoed an agreement amongst all 27 EU members which is likely to significantly change the UK’s political and economic relationships with its continental neighbours. 

True to my recent post on using social media to establish cross-cultural relations, this week I was fortunate to have some great conversations over Twitter with Hansjörg Leichsenring, a former Asst. Vice President of Group Strategy for Deutsche Bank. When we broached the subject of the euro debt crisis, I asked him whether eCommerce would be able to avoid a lot of the problems facing businesses across the board:

“Unfortunately, no. In general, I think [eCommerce] will be no different. It’s all or nothing. No business is safe.”

If this is the case, then it is likely that the euro crisis could affect UK online sellers in two ways, in particular.

Firstly, if you operate in European markets, your customers will be the worst hit, and will likely want to cut down on unnecessary purchases, so luxury goods, specialist equipment, and leisure products will most probably see a dip in sales across the board. What’s more, if there is a choice between local and overseas suppliers, customers may have no choice but to choose cost over quality if fuel prices continue to rise and take shipping costs with them. Similarly, it is likely that customers will become much more discerning when researching products online, meaning marketers will have to work even harder to squeeze a return out of their already limited acquisition costs.

Secondly, if the euro zone were to disintegrate, it would probably result in widespread unemployment across Europe due to the complex trade relationships underpinning the European economy. Should this happen, UK companies relying on European production lines are likely to suffer because competitors will have to renegotiate their contracts at higher prices in order to manage their supply. Add that to the fact that there is likely to be some resentment from EU countries directed towards the UK as a result of Cameron’s treaty decision this week, UK-owned companies may need to reconsider how they manage their relationship with foreign suppliers. In the case of smaller companies, it could also simply be a case of being priced out of the market altogether.

Damage Control?

It’s a competitive time, but then again, hasn’t it always been? There are, of course, ways for online marketers to weather the impending storm.

What you should be doing

Email Marketing: If this is the single most-used internet activity on the internet, there is no justifiable reason to ignore the power of email marketing.

Search Engine Optimisation: Your customers won’t find your website if search engines can’t find it, so it is important to make sure your site is optimised and easy to be found. Since more customers will take more time to research products online, it is even more important to make sure your website features prominently at the top of the search results for a variety of short and long tail keyword phrases.

Pay-Per-Click Advertising: Connecting with potential customers when they search for relevant terms is a sure-fire way to encourage site visits and onsite conversions. PPC adverts show up as featured listings in search engine results are an excellent way to boost traffic, whilst also providing accurate ROI data.

Smartphone App Marketing: The app market is growing and growing, and savvy sellers realise that the future of marketing will be heavily influenced by mobile technology. Allowing your customers to access your products and services on the go could well give you the competitive edge.

Social Media: Word of mouth advertising is arguably the most effective method of marketing. Communicating your sales message consistently through social networks is an effective way of developing brand loyalty. Remember, social marketing is about engagement- it is better to have 5000 active purchasers, than 50,000 window shoppers. Realising who your audience is here is critical.

Are you a business owner? Do you sell online? What are your thoughts? How are you planning on dealing with increased economic and logistical pressures? We'd love to hear about it. Leave a comment below or talk to us on Twitter.

By Adam Cowlishaw