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How E-Commerce Can Survive The UK Consumer Spend Squeeze

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How E-Commerce Can Survive The UK Consumer Spend Squeeze

Shop on high street Editorial credit: IB Photography

UK Retail Sales are in Free Fall

The UK retail sector is in real trouble, with sales growth in May 2017 at its lowest rate for four years. This is primarily due to the uncertainty of Brexit causing a fall in the value of the pound. Import prices have increased for retailers, which is being passed onto consumers and increasing inflation.

The squeeze on living standards in the UK is increasing at an alarming rate, and the E-Commerce sector faces some tough decisions over the next 12 months if it is to weather the economic storm.

Without any sign of economic stability on the horizon for the UK, Web Method’s E-Commerce Consultants have prepared some sage advice for online retailers. Following these steps will help online businesses weather the storm and thrive afterwards.


  1. Reduce prices only if it fits your brand and business model
  2. Stop wasting advertising spend.
  3. Get your E-Commerce website’s analytics in order.
  4. Report on business metrics like CLV (Customer Lifetime Value) and CPA (Cost Per Acquisition) that actually matter.
  5. Keep abreast of your competitors and other sectors.

special offers in a shop Editorial credit: 1000 Words

1. Drop Your Prices

“We’ll just cut prices 10-15% and take a long lunch.”

Reducing prices is usually the first straw grabbed when trying to turnaround sluggish sales. We know that supermarket “own brand” products and discount shopping will do well as shoppers tighten their belts. Customers want to spend less, so offering cheaper prices is a logical step.

But price drops can be a hazard.

E-Commerce stores run the risk of acquiring and cultivating a customer base that won’t ever pay full price. This compromises customer loyalty and affects long term profitability. Your boat might weather the storm one day but then run aground in shallow waters the next.

Price drops also aren’t a sustainable solution for luxury goods retailers where the high price is a key attribute of the item purchased. In this instance a new, cheaper range might be produced under a diverse sub brand. This can boost falling sales but without compromising luxury brand equity.

Where price drops can work is on multi-line orders such as those placed on a supermarket, or office supplies website. These sectors keep core products keenly priced – such as milk and paper respectively – in order to win a greater share of a customer’s wallet and longer term loyalty.

Google AdWords optimisation Editorial credit: IB Photography

2. Optimise Your Google AdWords Spend

Advertising and training budgets are two early casualties of poor company growth. But cutting advertising spend is not as simple as reducing daily budgets and hoping for the best. Knowing where to make savings is key, as cutting randomly can hurt performance and profitability.

Analysing advertising performance at each stage of the marketing funnel will show where budget is being wasted. Looking at AdWords keywords and campaigns focused on the stages of Awareness, Engagement, Consideration and Conversion will drive a focused approach to making sensible savings.

Also assessing which campaigns that are driving conversions, revenue and sales will build a picture of areas that need to be protected from spend cuts.

Should I stop bidding on Brand terms?

Cutting brand advertising spend is seen as a logical saving to make. But, for example in Google AdWords Search it’s usually pointless as brand campaigns often use a fraction of the overall budget. Brand campaigns also typically drive huge value and cutting spend potentially compromises this.

Read More: For more steps on how to optimise your Google AdWords account click here.

3. Implement Website Analytics Correctly

Even in 2017, website analytics is still seen as a luxury to many online businesses. For businesses in this category, analytics are relied upon only when something goes wrong and can’t be explained.

A drop in website traffic, a drop in sales, a drop in conversion rate might cause a marketing person to open up Google Analytics and try to find a reason why. It’s usually a fruitless task for them because analytics packages are too often set up incorrectly or not to their full potential.

Investing in your website analytics means that channel performance, ROI, user behaviour, conversion funnels and many other key business metrics can be measured and optimised for the long term.

“But … It’s too late to fix my website analytics …”

There is no time like the present to audit and fix your website’s analytics. As soon as you start collecting historical data, the sooner you can use it to check your performance. Are the changes you are making to your advertising working?

Which metrics matter to your business?

Looking beyond the standard website KPIs, it’s important to have a grasp on the metrics that define your business performance. There are no perfect metrics, but a small combination of select numbers should cut through the noise of website analytics and advertising.

For this purpose, Cost-Per-Acquisiton is regularly used but is clearly limited as it doesn’t take into account future orders. A business may be willing to make a loss on a first order if customers turn profitable over time in a competitive sector. Calculating Gross Profit, Retention Rate and Customer Lifetime Value (LTV/CLV) contribute to building a clearer picture that isn’t E-Commerce-centric. These metrics can become the foundation of measuring E-Commerce business performance and projecting future growth.

analytics website reporting image

4. Master your Marketing Reports

Assuming website analytics is set up correctly, it should be easy to look at channel performance across email, social, organic, paid etc. Are there particular channels that are performing significantly worse than this time last year? Using Assisted Conversions in Google Analytics, what does the overall mix of your channels look like? Are there channels – such as Social Media and SEO – that are contributing nothing to sales and awareness?

Email marketing is often overlooked channel as it’s seen as old fashioned. But email can still be very effective in driving direct sales to a website when sent to brand-aware customers.

Which channels are driving the most value?

When looking at channel attribution in website analytics, it’s important to look beyond the “last click” model. The “last click” attributes all the value of the conversion to the last channel the purchaser engaged with. As online purchases are often as a result of multiple channel engagements, this isn’t a fair allocation of credit. Cutting spend from earlier stages in the marketing funnel means that there will be less customers getting to a “last-click” state.

5. Audit Your Competitors & Other Sectors

Even if your E-Commerce business is a market leader, there is still plenty to be learnt from other businesses’ actions. Monitoring competitor price changes, analysing advertising spend and changes in channel investments will give some useful insights into your own strategy. Equally auditing websites in other sectors that have a similar model to yours could produce some useful findings.

That’s not to say competitors should always be copied. But knowing what the competition is doing puts you in a position where you can adapt more easily to market forces.

Read More: Top Tools for Auditing Websites.

Summing Up

Beyond dropping a very overused “failing to plan / planning to fail” quote our advice is to make informed decisions and don’t go solely with your instincts.

  1. Reduce prices only if it fits your brand and business model
  2. Make sure you aren’t wasting advertising spend.
  3. Make sure your E-Commerce website’s analytics is in order.
  4. Make sure you’re reporting on business metrics like CLV (Customer Lifetime Value) and CPA (Cost Per Acquisition) that actually matter.
  5. Keep abreast of your competitors.

Want to Optimise your E-Commerce Website Performance?

You can find out more about Web Method’s consultants, or contact us directly to discuss your project.

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