I confess I am feeling a bit uneasy these days. These are interesting times to be in retail. Having been in business back in 2001, I know what a recession is like, but I also know that it is possible to survive and even flourish during bad times.
I remember sitting at my desk one morning going about business as usual. I happened to check Drudge and saw headlines that the World Trade Towers had been hit. At the time, I had just quit a consulting position and hired my first employee. My business was profitable but just barely.
I remember the shock well, and I remember telling my employee that we might as well quit working because we were not going to do any business. Sure enough, no orders came in the rest of the day except from one customer stuck in the middle of the woods somewhere that was blissfully ignorant of the attack.
For the next few weeks, we did little business. It was so dead that I was able to walk away and go to New York to help out a bit. Even though it was at least two weeks after the attack, I remember that the rubble was still smoking.
When I got back, I was shocked to find out that we had just had our biggest week ever. And over the next two years, our profits grew exponentially.
So what was my secret? I have to admit I didn’t have one. I just kept working hard on what we needed to do. I was also benefiting from a phenomenon much larger than my business–the increasing popularity of internet retail in general.
If there is one positive sign that internet retailers should take from the current retail environment, it should be that internet retail is still growing fast even while other retail is stagnant and shrinking. That is a sign of strength.
I do not know for sure, but my guess is that this divergence in growth between internet retail and other retail is due to a few different factors including the convenience, the cost of gas, and a higher comfort level in buying online.
Interestingly, Vitabase has never grown faster than it has over the past six months. So, I am cautiously optimistic that we will be OK even though I expect the economy to continue to worsen for a while.
Here are a few tips for internet retailers to handle this challenging time:
1) Get your debt situation in order.
A year ago, banks were throwing money at companies faster than they could use it. But have you tried to get credit lately? I recently renegotiated our company debt. I ended up with increased credit lines and better rates, but it was painful and I got the idea that if a few numbers in our financials had been much different, we would have been in trouble.
There are two good reasons to evaluate your debt right now–first, rates are incredible and secondly, it is likely going to be easier to get credit right now than in six months.
By the way, renegotiating existing debt is one thing, but I do not really recommend taking on any debt at the moment if you can possibly avoid it.
2) Focus on your core strengths.
It may be time to stop doing new initiatives and get back to your bread and butter. Make sure you are investing in the things that got you to where you are. Put the side projects on hold for a while.
3) Watch expenses but don’t go overboard in tightening up.
I remember working in a large company that made you sign out new pens during hard times. That is a very silly viewpoint. Don’t obsess about saving a few dollars here and there–put that energy into growing your revenue. On the other hand, make sure you are being prudent with the large items on your expense sheet–for most of us, those large items are cost of goods, employees, advertising, and shipping.
4) Find ways to stay positive.
Negativity brings inertia. This is no time to slack off. One of the things I do to stay positive is watch numbers less. If I am getting hourly sales numbers, my attitude goes up and down like a yo-yo.
Above all, understand that your growth comes from tiny steps forward. You may not see big benefits from everything you do, but we are in a marathon rather than a sprint.
Best wishes to your internet retail business through the next year.