Is Selling on Amazon Recession Proof?

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 It’s not 2019 anymore. We are now facing uncertain times.


There is no way to escape from a recession but there are ways to understand what happens to the market in a downturn and plan accordingly. In this article, I am going to tell you from a marketing stand-point, some interesting data that can help you to recession proof your amazon business.


 As a creative branding studio who has worked with countless e-commerce entrepreneurs we have seen the workable marketing strategies used by those sellers who are thriving in their business right now. Even in hard times many companies survive.  But in order to survive you have to take the necessary steps to execute those strategies that will keep your business above water. I am going to tell you some of the main reasons why people fail during hard times.


1. lack of understanding of the market

2. lack of strategic planning

3. Poor marketing execution


If you want to bullet-proof your business, read carefully:


We all know in weak economic times marketers may forget that rising sales are not caused necessarily by bright advertisings. This is because purchases depend on consumers having disposable income, feeling confident in their future, trusting in business and the economy. These values are what encourages consumption.


In light of bad economic news, confidence is low, buying power is limited to consumers adjusting their purchase behavior to what they really need instead of want.


According to a Harvard Business Review article from 2009, in times of downturn customers will fall into four groups:


1. Those who will slam-on-the-brakes. They are the ones who feel most vulnerable and hardest hit financially. This group reduces all types of spending by eliminating, postponing, decreasing, or substituting purchases. Although lower-income consumers typically fall into this segment, anxious higher-income consumers can as well, particularly if health or income circumstances change for the worse.


2. Pained-but-patient consumers tend to be resilient and optimistic about the long term but less confident about the prospects for recovery in the near term or their ability to maintain their standard of living. Like slam-on-the-brakes consumers, they economize in all areas, though less aggressively. They constitute the largest segment and include the great majority of households unharmed by unemployment, representing a wide range of income levels. As news gets worse, pained-but-patient consumers increasingly migrate into the slam-on-the-brakes segment.


3. Comfortably well-off consumers feel secure about their ability to ride out current and future bumps in the economy. They consume at near-prerecession levels, though now they tend to be a little more selective about their purchases. This segment consists primarily of people in the top 5% income bracket. It also includes those who are less wealthy but feel confident about the stability of their finances—the comfortably retired, for example, or investors who got out of the market early or had their money in low-risk investments.


4. The live-for-today segment carries on as usual and for the most part remains unconcerned about savings. The consumers in this group respond to the recession mainly by extending their timetables for making major purchases. Typically urban and younger, they are more likely to rent than to own, and they spend on experiences rather than stuff (with the exception of consumer electronics). They’re unlikely to change their consumption behavior unless they become unemployed. Regardless of which group consumers belong to, they prioritize consumption by sorting products and services into four categories:


• Essentials are necessary for survival or perceived as central to well-being.

• Treats are indulgences whose immediate purchase is considered justifiable.

• Postponables are needed or desired items whose purchase can be reasonably put off.

• Expendables are perceived as unnecessary or unjustifiable.


Now we all know that what is essential for a parent might not be essential for a senior citizen or for a student who has just graduated from college and only has his own shoulders to worry about.


During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth. Marketing isn’t optional—it’s essential to bringing in revenues from these key customers and others. And how do you create loyal customers? With a Brand Strategy. You have to assess opportunities on your brands and products or services. Determine which have poor survival prospects, which may suffer declining sales but can be stabilized, and which are likely to flourish during the recession and afterward.


Your strategic opportunities during the downturn will strongly depend on which of the four segments your core customers belong to and how they categorize your products or services. For example, prospects are reasonably good for value-brand essentials sold to slam-on-the-brakes consumers, who will forgo premium brands in favor of lower prices. Value brands can also effectively reach out to pained-but-patient consumers who previously bought higher-end brands, a strategy Wal-Mart aggressively used with its “everyday low prices” policy in the 2001 recession. Value brands have opportunities with postponable products, as well. Repair services can market to the pained-but-patient group, who will try to prolong the life of a refrigerator rather than buy a new one. In deciding which marketing tactics to employ, it’s critical to track how customers are reassessing priorities, reallocating budgets, switching among brands and product categories, and redefining value. It’s therefore essential to continue investing in market research. As the recession winds down, consumers will regain buying capacity but possibly will not return to their old purchasing patterns.


Market research should explore whether consumers will go back to familiar brands and products, stay with substitute products, or welcome innovations. In tough times, discounts that require little effort from consumers and give cash back at the point of sale are more effective than delayed-value promotions such as sweepstakes and mail-in offers. Many marketers will need to increase the frequency and depth of temporary price promotions. At the same time, they must carefully monitor consumers’ perceptions of “normal” price levels: Excessive promotions lead consumers to revise their expectations about prices downward and can threaten profitability in the recovery period because people will resist the steep increases as prices return to “normal.” Extreme price deals can also lead to costly price wars. So, how do you prepare for a recession?


Do your research. Find out where your audience will fall and under which category. KNOW YOUR MARKET, KNOW YOUR AUDIENCE. I hope this article brings to you a peace of mind, knowing that although we cannot change all misfortunes ahead, we can at least be as prepared as possible in order to survive. 

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