With an impending recession and continued high inflation, shoppers are becoming hyper-attuned to how and where their money is being spent.According to Attest, a consumer research platform for the world’s largest and fastest-growing brands, consumers plan to spend less in the next six months as discretionary spending continues to decline from widespread price spikes.
The big question for brands and retailers is how to increase revenues and efficiency, decrease expenses and make every customer count.
When it comes to augmenting the top line, brands should prioritize optimized product discovery and aim to hyperpersonalize the customer journey and transform pre-loved pieces. A better bottom line can be achieved by minimizing returns, leveraging user-generated content (UGC) and implementing smart forecasting solutions.
With my background in business and economics, here’s what I would recommend for boosting your top line and bottom line this year.
How to Maximize Your Top Line in 2023
- Introduce buyers to the right product at the right time.
In periods of soaring inflation, consumers look to buy products they truly need. AI-powered product discovery tools have emerged as must-have technologies. They ensure consumers are connected with the right products early on, ease the purchase process and lead to higher conversion (CVR). By leveraging visual AI to understand the language of your shoppers, you can offer accurate matches between shopper intent and products in your catalogue, which increases average order value (AOV).
Visual AI can help turn every image into a gateway for continuous product discovery, no matter where the shopper is on your website — whether the homepage, product listing page (PLP) or product detail page (PDP). Visual AI can also be leveraged to boost text search, enrich product data with detailed attributes and drive inventory efficiency to improve your business metrics.
Using the same technologies, retailers can implement smart merchandising solutions to inspire customers through shoppable galleries that pop up when a user uploads an image to an ecommerce website or searches for a specific item. What’s more, merchandising rules enable ecommerce sites to rank how items appear in a gallery, banner or carousel, to promote and demote products and, in turn, improve your business metrics.
- Personalize the customer experience for added loyalty.
With dwindling discretionary spending, consumers will be increasingly cautious about how their money is being spent and the level of customer service received. This provides a segue for brands and retailers to win over new and existing customers through personalized shopping experiences, premium customer service and trustworthy connections to build loyalty and return visits.
Visual search is designed to help people shop the way they’re used to in-store. Visual AI instantly recommends products that are aesthetically similar to a shopper’s favorite styles, encouraging customers to browse more and be inspired as they would in physical shops.
At least 49% of consumers have purchased a product they didn’t plan to after receiving a personalized product recommendation. With online shopping, suggesting highly relevant pieces based on session history can improve the customer experience and increase CVR. This can be achieved through recommendation engines such as “Complete the Look,” which might suggest complementary pieces, or “You May Also Like,” which can recommend items personalized to the shopper’s current search.
Farfetch is one company that offers personalized journeys, with a global stylist team of more than 100. The company’s strategy in acquiring new customers includes increasing its personalization and its loyalty program. Farfetch Concierge can source hard-to-find luxury items — even if not available on Farfetch — and offers stylists in 29 cities.
- Transform pre-loved pieces into a business strategy.
As consumers decrease their spending, purchasing pre-loved items will become a more popular consumer action. A recent report by GWI, a consumer insights company, stated that the secondhand market is expected to double to $82 billion by 2026 in the U.S. and is one way for younger customers to shop responsibly.
Shopping for pre-owned items is second nature for Gen Z consumers. “Just over a fifth of Gen Z and millennials say they’re planning to buy more second-hand clothing due to rising costs, and we may see this number continue to grow,” the report added.
More and more brand names like Levi’s and Wrangler have been expanding their collections to pre-loved items, which has made access to secondhand garments more straightforward. Both denim retailers have added vintage and pre-owned jeans to their assortments and new second-hand ecommerce sites like Denim Library have popped up.
Another example of this is Depop, a global peer-to-peer marketplace, a platform for pre-owned goods where you can see what your friends and the people you’re inspired by are liking, buying and selling. It is not only an m-commerce hub but also a conduit for culture, design and creative communities around the world.
Visual AI automates the process of correctly tagging a large catalogue of user-generated items, as is the case with secondhand marketplaces, to ensure customers can easily connect with the right products early on. It also frees up resources from manual product tagging and minimizes human error so staff can focus on revenue-generating areas of the business.
How to Maximize Your Bottom Line in 2023
- Minimize returns.
In the U.S., average ecommerce return rates jumped to 20.8% in 2021 with an estimated $761 billion worth of goods being returned. Rising returns cancel out the top line from the sale itself and also affect the margin, because money is being spent on acquiring the products and shipping them to customers and then reabsorbing the return and processing expenses.
While some brands have turned to charging customers for returns or narrowed the timeline for sending back items, there are other ways to make shoppers think before purchase.
To decrease returns, buyers should be able to quickly inspect products through 3D imagery and avatars, virtual try-on tools or fitting rooms, 360° product views and super zoom. These tools give customers a better picture of an item before purchase and help them find what they’re looking for much faster.
- Leverage user-generated content.
Many brands rely on user-generated content (UGC) as part of their marketing strategy. It is a tried and tested way to manage budget spending by amplifying customers’ voices and letting the product speak for itself through word-of-mouth recommendations.
It is IRL (In Real Life) content, which younger consumers are demanding more of, and brands can leverage visual AI to include more post-purchase photos and videos from customers on the product detail page (PDP) so shoppers can see the products in a real setting and on real people.
Product reviews also minimize returns because shoppers can leave comments on the fit, quality and comfort to help others who have their eyes on the same item. This works to better inform purchase decisions and makes for happier customers and enhanced brand loyalty.
- Implement smart forecasting solutions.
Proper inventory management and trend analysis help to forecast supply and demand. Visual AI makes this possible by analyzing trends from product attributes and unlocking sharper insights into consumer behavior. While linen pants might be best-sellers, AI tags home in on the finer details, such as creme bell bottom linen pants with drawstrings.
Smart forecasting solutions better align with shopper preferences and enable brands to make data-driven inventory decisions. Ensuring stock levels are kept in check will lessen the likelihood of price cuts or stockouts, which lead to low conversion and lost sales.
To make customers feel they are front of mind for your brand, begin by introducing them to the right product at the right time. Personalizing each step of their buying journey will build trust with your brand and increase the chances that they’ll return to your site. In addition, shoppers should be able to quickly inspect products through 3D imagery and virtual try-on tools, flip through user-generated content and read customer reviews so they have a better idea of a product before purchase. All of these strategies work in tandem to maximize your top line and bottom line all year round.
Vered Levy-Ron is the CEO of Syte, a leading product discovery platform for retail. A seasoned executive with extensive business development and general management experience, Levy-Ron was formerly GM and VP at Taboola News, VP of Business Development at nanotechnology incubator Landa Labs, and CEO of HumanEyes Technologies.