Shift Your Business: What You Can Do
Profitability in today's environment is even more important because the environment we're working in is unprecedented.
There are some industries that have never had it better. Online alcoholic beverage sales increased 387% for the week ending April 11, which is roughly a month after shelter-in-place orders began taking effect because of the coronavirus pandemic.
There are businesses in other industries that are doing really, really poorly. Like restaurant supply companies. They're not doing so hot these days.
Here in the Cayman Islands, there is a great example of a business being able to quickly shift what they do. I went to the grocery store and the line to get in was a mile long. Like the whole of Cayman was trying to get in.
So I left.
I got home, popped on Facebook, and this ad comes up for this tour company that has shifted its business model. Before the pandemic, they picked up tourists and toured them around the island. Now, they will go to the store for you and deliver your groceries.
So you know what I did? I sent them a list. Hopefully, my groceries arrive within the hour.
If you are business to business, you may have toyed with the idea of creating a direct to consumer channel. But you’re selling by volume, and you aren’t set up to sell onesies and twosies to the public. Over the last month, a lot of direct to consumer ideas have been surfacing because they're a lifeline for B2B companies.
In the example of the restaurant supply companies—restaurants are just not buying supplies right now. Everyone is cooking at home. One solution would be to pivot, set up a direct to consumer channel, and supply to those cooking at home.
These are examples of how some businesses are just sitting back and waiting for the clock to run out, and others are adapting to the new normal.
You might be wondering, “If I pivot, what does it look like in the end?”
Or, you might look back and say, “Wow. If we didn't accelerate and pivot, we would have been out of business anyway.”
This is when we redefine ourselves and reposition our businesses. I get it—it’s not under the best circumstances. But we can build to survive, with the intention of being in a position to thrive.
Even if life goes back to what it was before, all you’ve done is add a channel.
In the example of the tour company, they are tourist-driven. When the tourists come back, they have a tourism business and they deliver groceries. They bumped their revenue and they have two channels.
And then there are the companies that think they are pivoting, but they are just doing something different without the data to back the pivot.
Businesses should have a solid handle on their metrics so that they can make intelligent choices to survive, pivot, and position themselves to thrive. To fly blind in this current environment, it's suicide.
Let’s be honest. There are some companies that are going to be opportunistic and will make a quick buck. But they're not going to solidify their place in the market. And they're not going to be relevant when this is over.
And even worse, a lot of good companies won’t make it for the sad reason that they just didn't have a solid grasp on their numbers.
So how do you stay relevant now and become even more relevant in the end?
The difference between companies that will experience exponential growth in this period and the companies that will not, is understanding what's working, what's profitable, and identifying the unprofitable products.
In my e-commerce business, we had a bunch of products that were over-ordered for Christmas. They weren't highly profitable for various reasons. But in this particular situation, we have been able to liquidate these products a lot quicker. We got all our cash out, and we placed orders for some new products.
Because we had a grasp on our numbers, we made an informed decision. We knew it was a great opportunity to shift product that was slow-moving.
Knowing your profit, down to the SKU, in your Amazon account is very important. And knowing how to set up your account to check for profit, making sure the channel is worthwhile.
So many businesses just put their head down and work hard all year long. Then, they submit their books to their accountants and ask, “How much money did we make?”
I’m not a fan of ‘rear-view mirror metrics.’ By the time you're looking in the rear-view mirror, you could be out of business. You are looking at how you got out of business rather than using the data on a day-to-day basis to be profitable.
The one question I am asked repeatedly is, “How much profit does Amazon take from sellers?”
Instead, ask yourself, “How do I optimize what I'm already making and how do I minimize the losses?”
At the end of the day, Amazon is your biggest opportunity but it also is your most expensive channel if you let it run away from you.