However, there is one post-Brexit referendum fact that you can focus on now and that is the current weakness of the pound against the dollar.
Note: At the time of writing, The Independent reported that sterling was at a 31-year low against the dollar.
A weak pound makes buying stock from International sources more expensive. It also has a knock-on effect on the price of almost everything else your business needs to operate, such as packaging materials and transportation costs which can add significantly to the cost of delivering goods to your customers.
While some would argue, a weak pound also makes UK retailers more attractive to International buyers – this only really benefits retailers selling goods manufactured and sourced in the UK (although the cost of raw materials and fuel will almost certainly have an impact here as well).
Unfortunately, currency fluctuations are one of those things we have absolutely no control over but that doesn’t mean we cannot work around the problem.
In a competitive market, where someone will always be ready to undercut you, it takes a brave soul to take the first step and pass any increase in price to the customer. Many retailers tell me they are nervously watching the competition to see who will be the first to raise their prices. Until then online retail is an expensive war of attrition.
And it’s not just retailers who are feeling the pinch from sterling’s fall. A number of big brands (most famously – Toblerone and Marmite have faced a significant backlash from both the press and social media for trying to make savings as a result of the current currency situation.
So what can an online retailer do to protect their margins and their reputations in such a difficult and uncertain financial climate?
We’ve compiled the three things you should do first.
- Renegotiate Everything: Speak to your suppliers (the people you buy stock from, your packaging suppliers, your couriers, your web hosts, your software vendors and even your energy suppliers and the people who sell you toilet rolls and cleaning products) and try and force a better deal for yourself. Get quotes from rival firms and pitch them against each other. They’ll be feeling the pinch as well and won’t want to lose your business – so make them fight for it.
- Free Up Cash: The easiest way to do this is to clear distressed inventory (end-of-line products, returns and seconds). The longer they sit in your warehouse the more money they will cost you. Better to cut your losses, sell cheap and re-invest in products that stand a better chance of delivering a more positive return. Remember, in a tight economy, cash is king.
- Attack New Markets: This is a lot easier than you might imagine and potentially a lot cheaper as well. SKU Cloud can help you reach millions of new consumers via a range of online marketplaces (including our very own Flubit) and other high traffic eCommerce venues. Integration is free and there are no listing or final value fees, helping you accurately understand margins and profits. What’s more, if you are using a multi-channel retail system like ChannelAdvisor, Volo or SellerExpress, we’ll have you up and running in no time at all.
How has uncertainty over Brexit impacted on your retail business? Is it time to cut through the political spin and start adopting more agile business practices? Share your comments below: