Farzana and Freddie speak on perseverance as a company and as an entrepreneur.
“Never let a good crisis go to waste,” says Farzana Nasser. “It’s really an opportunity to laser focus on the key things that are important to your business.”
Farzana is a partner at Chameleon Collective who specializes in interim VP work across ecommerce, growth marketing, and business transformation. In the past, she’s worked with brands from Cheerios to Betty Crocker and truly has her finger on the pulse of the market. She also leads mBolden, a global organization empowering women in the digital sphere. We might say that navigating challenges is her forte. On Oh Ship!, she shared key ways that entrepreneurs can navigate post-pandemic impacts on ecommerce—including the downturn we’re experiencing today.
Lessons from the 2008 recession
The last recession sparked an environment of innovation, Farzana asserts. Companies like Uber, Airbnb, and Venmo emerged from that climate of disruption. As we enter the time of Web 3, NFTs, and the metaverse, the current downturn could catalyze further innovation that keeps companies relevant, she posits.
During the 2008–2009 recession, Farzana worked at General Mills. She shares how that crisis influenced both strategic marketing choices and her personal career trajectory.
Focusing on brand value
General Mills doubled down on how to highlight the value they provide. “Food is a consumer staple, so a little bit more recession-proof than most brands, but we were getting hit really hard by private label,” she says. “That was really the threat at the time. Normally during a recession, people cook more at home; they go out a little bit less, so that’s really favorable.”
Business also rose at discount stores like Walmart and Costco. They focused on tailoring their product mix to appeal to consumer sentiments by offering special products to particular retailers.
Taking personal risks
During recessions, people often have the urge to hunker down instead of taking risks, trying to wait it out—but Farzana has the opposite impulse. Toward the end of the last recession, she quit her job and moved to NYC’s East Village without having another one lined up.
It was a scary time, she reflects. “I still remember all of the stores being boarded up—retail was desecrated at that time.”
But that inspired rather than deterred her. “I saw an opportunity. The world was changing so much,” she continues. “Facebook was becoming mainstream; the App Store launched … all of these great companies came out of that.”
Wanting to be at the forefront of the change, she went back to school to get her master’s degree in digital marketing from NYU. This marked her segue into performance marketing and direct response, launching her current career trajectory.
“Recessions are an incredible time to upskill, and to learn, and to embrace new things,” she says. For her master’s thesis, she wrote the business plan for the startup she launched after graduating.
Key lessons on prepping for a downturn
In April, ecommerce declined for the first time in a very long while. While there’s much debate about whether a recession has begun or is unfolding, we clearly need to take immediate steps to prepare, as Farzana outlines.
“If you know what the situation is, you’re able to navigate it much more clearly,” she asserts.
“Luckily, I feel like this current climate is probably the most anticipated recession in history,” she continues. As a result, people are studying the key indicators closely. Farzana walks us through some of the main ones:
- We’re seeing consumer sentiment drop to the lowest point in a decade.
- GDP has declined for two quarters, which generally indicates a recession.
- Inflation has spiked to 9%—a 40-year high—and lower-middle income people are being hit especially hard.
However, there are some positives: Unemployment is very low. The labor market remains tight, and compensation is still rising, suggesting we might avoid a deep or prolonged recession like what we saw in 2008–2009, she notes.
Ecommerce isn’t dying, she also affirms. She looks at how its sharp rise during the pandemic may have contributed to its current drop. “A lot of companies, especially in ecommerce, got big on the pandemic accelerating ecommerce growth, and accelerating it to the point of where it would be in 5 or 10 years,” she asserts. In 2020, ecommerce underwent a near-vertical uptick before dropping more recently. Rather than signaling a catastrophe, this may simply show the influence of factors like the return of physical retail.
Farzana served as an analyst for an eCommerce Next benchmarking study conducted earlier this year on challenges that ecommerce marketers are facing—particularly rising advertising costs and talent shortage. There is a silver lining, they found: “There could be a pullback on ad spend, which could lower ad costs.” And going into a recession could increase the availability of talent.
Some companies are reforecasting their expectations for the year or reducing fixed costs—strategies she advises using. In particular, we all need to consider how the return of physical retail may affect ecommerce performance for our business. “Now we know consumers actually do like to shop in stores, so we’ve seen an uptick in physical retail,” Farzana says.
In the past three years, we’re seeing more change than we saw in the last ten before that, she continues. “Even Amazon is reporting ecommerce decline,” she notes. “Now we need to start looking at how we can best serve the customer and where the opportunities are to optimize.”
Go back to basics.
To cope with rising advertising costs and changing consumer preferences, ecommerce teams should laser in on how to optimize. “In a challenging situation, or in a time when you have to really think about profitability as well as revenue, how do you mitigate the impact of revenue?” asks Farzana. “There’s a lot of ways to do that, and one of them is thinking about the purchase journey and really laser-focusing and being thoughtful on every step of that journey.”
“A lot of it is just going back to basics; how do you reduce your reliance on ad spend?” she emphasizes.
Ad spend has rapidly risen with fast-rising advertising costs, which comes down to supply and demand. Decreased ad spend during the pandemic reduced costs, which now are rising more steeply due to increased investment in those platforms.
As companies reforecast, they might pull back on media spend, which could slow the trajectory of rising costs. Instead of just spending more, look at content more critically. Examine how you think about your brand and its positioning. Look at your landing pages.
During times of growth, people explore lots of different channels, Freddie says, and they don’t always do it well. During tough times, you have to nail the basics. By doing so, you can re-engage customers that once did buy your products.
“Get back to basics, and really get back to the fundamentals of the business to drive profitability overall and mitigate any impact to revenue,” Farzana stresses.
Build trust to earn loyalty.
“What we know about recession is that consumers tend to spend on brands they know and trust, so there’s a huge opportunity there from a retention perspective,” she says. “We also know that during recessionary times, people are much more hesitant to switch, so that loyalty piece is really critical.”
“Brand equity becomes really important at a time like this because people need to be able to trust,” she asserts.
This brings huge opportunities for growing customer lifetime value, she continues. “If you can raise customer lifetime value, and if you can get customers to come back and be loyal, then you can mitigate the rising tax. So as advertising costs go up, if you’re raising your LTV, you’re still in a profitable situation.”
Look at having room to grow as an opportunity. “When you look at conversion rates, if you have a 5% conversion rate, there’s 95% opportunity there for you to fine-tune the purchase journey,” Farzana says.
“A big mistake that sometimes companies make during times like this is they pull back on brand spend, and they only spend at the bottom of the funnel, and then you’re hitting the same people over and over again,” she adds.
“It’s truly back to basics,” she affirms. “What’s a good entry-level product for a new customer in a recession? How do you speak to consumers in a way that recognizes the current state of the economy and the current situation; what type of messaging would resonate with them?”
How to thrive professionally during a recession
Founders and leaders must focus on accountability, Farzana emphasizes. Overcommunicate and become a beacon of strength for your people.
If you’re an employee, find new ways to help your company navigate the situation. This will improve your job security and prove your abilities.
Most importantly, don’t become paralyzed by fear. Keep moving. Build new skills, as Farzana did herself, or advance your education. Think outside the box to remain relevant.
Finally, cope with stress in healthy ways. Look for a supportive community so you won’t feel isolated. Countless entrepreneurs are navigating the post-pandemic impacts on ecommerce, and we can support one another along this journey. By thoughtfully preparing, engaging in professional development, and staying connected to others, we will stay relevant and bring forth creative new ideas that allow us to thrive.
Find Farzana on LinkedIn or on Twitter @FarzanaNasser. And “like” and follow us for more great content!