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The impact of the cost-of-living crisis on eCommerce businesses



The author is Melanie Vala, COO, Deko


The current cost of living crisis is having a global impact, with Covid and events like the war in Ukraine playing a significant role. In the UK, Brexit has further contributed to slowing economic growth. It all points to people spending less as they become more cautious with their money. Consumers are feeling the pinch of the highest prices they’ve seen in a generation, with energy bills soaring, food costs rising, and mortgage interest rates reaching 15-year highs.

As a result, inflation hit a 40-year high of 11.1% last Novemeber, and while it is too early to predict its future direction, it is currently having a dramatic effect on people and businesses. And, inflation is not the only challenge facing businesses. Supply chain and labour shortages are also significantly impacting eCommerce stores, contributing to higher manufacturing costs and fewer products in production.

Yet, that doesn’t mean it’s the end of the road for businesses operating in online sales. eCommerce might see a slight slowdown in growth, but there are still opportunities for online stores to meet consumer demand. For many, it’s a case of rethinking strategies and refocusing to align with a changing consumer mindset.

Melanie Vala

It is of course worth noting that the eCommerce boom during the pandemic was bound to see some stagnation in the wake of brick-and-mortar shops reopening. Even if online shopping is the future, consumers aren’t ready to give up on high-street shopping just yet.

More competition and skyrocketing living costs led eCommerce sales to fall to 25% of all UK retail sales in June 2022, its lowest number since the pandemic.  Shoppers are reigning in on their spending, buying fewer goods in the process. However, this trend does appear to have reversed, online at least. The latest figures from the ONS in October 2022 indicate that online sales are at the highest level since the beginning of the year standing at £2.2bn. Consumer confidence has undoubtedly been damaged by the cost-of-living crisis and high inflation levels but it is a complex picture.

Businesses across all industries see less appetite for their products and services during an economic downturn. For that reason, companies need to pay extra attention to the details and craft a service that customers highly value.

Online stores can do this in several ways, including:


Re-examining your conversion funnel

Moving your customers along their purchase journey through a conversion funnel allows them to make small actions that lead to a purchase. Think of it as a diagram paving the way for your buyers to make a purchase. And, consider the three growth lanes – performance marketing, virality and content.


Maximising special occasions 

Even during times of recession, companies can still maximise special occasions. Whether it’s the festive season, summer holidays or special days like Valentines Day, these occasions offer eCommerce solutions a chance to catch customers when they’re more inclined to spend. Now, more than ever, is the time to double down on promotions and advertising around special days in the calendar.


Focusing on customer service

Service has never been more critical, especially in the aftermath of Covid when many complaints centred around the lack of high-quality service on offer in many sectors. By establishing yourself as a brand known for its customer-centred approach, you can build loyalty with customers. When it does come to spending, they’ll be more inclined to shop with your store thanks to its heightened level of customer service.


Increasing retention rate

Focusing on existing customers is essential during any economic situation. But it takes on even more importance when there consumer demand is down. You want consumers to keep coming back and buying your products or services. For that reason, a significant part of your strategy should involve customer retention and keeping loyal shoppers coming back for more. Increasing the percentage of new users who return to your store can compensate for the lack of first-time and one-off customers.


Reviewing your value proposition

While the internet provides the perfect platform to obtain new customers, it’s also the ideal distraction and can be hard to keep people’s attention. Having a watertight value proposition helps cut through the noise and allows you to engage with the right type of shoppers. Know your target audience and refine your message, so it resonates with them and positions your online store as the best place to get what they need.


Creating a sense of urgency

Create a feeling of exclusivity around your products and services, whether by offering exclusive access, creating the fear of missing out or building strong word of mouth by constricting supply to stress a sense of urgency. Taking this approach can be a powerful motivator and lead to more conversion opportunities.


Involving your customers (UGC)

Shopping has evolved, and customers want to feel like they’re part of the brand. Allow them to be brand ambassadors by encouraging your shoppers to submit content you can use in marketing materials. Ask them to post images on social media using your products with the relevant hashtag or run competitions that require them to use content with themselves and your products. There are several benefits to user-generated content (UGC), including getting your audience more engaged and giving back to them. Plus, it’s a more affordable form of marketing, and shoppers are far more likely to buy and use products and services when they see others like themselves using them.


Making the checkout experience seamless

Cart abandonment is a genuine concern for online stores, with about 70% of shoppers dropping off at the checkout stage in the UK. In times of economic uncertainty, refocusing on your checkout experience is even more important. Does your checkout offer a fluid experience for shoppers? Can they easily enter their information, and do you remove friction from the methods used for paying? Your checkout experience needs to offer a ten-out-of-ten experience for shoppers. Otherwise, you risk losing them to a competitor with a better shopping experience.


Offering alternative payment methods

Giving people the option to use different payment methods is arguably the best way to combat a complex financial landscape. An increasing number of customers prefer to pay with alternative payment methods, such as buy now, pay later (BNPL). In fact, four in ten Brits have used BNPL and choose to do so over other ways of paying. If your online store doesn’t offer a wide variety of ways to pay, you risk losing customers to other eCommerce options with more extensive payment options.


The role of retail finance

Providing finance to your customers gives them a choice, something that takes on even more importance during an economic downturn. Retail finance gives them more financial freedom and helps them feel more confident about making a purchase.

Whereas the idea of paying for an item outright might be enough to stop shoppers from going through with the sale, having the ability to spread the cost will likely have the opposite effect. Alternative payment methods, such as buy now pay later, can help reduce cart abandonment while making customers feel more empowered about their shopping choices.

The current climate will see many people be more careful with their money. They’ll put off buying that new TV unless it’s absolutely necessary. They’ll consider cheaper jewellery options for special occasions. And they’ll think twice before committing to a subscription service.

You can increase shopper confidence by offering payment solutions like retail finance, BNPL and other forms of digital credit. Suddenly, having the option to pay for a TV over instalments with zero interest is far more appealing than forking out the total price all in one go.

Other products such as digital credit accounts have a similar effect: customers can manage their finances and avoid feeling the burden of paying high prices all in one setting. As a result, they feel more confident and are increasingly likely to make purchases, even during economic uncertainty. Digital Credit also gives the added benefit of having a credit line a customer can utilise with repeat purchases.

Stores that offer customers the freedom to use their preferred payment method of choice will see increased levels of customer loyalty. Customers are already seeking out online stores that provide multiple payment options. Offering credit, debit, and PayPal is no longer enough, with shoppers wanting options like BNPL so they can be more responsible with their money. If you give consumers the finance choices they desire, they will appreciate the flexibility, and you increase the chances of them shopping with you more than once.

Offering finance at your store is a no-brainer, as it gives customers more control over their spending. It can be the difference between a shopper buying from you and going elsewhere to find the products they want.

The economic landscape is heading into an uncertain space, with consumers feeling the pinch and evaluating their spending. This poses an issue for eCommerce businesses, who are yet to face long-term consumer decline.

To ensure you stay relevant and in the mind of shoppers, you’ll need to diversify your approach and focus on the core elements that really matter to customers. From offering an excellent service to providing retail finance and the payment options they desire; your business can remain relevant and flourish in these difficult times to see vital business growth.





Accounting Automation in the Future



Accounting automation is the process of streamlining repetitive tasks in financial processes. For example, some processes like invoicing are time-consuming and repetitive. Automation can reduce manual labor and save businesses both time and money. Also, it helps improve accuracy, reduces errors, and provides more accurate financial reporting.

Accounting automation in the future will be increasingly important for businesses to stay competitive. But every new change comes with both advantages and challenges. Let’s dive in to get ready for this future trend.


Potential Future Benefits of Accounting Automation

Increased Efficiency and Cost Savings

Accounting automation is a great way to increase efficiency and cost savings. For example, AI bookkeeping uses advanced algorithms to automate many accounting tasks. So, companies can track expenses, prepare financial reports, and more using AI.

It reduces the time needed for manual entry. So, businesses can spend fewer labor hours on tedious processes. They can increase efficiency by freeing up resources for more strategic work. It also helps reduce errors and inconsistencies associated with manual processes. So, the cost of compliance is lower because of greater accuracy.


Improved Accuracy and Reliability

Accounting automation can improve accuracy and reliability in accounting processes. For example, Automating bank reconciliation is less prone to errors from human mistakes or miscalculations. You can automate the process to identify discrepancies between the bank statement and accounting records. It helps to ensure that financial reports remain accurate and reliable. So businesses can take corrective action faster than processing data manually.


Streamlined Business Processes

Streamlined business processes involve eliminating unnecessary steps, reducing paperwork, and automating repetitive tasks. This allows businesses to focus on higher-value activities, such as developing new products, improving customer service, and developing strategic plans for the future.


Making a Better Decision

Accounting automation can enhance decision-making in 3 ways.

1. It enables businesses to access real-time information from multiple systems. So they can identify trends for better decision-making.
2. Automated accounting also helps with forecasting, budgeting, and auditing tasks. It enables businesses to be more proactive in their decision-making processes.
3. Also, automated accounting tools can integrate with enterprise resource planning (ERP) systems. They can manage data across the enterprise and make concise decisions that are favorable to the company as a whole.


Increase Customer Satisfaction

Accounting automation can help businesses increase customer satisfaction by streamlining their processes and providing a more efficient customer experience. For example:
4. Automated accounting systems can automate tedious manual tasks such as invoicing, data entry, and payroll processing. This allows businesses to focus on other aspects of their operations that are more important for customer service.
5. Automated accounting systems can also provide customers with more accurate and timely financial information. The information can help them make better decisions about their finances.
6. Also, accounting automation enables businesses to respond quickly to customer inquiries. It helps reduce wait times and improve the overall customer experience. So, you can build better relationships with their customers.


Improved Accessibility

Accounting automation takes place online or comes with cloud-based solutions. So, you can access your information and do your job from anywhere instead of being confined to one spot.


Challenges to Implementing Accounting Automation in the Future

Cost of Technology Infrastructure Upgrades

Automating an accounting system often requires businesses to invest in new hardware and software, such as servers and other associated equipment. These upgrades come with a hefty price tag that may be difficult for small businesses to afford.

There are also extra costs, such as installation fees, setup charges, software licensing fees, cloud storage costs, and maintenance fees.


Training Requirements for Staff Members

Accounting automation involves using advanced technology to automate certain processes. So, it creates a need for trained staff members who can handle the new technology. Training requirements vary depending on the type of software used.

Some common training includes record-keeping procedures, software applications, and troubleshooting skills.


Regulatory Compliance Issues

Accounting automation can be a time-saver, but it also requires firms to be aware of the applicable rules and regulations. Companies must ensure that their automated systems are compliant with relevant laws and regulations such as Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), and other applicable accounting standards.

Besides, they must also comply with legal requirements related to taxes, financial statements, and other reporting obligations.

So, businesses must consider the complexities of regulatory compliance when automating accounting.


Security and Data Protection Concerns

As businesses move their accounting processes to the cloud, they are exposed to a wide range of potential security risks. Data breaches can cause significant damage to the business’s financial and reputational integrity. Besides, the complexity of automated accounting systems can make it difficult to identify and detect suspicious activities or errors in the system.

To ensure data is kept secure, businesses must have strong measures in place to protect against unauthorized access, encryption, and regular backups of data.

Furthermore, companies must train their staff on the proper use of the system. It helps staff to know how to protect confidential information from being accessed or misused by unauthorized personnel.

Businesses may also need an experienced IT team to monitor and maintain the system to keep up with any changes or updates for optimal performance.


Final thoughts

Accounting automation has come a long way in the past few decades. It is likely to continue to advance in the future. As technology continues to evolve, more businesses will likely begin taking advantage of automation in their accounting processes. So, businesses should be aware of the potential challenges and prepare to stay competitive.

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How banks can help customers during the cost of living crisis



 Lavanya Kaul Head of BFSI, UK & Ireland, LTI Mindtree


Surging energy and food prices are significantly driving up household expenditure, which means living standards in the UK will fall to 2.2% this year, according to the Office for Budget Responsibility. This is the biggest drop in any single financial year since the records began in 1956-57.

It’s a tough situation for many consumers who are still struggling with financial hardship following redundancies and pay freezes from the pandemic. According to TSB’s Money Confidence Barometer, 82% of people have experienced an increase in the day-to-day cost of living. This resulted in almost a quarter of them using their savings, while one in five changed their usual spending habits and behaviours.

As the financial situation worsens, consumers are increasingly relying on their banks for help and support. But, while banks can’t control inflation, energy or food prices, they can play a more supportive role by adapting their services to offer stronger customer service, better tools for financial management and be more flexible with loan repayments.


Strengthen customer service with intuitive AI solutions

Since the pandemic, consumers have changed the way they bank, using more mobile apps for primary banking rather than going into physical branches. This provided an opportunity for banks to accelerate their investment in digital services including automation and offer customers more support during the cost of living crisis.

Lavanya Kaul

Effective tools include AI-powered chatbots which respond intelligently to customer enquiries to quickly help troubleshoot problems and provide useful advice. But to be successful, you need to ensure you strike the right balance between an efficient and convenient process and creating a personalised experience. Customers need to feel like you understand and care about their problems and are here to help, rather than just fobbing them off with a monosyllabic bot. To avoid this, banks need to embrace intuitive AI solutions to ensure that empathy comes across in all automated interactions with customers. While doing that, messaging is key. In times of stress, we don’t function as well and financial struggles are a huge stressor. The clearer the message and the simpler the instructions, the better.

Financial education, when combined with technology solutions such as open banking, can offer more long-term solutions for people to navigate their finances. This can help put more information into the hands of the consumer to help them grasp their financial situation better. Some banks have cracked this with innovative solutions like HSBC’s Financial fitness score tool that can analyse your money habits and signpost you towards ways to improve your financial health. This may include joining one of the financial education webinars run by the bank or having a ‘financial health check’ with a member of staff.


Launch money management features & apps

Introducing money management features and apps to increase the visibility of a customer’s financial situation, empowers them with the information they need to make smarter choices.

TSB offers Spend & Save and Spend & Save Plus current accounts which include a savings pot that enables customers to put extra money aside when they can and an auto-balancer feature that automatically transfers money from the savings pot into their current account if their balance falls below a certain level. This allows them to start building up savings and protects them from unnecessary overdraft charges.

Personal financial management (PFM) apps also help customers get a better understanding of their finances. These connect with a customer’s bank account and enable them to keep a close eye on their spending habits and track upcoming bill payments. An example is Prism, a PFM app which allows customers to manage bill payments by sending them reminders about due dates. It also provides a summary of their income, account balance and monthly expenses at a glance, therefore consolidating all their financial information in one place and saving time on bill payments.

Lloyd’s Banking Group and HSBC launched a subscription management tool for all customers on mobile, allowing them to see and cancel recurring card payments for things like TV subscription services. HSBC says that during the first quarter of the year, it led to customers dumping around 200,000 subscriptions.


Introduce payment holidays

While improved customer service and financial management tools are important support tactics, they might not be enough for more vulnerable customers. For example, those who are about to default on mortgage payments or loans due to redundancy or periods of ill health need banks to do more, like offering payment holidays. Banks relaxed the rules for payment holidays during the pandemic, so they should consider doing it again to help more vulnerable customers through the crisis. Customers need to understand that they are not alone when experiencing financial difficulties and that help is available


Ride out the crisis together

As inflation reaches a 30-year high, customers are now more reliant than ever on banks for guidance and support. But to provide the right level of service, they need to move away from their traditional ways and behave more like technology companies by embracing automated solutions to create the right products and services for customers. Then layer on top of that the need for more personalised and empathetic customer interactions, as well as consider additional support for more vulnerable customers.

While we don’t know how long the cost of living crisis will last, what we do know is that the pressure on household finances is likely to get worse before it gets better. Therefore, banks need to step up, be the supportive partner and do whatever they can to help customers. After all, the only way we can ride out the crisis is by supporting each other and working together.


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