Recent data from Airwallex, reveals a Q4 uptrend: Australians increased their online spending by nearly $200 during the peak sales season of 2023 compared to 2022. This surge – notably in e-commerce, travel, and financial services – presents greater revenue opportunities but also calls for strategic caution.
A considered look in the rearview mirror can help us forge a strong path ahead. As e-commerce growth strategist Mal Chia suggests: “Reflecting on the past year is a game-changer. It’s where the gold lies.
“Don’t rush into ‘solutions’ mode. First, understand the ‘why’ behind what worked and what didn’t.”
For many retailers, the stretch from January to October can be financially challenging, with the aim to break even or achieve slight profit margins in November.
As the peak season winds down, retailers typically navigate one of two distinct business cycles…
- The high sales volume, low-profit margin cycle
This cycle is characterised by a dependency on high sales volume achieved at the cost of low-profit margins, heavily leaning on discounting strategies, especially during sales events like Black Friday and Cyber Monday.
While this might lead to a spike in short-term sales, it’s a strategy that can erode long-term profitability and dilute brand value. This can influence behaviour as customers start to anticipate, if not expect, continuous price reductions.
- The sustainable growth and profitability cycle
The other cycle adopts a more sustainable approach. Here, the focus is on achieving balanced growth, anchoring strategies in long-term value creation through strategic pricing, effective customer relationship management, and a thorough grasp of unit economics.
To lessen your dependency on peak season and set your business up for year-round success, a peak season performance review can help.
How can you conduct a profit-driven performance review?
Conducting a performance review of your peak season strategies and financial outcomes will illuminate new opportunities for sustainable business practices. For maximum impact, you want this evaluation to be profit-driven – and these tips can help you do exactly that.
Understand unit economics to guide profitable decisions
To avoid activities that erode margins, retailers should be analysing direct costs, discounting impacts, and the profitability of each item.
Use unit economics to understand the cost implications of holding inventory, aiding in smarter stock-level decisions for future peak seasons.
At Airwallex’s 2023 Beyond Black Friday Summit, Mal Chia and retail leader Rachel Tigel shared the importance of strategic discounting. Sitewide sales may not always be beneficial; instead, tiered discounts or gifts with purchases can help move overstocked items without compromising brand value.
Eliminate unnecessary banking fees
Retailers should pay attention to the costs associated with cross-border transactions and conventional banking fees for currency conversions and payments.
The expenses related to returns and refunds often range from 5 to 7 per cent. However, Airwallex offers a more economical alternative, capping these charges at an average of 1.2 per cent plus a transaction fee of 30 cents.
A case in point is the experience of Vinomofo, an e-commerce business that, by opting for a more cost-efficient FX & transfers solution, saved over 11 per cent on its initial transaction while converting Singapore dollars to Australian dollars. Extended over a year, this strategic move led to savings in the tens of thousands.
Streamlining financial operations for efficiency and growth
Automation plays a significant role in this process, as it helps reduce the burden of administrative tasks and minimises human error.
When operating at a global scale, a robust financial infrastructure becomes indispensable, facilitating seamless global transactions and ensuring the business can smoothly enter and navigate different markets.
An investment in financial technology is an investment in customer experience – an infrastructure-first, API-driven platform enables the integration of financial products and services into your existing tech stack, allowing for operational improvement alongside enhanced CX.
“If you are aspiring to rapid growth, it’s critical you are supported by a robust global financial infrastructure that scales with you,” says Luke Latham, MD at Airwallex Australia and New Zealand. “Businesses and customers alike are looking for streamlined and secure financial experiences, and legacy systems are struggling to keep up. We’ve combined a complex infrastructure with easy-to-use functionality to rise to the challenge.”
Optimise your customer experience
In a market where price sensitivity is high, the fundamentals of e-commerce– a seamless customer journey and a positive shopping experience – remain a priority. These aspects often significantly influence where consumers choose to spend their money.
Your technology stack should reflect your brand’s efficiency and reliability in every customer interaction. Consider how your systems handle everything from purchase to post-purchase support. Retailers need a solid strategy to ensure that their online experience meets customer expectations for speed, reliability, and satisfactory solutions when things don’t go as planned.
Planning for year-round retail success
A strategic, profit-first approach to post-peak season performance reviews is the key to year-round retail success. You can create your blueprint for profitable and sustainable growth with every data point and insight.
This information doesn’t take into account your objectives, financial situation, or needs. It is important for you to consider these matters and read our Product Disclosure Statement (PDS) before you make a decision about our product.
