While reporting its quarterly earnings last month, Walmart made headlines by announcing that it was lowering its profit guidance for the upcoming year.
It turns out that rampant inflation has changed consumer habits considerably, causing shoppers to hold onto more of their money and reduce discretionary spending.
In addition to taking a big bite out of the bottom line, this shift has left the megaretailer with a surplus of inventory that’s now collecting dust. To get rid of this excess stock, Walmart has decided to sell certain items at a discount — like clothing, electronics, and toys. With food and gas accounting for so much of the consumer wallet, more and more Americans have less to spend on other items.
The move allows Walmart to look like a consumer champion by discounting when most prices are rising. While a company worth hundreds of billions of dollars might be able to sell items at a discount — or even at a loss — to reduce excess inventory levels, most ecommerce firms wouldn’t be able to even entertain such an idea.
As the economic storm inches closer, what can your ecommerce business do to survive?
The solution: Improving inventory accuracy and focusing on profit optimization
Surviving these turbulent times requires a two-pronged approach.
On one hand, ecommerce retailers need to do everything in their power to ensure that they have ideal inventory levels at all times. That way, they won’t have to worry about sitting on top of too much product — or not being able to keep certain in-demand items in stock.
On the other, firms need to make sure they squeeze as much profit as they possibly can out of each sale. While many ecommerce companies may experience a downturn in sales just like Walmart, profit optimization ensures they are making the most out of a difficult economic climate.
By leveraging the power of artificial intelligence (AI), machine learning (ML), and real-time data, ecommerce companies can accomplish both of these objectives.
Not only can AI and ML help ecommerce firms automatically avoid inventory scarcity issues, it can also improve demand forecasting to ensure you don’t get drowned in overstocks. At the same time, AI and ML can help ecommerce retailers set the perfect price for each product — that which enables them to maximize profitability without scaring consumers away with sticker shock. Ultimately, this allows them to fight back against inflation, weather the economic storm, and ensure their businesses are on firm ground when the economy rebounds.
For more information on how AI and ML technologies can help your ecommerce firm avoid a situation like Walmart’s, request a demo of Hypersonix today.