Last year, around this time, I wrote an article called The Three Economic Forces That Can Crush Your Business in 2020.
And although no one could predict the events of 2020…the trends that I called out ended up being eerily prescient.
As you probably know, in business, some things you can control: your market, products, offers, messaging, design and branding, and more.
Most of our time as business owners is spent working on and thinking about these things. And usually, if you get them right, you’ll see increased sales and revenue.
And then there are the forces that we cannot control. The way you change, adapt, and react to these larger macroeconomic forces is no less important to your success.
That was never more true than in 2020…and it will continue to be true in 2021.
So today, I want to look back at these 3 Economic Forces that can crush your business and UPDATE them for what’s coming in 2021, so that YOU are in the best position to grow your business this year.
Macroeconomic Force #1
2020: The China Trade War
2021: Pandemic Supply Chain Instability
In January 2020, I talked about how the China Trade War and tariffs were creating issues with importing and sourcing products from China.
Little did I know that supply chains around the world were about to be disrupted in a MAJOR way because of the pandemic.
A full 73% of businesses reported having significant supply chain disruptions in 2020, and more than 66% are moving to source goods more locally.
Last year, I had people asking me if it was even worth it to try to sell physical products because of the trade war issues…
And this year, I think we can ALL say that selling physical products online is one of THE biggest opportunities of 2021…
But that being able to have reliable supply chains without relying on China is still CRITICAL.
Macroeconomic Force #2
2020: Amazon Taking Everyone’s Lunch
2021: Amazon Taking Everyone’s Breakfast, Lunch, AND Dinner
In January 2020, I talked about how Amazon was taking over their competition:
“According to Amazon, it pays for small businesses to sell their products on Amazon.
Because as soon as Amazon figures out that you’re making any money at all, well…guess what?
Amazon is going to go and create their own branded version of your product, sell it for half the price, and put you out of business.
When you sell on Amazon, you’re building on quicksand.”
Now, in January 2021…The “Big Ecommerce Opportunity” has never been clearer.
E-commerce penetration in the United States, meaning the percent of people who are using e-commerce as a way to buy goods and services was 22% projected for pre pandemic numbers in 2030. Based on the way things have moved, that scale has accelerated tremendously to over 34% post COVID.
People are buying stuff online in ways that we did not project to happen until 2030. We have people of my parents’ generation, who don’t buy anything online, now buying their groceries online. We did not expect these things to happen for another 10 years. We just fast forwarded 10 years of development and compressed it all in a matter of 10 months. So this represents a massive opportunity, and yet at the same time, a massive challenge.
Now, Amazon is still dominating the market. During the third quarter of 2020, Amazon generated total net sales of almost 96.15 billion U.S. dollars, surpassing even the 69.98 billion U.S. dollars in the same quarter of 2019. Amazon had already had its most profitable year EVER by Q3 of 2020!
And because Amazon has “trained” their customers to expect fast delivery (sometimes even same-day)…people have come to expect other online retailers to do the same.
These are the click to door times for online orders and how they’ve moved in just the last two years. What this means is, people are expecting less and less time to take place between when they make an order online and when that order arrives at their doorstep. They’re expecting instant gratification.
Which means that the old way of doing business, of having a whole bunch of stuff in a warehouse, having a whole bunch of stuff in your garage, buying 25,000 copies or units of the thing that you want to sell and shipping them out by hand one by one, those days are behind us.
The big e-commerce opportunity in 2021 is rapid response e-commerce. There IS a huge opportunity for e-commerce even without relying on Amazon, as long as you can tap into the “rapid response” model that they’ve turned into the norm (more about that coming soon!)
Which brings me to…
Macroeconomic Force #3
2020: Facebook Uncertainty
2021: It’s not just Facebook anymore.
In January 2020 I was worried about the uncertainty surrounding Facebook. I wrote:
“Advertising on Facebook has also gotten a lot harder and more expensive. Arbitrary account shutdowns and ads being disapproved are happening more and more frequently. And once your ad account takes a hit it can be hard to recover.
The cost of ads has also skyrocketed in recent years – between the release of my best selling books ASK in 2015 and CHOOSE in 2019 the costs of lead generation on Facebook have more than doubled, and in some cases tripled.
Not only that, but 2020 is an election year in the US and Facebook has clearly stated that they will not limit ad spending for political campaigns, which means that you will be competing for attention against endlessly deep pockets.”
I had no idea the extent to which Facebook would go haywire in the months surrounding the election.
Seemingly random account shutdowns with no way to appeal have left so many small business owners frustrated and confused – and looking for other options to drive traffic.
In 2021, the uncertainty surrounding the big social media platforms is only going to increase. Which means that smart business owners will need to be able to recognize the best places to advertise and find reliable sources of traffic.
2020 was the year we all learned the lesson of uncertainty. How to pivot quickly, how to innovate and adapt. But for every challenge, there’s an opportunity.
And the ecommerce opportunity has never been bigger – for those who are playing smart.
I’m going to be talking a lot more about this opportunity over the coming weeks…
Let me know right here if you want to hear more about how to profit from the ecommerce opportunity by selling physical products: