Why your online shop sales dropped in 2023: the shocking truths.

2023 has been a rough year for a lot of the shop owners. Sales are down even for shops that have made a ton of sales in previous years. Shops are closing down left and right. It is a scary time right now. So what is going on ?

The sales slump in 2023 has raised concerns. The year that didn't work for a lot of us online shops. everywhere I turn, shops are reporting a 40 to 50% decrease in sales especially around July. Why have sales declined ?

but after spending some time investigating what could cause everyone to drop at exactly the same time and same rate?

I finally figured it out!!.

Yes, everyone always blames the Economy , inflation, the recession , the US election but that doesn't explain the precise behavior we’re seeing in the sales decline.

There are multiple reasons broken down into two main categories.

One is Etsy shops and two is E-commerce which is online sales in general so let's break it down.

Let's start with Etsy.

If you’re selling at Etsy and you’re struggling to make the same kind of sales you saw in the previous years, here is why.

in 2020 we saw almost a double in active sellers on the platform that means double the competition and as if that didn't already make things hard enough, we also saw a surge of Etsy coaches come out of those pandemic years when people were seeing how easy it was to sell digital or print on demand products on there.

And these Etsy coaches have made starting an Etsy shop so much accessible by teaching tricks on YouTube and on tick-tock and most of the time the advice they give is to post and publish hundreds and thousands of products listing and copying other shops' bestsellers.

It's basically a spaghetti on the wall approach and see what takes. It's one strategy but frankly not a time position strategy.

now in quarter three of 2023 we sort another huge surge of new at the sellers and because Etsy doesn't have a great system for filtering out sellers.

we've got a ton of shops that sell dropship, mess manufactured in China or copycat products. In order words, not only are there so many more shops to choose from, there are now also a lot of crappy products on the platform.

shoppers are struggling to find beautiful unique goods on Etsy and are choosing not to shop on Etsy anymore. Therefore, traffic drops and sales drop.

Now let’s cover e-commerce or online sales in general.

It’s not just Etsy, anyone who has an online shop is suffering right now to the point where I’m hearing so many shops closing down even big companies like Allbirds and Blue Apron who have millions of investors funding are basically empty shelves close to bankruptcy. Why?

So in the USA the government created two major initiatives to help with Covid and now we are seeing the consequences of each one.

First, student loan interest rates went down to 0%.

which means no one was motivated to pay off their Student loans and the average student loan for a person is between $300-$500 a month.

This meant people now had an extra $300 to $500 a month of disposable income they were using on shopping.

This student aid officially stopped in September 2023 and that interest rate has almost doubled which means people had three years of feeling like they had more money to spend and now are feeling the financial pinch again for having to be more budget conscious because now they have to pay student loan debt again.

Second, the cost of homes whether it's rent or mortgage has gone up this year.

further and is forcing people to be tighter with their spending. So what should you do? If there is one thing economics class and being in business has taught me is that everything works in cycles. there is a natural order and balance of things and we will find our equilibrium once again.

People will also get accustomed to having a tighter budget again. And once they get back in the habit, they will continue to shop again like before.

Bottom line is,

Do what you can to keep your business up and running. so that you can write this out until things are back to normal. Now how long will it take to get back to normal no one knows. It could be six months, one year or two years but it will happen I promise. You have to change your marketing strategy. That’s how you stay in business for so long by pivoting based on market changes.

Identifying and addressing the root causes of the sales slump is crucial for sustainable growth. Continuous monitoring and adaptation will be key in achieving long-term success.

Thanks for reading

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