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The Rising Costs of 2022

Businesses have dealt with more change in the last two years than in the previous two decades. As a side effect, we’ve grown more resilient. And it’s a good thing—because there’s a lot more change ahead. This post will cover the anticipated impact – and subsequent recommendations – of record-high shipping costs, diminishing returns on online advertising, and a massive increase in the number of channels businesses are selling on. All of which this will affect the way we shop, sell, and ship.

Increasing Shipping Costs

“Shortage” is a word that will define the coming year. Supply chains, resources, and access to staff will remain constricted for businesses while consumer demand keeps going up.

Know what else is going up? Shipping and acquisition costs. The average cost of a shipping container is now over $10,000, four times higher than a year ago. We have become accustomed to free shipping with online orders but increasing your minimum qualifying spend or unit prices may become inevitable.

Shipping Costs 2022

Reduced advertising effectiveness

When planning Facebook media campaigns back in 2010, the CPM was pennies and CTRs were double digits. Now, through a combination of extreme competition and changes in technology (thanks iOS14). The cost per click for paid search ads increased by 15% between the second and third quarters of 2021 alone.

To succeed in 2022, compete not on price but on brand proposition. People want to buy from brands that stand for something; whether thats sustainability policies, unique design or digital experiences. Focus on customer retention and lifetime value, especially as advertising costs increase.

Fending off extreme competition

We work with some pretty unique categories – insect-based cat food, healthy ‘junk’ cereal, sex care, meal-kits, and yet all of these have 4-5 strong competitors in the online space. All with investment, desirable branding and hoping to be the one that comes out on top.

So how do you differentiate? It has been suggested that the C in ‘D2C‘ stands as much for community as it does consumer. Direct To Community is a powerful sentiment but strong brand communities don’t emerge by accident, they are a significant commitment of time and resources.

Where to focus resources

Trust is the main currency of the future of ecommerce. By investing in brand building, it boosts conversion rates in the short term with increased customer lifetime value and attracts new, out-of-market buyers in the long term. A ‘always-on’ approach to brand and baseline performance media spend to leverage that awareness is the most prudent way to apply resources. Switching on bursts of activity will not get the traction required, consistency is key.



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