Amidst the prevailing cost of living crisis, its widespread effects are being felt by individuals across the board. However, small and medium-sized enterprises (SMEs) are experiencing a significant blow, with a staggering 61% grappling with surging energy costs, and 47% facing the mounting expenses of materials.
In the United Kingdom, more than 85,000 SMEs have established a presence on Amazon, and they are resiliently exploring innovative measures to navigate through this challenging era of soaring living costs. This article will delve into how some of these businesses are proactively tackling the impacts of the cost of living crisis while skillfully managing their operations.
Although Freda Health’s sales are still steadily growing on Amazon, they noticed a dip on their own website sales and the cost-of-living crisis has resulted in higher costs. Freda Health have seen an increase in the price of packaging, materials and delivery for the brand, but also heightened demand for donations as women across the UK have been struggling with period poverty.
Despite overall costs having gone up by 27%, they are absorbing as much as possible rather than passing it all on to the consumer. This means getting creative and making internal changes – they’ve had to pivot their strategy to target more corporate customers to help reduce the cost for consumers.
The founder, Affi Parvizi-Wayne, has seen this change as an opportunity for her business to move in a different direction: “This has fit well with how we have been planning My Freda moving forward as we begin to move towards selling our items in bulk to save on postage and packaging to benefit our costs and shrink the carbon footprint for the business and consumers.”
Anni Kriesche, founder of Funky Soap Shop, has faced a rollercoaster year due to the Ukraine war, supply chain issues and cost of living increases. The combined impact put unprecedented pressure on her business – for the first time Anni feared for the survival of the business she had worked so hard to build up over the past decade.
“Not only did we see our raw materials such as olive oil double in price, we were also seeing our customers being more cautious with their spending in the early months when things were quite uncertain. There were weeks where I couldn’t pay staff wages and I felt devastated and responsible and my health was impacted by the stress of it all.”
Resilience and support from family helped Anni push through and she focused her attention on being resourceful and exploring new opportunities such as offering white label products to hotels and hospitality venues looking to cut back on single use plastic, developing gifting options, and using Fulfilment by Amazon to maximise overseas sales in the US and Canada. Sales have started to pick up since Christmas 2022, and Funky Soap Shop will soon launch its gifting options on Amazon. Although still tough, Anni hopes to be on an upward trajectory now.
Despite rising supply and operating costs, Roni Badong is determined not to sacrifice the quality of her ingredients, despite a staggering 300% increase in essential ingredient rapeseed oil.
“Like consumers, as a small business, we also have to contend with the rising cost of goods and we have reflected that by increasing our prices. Rather than a blanket increase across our range of products, I’ve increased prices proportionally to the raw ingredients. We know that people are more budget conscious, with customers telling us, ‘I have a budget of X and that’s all I can spend this month.’ On the flip side, people are more willing to support small producers who use natural and quality ingredients. Despite the cost challenges, we refuse to compromise on the great flavour that we’re known for by using cheaper ingredients. As a food business, that simply isn’t an option for us,” says Roni.
Roni’s resourcefulness shines through, whether it’s making shrewd business decisions or finding money-saving hacks in the kitchen. Her mantra is simple: “When faced with tough situations, think creatively and outside the box. I’ve leveraged Amazon’s advertising support to get more eyeballs on my products. As a Filipino, I’ve grown up with the tradition of stretching meals and using leftovers, so I always tell my customers to only cook what they need and make the most out of their ingredients.”
While the cost of living crisis remains an ongoing challenge, the experiences of these SMEs offer valuable lessons for others in the business community. By embracing change, seeking new opportunities, and remaining true to their core values, SMEs can forge ahead and find success even when challenges arise.