Are Your Ecommerce Expenses Going Through the Roof?
With the rapid expansion of eCommerce, more and more sellers are investing in selling their products online to reach more customers globally. However, operating an eCommerce business comes with costs, including hosting fees, inventory storage fees, marketing expenses, etc.
High operational costs can waste your profits and leave you with less money to grow your business in ways you won’t like.
So to keep your business humming, find ways to reduce operating costs while maintaining or even improving the quality of your products and services. These 14 quick tips will help you do just that!
Lower Your Inventory
To reduce your eCommerce operating costs, you should conduct regular inventory checks. This practice ensures you are not hoarding too many items in inventory to increase your storage costs.
Selling your merchandise at a discount and providing coupons and special offers will help clear out unwanted items and reduce the need for more storage space.
Slow-moving items can be bundled with more popular, best-selling items to see immediate success. Otherwise, your unpopular products may sell well if offered as a gift to purchase more desirable items.
Besides making space in your old inventory, it will also increase customers and sales of newer products, leading to increased business. Exchanging your older inventory with new is another way to lower your eCommerce operating costs.
Trade it in for newer items, which may be just sitting there waiting to be purchased. There are some cases when purchasing used goods is beneficial, such as acquiring an item from an outlet store (though these deals tend to get snapped up quickly).
Focus on Quality and Not Quantity Service
By providing exceptional service to your existing customers, you can reduce your eCommerce operating costs and the costs of attracting new ones.
A study by Elasticpath shows the cost of acquiring a new customer is five times higher than keeping an existing one, and 89% of companies report customer service as a key indicator of customer retention.
You don’t have to be Amazon or Zappos to provide exceptional service; all it takes is a commitment from management, employee training, and investment in infrastructure like self-service chatbots.
Selling high-quality products would lower churn rates, returns, and refunds. Additionally, using personalized services that strive to establish long-term relationships with customers will keep buyers coming for more.
Offering free shipping on purchases over $150 is another option, as some studies show people are more likely to buy something they wouldn’t otherwise buy if they are paying less than the $15 shipping charge.
Finally, make sure your website is well optimized so that customers will find what they’re looking for easily and quickly – a recent study found that 68% of shoppers left when their search didn’t produce desired results within three seconds.
Outsource Non-Critical Tasks
Similarly to automation, outsourcing services to a professional third-party service provider can help you reduce your eCommerce operating costs. In addition, you’ll be able to focus more on your core business functions.
Also, by delegating these non-critical tasks to someone else, you won’t have the burden of worrying about whether or not they’re getting done. Finally, outsourcing will reduce operating costs because you will not need a full-time employee to perform the outsourced tasks.
However, you will also transfer the cost of purchasing and maintaining the necessary hardware and software to a third party.
Save on Shipping
Shipping costs can be expensive and can eat your profits or come close to doing so. Make sure you have free shipping (or at least a discount on shipping) as an incentive for people to buy more items in one order, increasing the number of packages you need.
This reduces your overall shipping costs. It also means that it is more likely that customers will complete their purchase instead of abandoning their cart due to high shipping prices.
Know How Much You Need
Knowing how much inventory you need before the start of a sale is not as simple as it may seem. However, it’s best to have too much inventory than not enough. While forecasting demand can be difficult, some strategies can help you figure out how much inventory you’ll need.
Tracking stock and sales in your Shopify dropshipping business is important for many reasons. The first reason is that tracking makes it easier to predict future inventory needs.
For example, if most items sell out within minutes during a flash sale, you know those items will likely require more pre-planning when running another flash sale.
On the flip side, if an item sells well after the flash sale ends, you’ll know how much inventory will be needed for similar products on your site or store.
Automation will help save time and money, streamline operations, ensure compliance, and improve response rates to customer inquiries without risking errors that could cost more.
Using eCommerce automation to minimize human error, manual work, and process completion times is another great way to cut your eCommerce operating costs while enhancing efficiency, productivity, and business continuity.
Instead of working in inefficient isolation, with the right tools, you can focus on setting up automated workflows, such as your customer’s contact data in your email marketing tool or data about your customers’ orders in your accounting software.
You can also set up automated tasks triggered by events within the system, such as filling out a form on your website and automatically registering for an upcoming webinar.
With automation, you can spend more time on value-creating activities, which increases revenues and lowers operating costs.
Ask Friends for Help When Starting a New Store.
When starting a new store, use your networks by asking friends, family, and acquaintances for help. Whether editing products or donating inventory, you’ll find plenty of people willing to lend a hand in your pursuit.
This is also a good way to spread the word about your store so that more people can help you gain traction with potential customers!
Use Ecommerce Marketing Techniques
Ecommerce marketing will do wonders for your business if done correctly. But, first, look into SEO best practices like optimizing meta descriptions and keyword phrases.
Then, when developing content on your site (including blog posts!), always ensure that you’re using keywords appropriate to what you’re writing about while maintaining a consistent voice across all content types.
When all else fails, don’t forget about the selling power of social media! Social media engagement is also important. Get involved in conversations on relevant social media channels such as Facebook, Twitter, Instagram, and LinkedIn!
Consider Hiring Remote Staff in Other Countries.
Research conducted by the Center for Strategic and International Study (CSIS) shows that countries like India, Vietnam, and Indonesia offer low-cost, high-quality labor.
One way that may work for most companies is hiring remote staff through outsourcing agencies.
This approach has helped many of our QuickBooks users keep their costs down while meeting deadlines and demands.
Switch Payment Providers
Consider the benefits of a service like Stripe that aggregates credit card processing rates from many different providers and provides merchants with access to each provider’s payment tools through a single point of entry.
You can still accept Visa, MasterCard, Discover, and American Express payments, but you don’t have to invest in expensive terminals for each card type.
Furthermore, you will be able to offer your customers much lower prices on all types of transactions by receiving discounts from processors that might not be available when only accepting one type of card or terminal.
Use an Integrated System like Connex.
Many traditional ERP software on the market is more expensive, complex, and difficult to use. This can make it hard for small business owners and entrepreneurs to gain insight into how their operations are performing.
That’s why Connex offers its cloud-based integrated system. It keeps all your data organized in one place, so you can make better decisions about your inventory and sales channels – meaning you’ll have a stronger profit margin.
More than anything else, an integrated system saves you time because you don’t need to spend hours analyzing different programs or apps. Instead, everything is in one place for you to easily access.
With Connex, QuickBooks users can log in with their account credentials to track expenses and monitor performance metrics without manually entering each number. As a result, you get real-time insights and trends across multiple reports, making forecasting easier than ever and allowing greater control over your company’s finances.
Switch Warehouse Locations If Needed
Consider changing your warehouse location if you are experiencing unusually high shipping costs. Different regions have different average costs, varying even within the same area or state.
The key is to find the best one for you and compare rates with other shippers. You may be able to get a better deal through one company and better shipping rates by comparison.
Learn from other stores’ mistakes
If you’re not careful, you might have a large inventory that could hurt your company. The best way to avoid this mistake is by learning from other store owners and seeing what mistakes they made and what successes they had.
Thousands of entrepreneurs have posted their stories on sites like Quora and Forbes, just waiting for you to learn from them. Knowing what has already happened to thousands of online stores before yours will save you time and money.
Rather than figuring out where your company is making the most cost, you must start by defining your top costs and then brainstorming ways to minimize those costs. Then, once you’ve figured out the lowest-hanging fruit, work on replacing costlier solutions with less expensive ones.