In the early days, e-commerce was a more convenient and affordable solution compared to traditional stores. But with the market rapidly expanding and the competition being fiercer than ever before, it is not uncommon for online retailers to be forced to find new ways of reducing expenses in order to stay afloat.
If your business is experiencing the same issues, automating every possible process is the most important first step. Once that is done, here are some ways your online store can be made even more cost-effective:
1. Minimize product returns
Keeping products in the hands of consumers and retaining profits is often the main priority in e-commerce.
When products are returned, it is likely not just a straightforward undoing of the sales. Instead, your business will have to incur the costs of packaging, shipping, labour, and other aspects as well. To avoid these expenses and ensure cost-effectiveness, make an effort to minimize product returns.
This can be done by avoiding high-risk customers who don’t fit your buyer personas and by investing in detailed product descriptions and images that allow consumers to know exactly what they are buying. Although it might seem counterintuitive, even extending your time frame for returns may help to relieve some urgency and pressure, thus lowering return rates.
2. Negotiate with your suppliers
Reliable suppliers are vital to the operation of any online store, but these processes can be improved as well. Use your negotiation skills and attempt to get better deals from your partners.
Keep in mind that order sizes and payment times are typically the most important factors to suppliers. If you are able to accommodate them in these two areas, most suppliers will be willing to adjust their pricing for you.
If you have an established relationship with your suppliers, aspects like early payment discounts and fixed price breaks can also help you save some money. Always calculate costs and reconsider arrangements before negotiating to ensure the deal actually lowers your expenses.
3. Optimize the shipping process
While most e-commerce stores tend to focus mainly on their suppliers, shipping companies are equally important partners to an online business.
Timely and efficient delivery of products can help to reduce your operating costs and increase customer satisfaction, thus making your online store more cost-effective and profitable. For that reason, you should select an experienced shipping company to partner with.
From same-day and one-hour deliveries to scheduled routes and on-demand couriers, the right specialists will be able to find the best, most suitable solution for your e-commerce business to meet deadlines and demands and fulfil customer needs.
4. Improve your delivery packaging
On the same note, delivery packaging can easily be overlooked in e-commerce as well. In case your packaging is too heavy or large, downsizing can immediately cut some costs. For example, you can use less protective cushioning, as one bubble wrap layer is often enough to protect non-fragile items.
Purchasing shipping material in bulk and taking advantage of quantity discounts can also help you save money while switching to more sustainable packaging can reduce package weights, lower expenses, and enable you to attract more customers by branding yourself as a green business.
No matter where you decide to cut costs, it’s generally recommended to use the lightest and smallest packaging possible that still offers proper protection.
5. Reduce your inventory costs
If you are in a difficult situation, coupon codes, sales, special deals, and other promotional campaigns can do more than just attract consumers. They could also aid in reducing inventory costs.
For instance, any unpopular products that are challenging to sell can be targeted with two-for-one deals, discounts, and free gifts with more profitable purchases to cut storage expenses. Naturally, promotions are quite effective at bringing in new consumers and reminding old ones of your existence as well.
Develop promotional campaigns wisely, focusing on more targeted, niche promotions that are aligned with your target audience to increase your chances of success.
6. Market more efficiently
As an e-commerce business, you likely want to highlight the benefit of your online nature through digital marketing campaigns. And while that is often the best choice for online stores, you still need to identify the exact avenues that will pay off in the long run.
Consider your current marketing strategies and calculate the return on investment (ROI) for each campaign. Then, compare percentages and allocate more funds to the avenues that perform the best to make your marketing tactics more profitable.
For example, you might find that social media marketing and pay-per-click ads are the most effective solutions for your business, or you may want to try alternative campaigns such as referral programs and influencer marketing.
Easy Ways Your Online Store Can Be More Cost-Effective
In summary, here are some easy ways your online store can reduce expenses:
- Minimize product returns.
- Negotiate with your suppliers.
- Optimize the shipping process.
- Improve your delivery packaging.
- Reduce your inventory costs.
- Market more efficiently.
While e-commerce’s market share continues to rise, operating costs can still present a big issue for businesses. If the same is true for your company, use the advice above to lower your expenses and set your online store up for success.
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Lilly Miller is a Sydney-based graphic designer and a passionate writer. Loves everything about home decor, art history, and baking. She shares a home with two loving dogs and a gecko named Rodney.