A well-known, though seldom-quoted, axiom of business is that your profits are made when you buy—rather than when you sell. In other words, the more you can reduce your costs, the wider your profit margin will be. To help you get there, we’ve compiled this group of money-saving strategies for ecommerce businesses.
Consider Payment Options Carefully
While you absolutely want to offer the widest variety possible, you have to be careful to limit your offerings to those most often employed by your customer base. Every payment option you provide comes with associated fees. These costs will usually be incurred—even if no transactions take place. If you’re offering choices that see little or no action, cut them and save yourself some money.
Intelligent Infrastructure Investments
Before you spend any money on your business, determine how much profit the investment will reap. In other words, will the expenditure make you more efficient in some area, thereby cutting costs? As an example, when you need to upgrade your online presence, rather than spending to build from scratch, look at website themes offered by a provider like Shopify. You’ll find a selection of free templates, as well as low cost premium themes. All are attractive to customers and have the functionalities you need built in. Further, be careful to analyze situations thoroughly so you can avoid having to incur subsequent corrections. If you measure several times, you’ll generally only need to cut once.
Be Careful With Promotions
Yes, discounts and coupons are great tools for increasing conversions, however that’s less money in your pocket each time a customer takes advantage of one. Instead of mounting such campaigns indiscriminately, have a solid objective in mind and make sure it won’t do irreparable harm to your bottom line. The same with free shipping offers; tie them to a price threshold whenever possible. In a lot of cases, customers will actually buy more just to get the free shipping offer. Sometimes, they’ll even pay more than it would have cost to ship the primary item they came to buy.
Keep Existing Customers Happy
It’s more expensive to acquire a new customer than keep a current one in the fold. When you’re thinking of promotions, gear them toward your loyal customers first. Customers who buy based solely on promotions seldom come back, until there’s another promotion. Meanwhile, your loyal customer base will buy what they need even if it isn’t on sale—as long they feel they’ve been treated well during all of their previous transactions.
If you’re going to forego a bit of profit to energize sales, reward people who spend the most money with you. Furthermore, do everything possible to resolve any problems they might have right away. When your customers know you’ll look out for them, they’ll take care of you too—in the form of repeat business.
Minimize Returns and Chargebacks
Thorough product descriptions and strong photography go a long way toward reducing returns and chargebacks. Monitoring your fulfillment chain closely to minimize shipping issues, such as wrong size, wrong color and wrong product will do the same. All deliveries should also be tracked and confirmed. Eliminating those issues will reduce disputed charges and potential chargeback fees of $25 or more per transaction.
These five money-saving strategies for ecommerce businesses will help you keep more of your revenue in your coffers. Yes, it’s very easy to throw money at problems, but solutions like these cost less and further your business interests at the same time.