Is your expense sheet looking a little heavy? Perhaps it’s time to put your ecommerce business on a spending diet. Putting a cost reduction strategy in place can help to improve your profitability and keep more money in your pocket.
But first, a word of warning. Don’t go slashing expenses willy nilly. You only want to cut costs that are not going to negatively affect your product quality or customer service. Or growth
Here are five cost-cutting strategies you can use to trim costs in your ecommerce business…
#1. Reassess your packaging
Is your packaging optimised to get you the best delivery rates possible? Don’t use the same box size for different sized products. You’ll likely pay higher shipping rates for larger boxes, so don’t throw away that money if you can reduce box sizes for smaller items. Consider cutting down on other packaging materials — particularly on non-fragile items that may not require that extra layer of bubble wrap. Pay attention to weight as well and opt for the lightest packaging material that you can.
#2. Revisit your product returns policy
Paying for product returns can take a major bite out of your bottom line. Consider putting more information in your product descriptions to ensure customers know what they’re buying. Don’t skimp on high-quality product photography, and ensure you include images from every angle. Also, be very clear about sizing where relevant, and including product FAQs and unboxing videos can also help to improve your customers’ understanding of what they’re buying. And be sure to have a clear product returns policy displayed in a predominant prominent? place on your website to prevent any confusion about the return costs you’ll pay for and what the customer is expected to cover.
#3. Talk to your suppliers
If your ecommerce business has been growing, you might have some leverage to negotiate better deals with your suppliers. This could mean better rates on materials if you buy in bulk, or perhaps better shipping rates considering your ongoing business. Also assess the deals you have in place with your secondary suppliers such as web hosting companies, marketing agencies and bookkeepers or accountants. But be polite and reasonable in your negotiations. The last thing you want to do is lose a key supplier.
#4. Clear your inventory
If you are paying for warehouse space to hold your inventory, you may want to clear old stock or any slow-selling product lines. Think about holding a sale on selected items you want to move, or even use the old stock as free gifts when customers spend more than a set amount at your store. This will help to cut your warehousing costs, and also give you a rich source of promotions to drive sales.
#5. Optimise your marketing spend
While digital marketing is vital for ecommerce businesses, ensure you’re getting the best bang for your buck. Review the results you’re getting for your current marketing spend and consider getting rid of any under-performing advertising channels. The key is to assess the channel against the actual number of conversions it’s producing for your business. This should show you where your money is having the most impact.