Even though e-commerce businesses boast some of the lowest overhead costs, it’s still important for online retailers to find ways to keep costs minimal. The e-commerce industry might be booming, but you’ll still be competing against big brands like Amazon, while traditional retail stores will still fight on in hopes of staying relevant.
Keeping costs low is about more than boosting profits; lowering costs means you can funnel funds back into product quality, improve customer support, or even create reward programs that can maximize customer loyalty.
So, we’ve listed five cost-cutting solutions to consider.
Rely On A Fulfillment Service
Outsourced order fulfillment is an effective way to reduce costs. With these services, you can access warehouse facilities across the country. Moreover, you’ll also have access on a long-term or on-demand basis. So you won’t need to pay rent on a storage facility if you don’t receive any orders. Instead, you’ll only need to pay per order that you receive.
These managed services will also handle everything from picking to packing and shipping orders. As a result, fulfillment services will help you save both money and time. However, that’s only true if you know what you’re doing. This guide to outsourcing fulfillment can ensure you get the most out of your fulfillment service.
Reduce Order Returns
It’s vital to keep products in the hands of customers. Otherwise, your e-commerce business will lose profits as sales decrease due to product returns.
When a product is returned, your business will lose more than the cost of the sale in refunding the customer or replacing the product. There are also the costs of shipping and packaging. Not to mention, there’s a good chance you’ll lose the customer as well.
When it comes to reducing returns, it’s important that customers know what they are buying; and ensure product images and descriptions are as relevant as possible. You can also consider offering value-added shipping protection to give peace of mind that they’re protected from package loss, theft, or damage during delivery.
Negotiate With Suppliers
One surefire way to reduce costs is to negotiate with suppliers; if you’re paying less for supplies, profits will automatically increase.
With this, suppliers are typically open to negotiations on pricing for orders of high volumes. Moreover, you can also negotiate with repeat orders.
As an e-commerce business, you will need to rely on a digital marketing strategy to get your brand seen. However, it’s not cost-effective to employ an in-house team of marketers. Instead, consider outsourcing your digital marketing needs to a reliable agency with a great reputation.
By outsourcing marketing, you won’t need to spend a fortune on the marketing budget, and you won’t need to compromise brand visibility either.
Reduce Inventory With Promotions
If you have old stock accumulating, these products will be considered a loss to your business until they are sold. So it’s worthwhile to consider running promotional campaigns on old stock to sell these items.
Even if you sell old stock to customers at the cost price, it’s better to break even than to run at a loss.
The best way for an e-commerce business to cut costs is to rely on managed services like fulfillment centers and digital marketing agencies. Additionally, running promotional campaigns for old stock, negotiating with suppliers, and reducing product returns are also effective cost-cutting solutions worth considering.