How Can Ecommerce Firms Minimize Their Operating Costs?
While e-commerce is only going to keep growing as time progresses, constantly proliferating categories across products and services, whether B2C or B2B and remaining an integral part of our modern lives, e-commerce firms now need to constantly stay vigilant about cost and profitability pressures that they encounter due to increased competition and cost of operations.
In this article, we look at some leading methods, including automation and clever use of promotions, for e-commerce firms to stay competitive and profitable.?
Why have e-commerce companies needed to rethink their operational costs lately?
It used to be E-commerce was the cheapest way for both consumers and retailers. Due to a rapidly changing ecosystem over the past decade, including frenetic competition with the supply side of e-commerce companies like Amazon, Whole Foods (etc.), as well as offline stores offsetting online stores with their strategies, the renowned e-commerce player now has narrow margins. So they must constantly find new ways to improve their value for money to stay in business.
While the basics remain the same, e.g. choosing the right eCommerce platform first, choosing the right 3PL (etc.), let's look at the best ways to reduce operational costs while improving efficiency for an online store.
Top 7 Ways to Minimize Operational Costs for Ecommerce Stores
1. Automation:?Unproductive (or wasted) time is the greatest loss of profitability. So reduction through automation is a good way to improve efficiency. servers, (etc.), are just some of the ways an e-commerce company automates its processes today.
The use of new technologies such as AR (Augmented Reality) is another new method
However, this should be done in a planned and phased manner based on your business needs.
2. Negotiate with?suppliers:?Order?size and payment?terms?are the key levers determining?your relationship with your suppliers.?So?if they are?to?your?advantage, for example,?if you are a?fast-growing?business?or?already?a large?company, make?sure you?use?them to your advantage. Your suppliers will also happily accept your suggestions if you?give?them a significant portion of your?business!
Early Pay Discounts,?Early Pay Discounts, and Freight Free Deals?are just?a few?of the ways you?can leverage?economies of scale?in their favor.
Don't?forget to?calculate?the?freight?cost?versus the volume discount.?You?shouldn't?spend more on?storage?space to?take advantage?of volume discounts!
Negotiating Credit Card Fees:?While some credit card fees are non-negotiable, others can be negotiated. The longer?you are associated?with them, the stronger?your?position?will be.
3. Reduce Product Returns:?Order returns are an?unavoidable?reality?in the world?of?e-commerce. And?while it will never go?away entirely,?you could certainly?put?policies and procedures?in place?to reduce it to a negligible minimum.
Product returns in the?world of?e-commerce?aren't?just?"in-house returns". " ”: You?pay for return shipping, labor,?repackaging,?use of infrastructure, product?refurbishment?(etc.).
And of?course,?you have an unhappy?customer who probably won't?come?back!
But?how?do you?reduce product returns? Here are some points to keep in mind.
4. Use?Dropship:?The?most effective way to reduce Ecom costs is?with Dropship.
领英推荐
Here, the?drop shipper?buys products directly from?the wholesaler?or manufacturer and?ships?them to the end?customer.
Since drop shippers?do not own or maintain their inventory, they save?significantly on operational?costs, and overheads can sell a wide?range?of?products?and offer?large Flexibility.
5.?Spend Marketing?Money?More Effectively:?Obviously,?a natural advantage for businesses?is that they exist online.?And leveraging
?Online promotion and advertising?methods?are something?to take advantage of.
If you?don't, you're?missing out on?a major strength.
It's?important?to?analyze ROI?across different?digital advertising?channels?and figure out what works best for your product. For example, Instagram and Facebook may not be your most rewarding channels if?you're?a pure B2B player.
6. Reduce handling costs with strategic promotions:?Judicious use of sales, seasonal discounts, coupon codes, BOGO programs, and other similar promotions can help keep inventory empty regularly.
While your best sellers are likely to always sell fast, other SKUs in your product mix that you need to hold onto for various strategic reasons may need a little nudge from time to time. Using it strategically will reduce inventory management costs.
7. Use more efficient packaging:?A common area of neglect at Ecom is packaging and the costs involved!
If your packaging is too heavy, unwieldy, or too bulky, not only are you costing yourself too much, but you are also inconveniencing your customers.
The "one size fits all" theory doesn't work here. Always find your smallest and lightest option when it comes to packing.
For example:
Use only the necessary protection. Otherwise, you'll buy too much bubble wrap, overpay for the extra weight, and use boxes that could be smaller. economies of scale.
Consumers are increasingly demanding ecological packaging. It works well because it's lighter and mostly makes up for the slightly higher cost of the
They are also gaining a reputation for being an eco-friendly brand, which is an important factor in today's consumer purchasing decision.
Conclusion:?It lies It is clear that to remain profitable and to be able to offer their customers competitive prices and tariffs over the long term, e-commerce companies must constantly keep track of critical operating metrics, as mentioned above. The use of automation, including modern automated software for last-mile delivery, is one of the key tools here.
Read More:??https://bit.ly/3EqT3Bl