Cost Reduction Strategies for E-Commerce businesses in 2023 - PART 2

Cost Reduction Strategies for E-Commerce businesses in 2023 - PART 2 Table of Content 1. Avoid excess inventory storage to save storage costs 2.Hire an ad consultant and optimize your Ads 3.Include accurate size pictures to avoid product returns 4.Inventory miscalculation can lead to unstable business setup 5. Streamlined delivery and supply-chain management cuts transaction costs 6.Take time to tally products with the demand 7. Process automation and precise Product descriptions 8. Integrate IMS software into your operations 9.Budget-friendly marketing, supplier negotiation, and Packaging 10.Keep focus on your best-selling items 11.Avoid needless debts to prevent cash flow issues 12.Outsource content creation or employ qualified interns 13. Minimize product returns, improve business terms 14. Focus on long-term SEO and email marketing rather than PPC 15.Engage your high-paying employees in crucial tasks 16.Process optimization and technology adoption in the business 17. Resource reusability might help with cost saving 18.One metric to play close attention to is shipping 19. Avoid using big boxes for small items 20.Multiple reasons 21. Conclusion E-commerce stores are essential for Retailers as they allow them to reach global audiences quickly and effectively. Being available online 24*7, they allow users to access various products anytime, anywhere on any device and shop them comfortably. Moreover, they provide users with detailed product information and reviews before making a purchase. Maintaining an e-commerce site may be inexpensive at first, but as the business grows, so does the complexity and expenditures. Therefore, proper strategies are highly required. This post is a continuation of Part 1, and here we will discover few more cost-cutting strategies to help you reduce unnecessary expenses in your eCommerce business. Avoid excess inventory storage to save storage costs Excess merchandise is a terrific way to save money on your eCommerce business's operational expenditures. Inventory storage necessitates a larger room, which comes at a cost. Getting rid of extra inventory can help you save money on storage. Offering the product at a reduced price is one technique to get rid of undesirable merchandise. Putting the products together in a package and selling it to a real store. Also, donating excess inventory to charity and receiving a tax deduction. 1. Dropshipping Storing inventory costs money. Therefore, if a company can avoid unnecessary storage of stock, it can save on storage costs. The best way to do this is to dropship. This is where a business advertises a product and when an order comes in, they purchase the goods from a third party like a wholesaler or manufacturer, and have them shipped to the customer. This way, they save on buying, transporting, and storing any items. Searching for an esteemed eCommerce development company for your business? Contact us now In addition to storage costs, an eCommerce business also saves on packaging, labeling, insurance, shipping, and all other costs associated with handling physical stock. 2. Keeping Items Sold Returned goods increase operation costs especially when the seller is responsible for the associated expenses. In this case, a business can save money if it can avoid returns. The best way to keep an item sold is to have staff that is properly versed on the products they are selling. In this way, they can solve the problems that are causing the return attempt by the customer. For example, if a customer is unable to operate a gadget, helping them to navigate this would mean the return is not necessary. By keeping the item sold, a business saves on the costs and inconveniences that would be associated with the return. - Chris Brown, CEO of Tudor House Immigration Services Hire an ad consultant and optimize your Ads Look for an appropriate and reasonable payment provider. I remember we did tons of research on this topic before deciding which provider to use. There are options for the low-volume transaction and relatively new stores, others are most suitable for high-volume. Keep your mind open, there is more than PayPal! Hire an ad consultant, unless you are an expert yourself. Let's face it, advertising costs are a big chunk of your operating costs. Having a specialist helping with your ads can lower your ads spent drastically. When you hit certain revenue levels, there is a need to optimize every tiny detail of your ads to squeeze out more profit. - Howard Gordon, Co-Founder of Customplasticpart Read More: How Artificial Intelligence (AI) can Boost Your eCommerce Sales in 2022 Include accurate size pictures to avoid product returns Ensure that you provide high-quality products. Provide adequate information on your product pages. Include pictures from every angle of the product and accurately describe what the customers are buying and what they should expect. By giving them the complete picture of what they are purchasing, you get to reduce product returns. When selling clothing, it would be best to include photos of models with different body types wearing the clothes so your customers know how the clothes would look when worn. Provide them with accurate size charts. Lowering product returns means you don't have to spend additional shipping costs and labor to fix the product. - Sarah Walters, Marketing Manager at The Whit Group Inventory miscalculation can lead to unstable business setup Operational costs are managed neatly if you can control the money spent on inventory or merchandise. Many eCommerce stores overspend on buying merchandise or miscalculate the need for inventory and this can lead to an unstable business setup. Getting rid of redundant merchandise will save you money on storage costs. There are several ways you can eliminate extra merchandise, my preference being to put them on sale at a discounted price. You can also donate extra accessories to charity which can help you claim a tax write-off. - Rbea Hmam, Business Head at   Almowafir Looking for a reliable NopCommerce development company ? Get in touch now Let go of your excess merchandise. If the sales numbers for one or more of your products have gone down, look into retiring them. They may be unnecessarily taking up storage space, incurring additional overhead. You can even hold promotional sales or partner them up with your other popular products to help get them out the door, and at the same time build value with your customers. Consider hiring virtual assistants. Virtual assistants are an excellent source of labor to help bridge the skill gap. Instead of hiring in-house, contracted personnel, a virtual task force can perform the same tasks at a highly reduced cost. - Sonya Schwartz, Founder of Her Norm Streamlined delivery and supply-chain management cuts transaction costs These days eCommerce websites are completely out there in terms of visibility, availability, and accessibility. They directly come in a better position to reduce their operations costs. They can even go paperless, which enables them to digitize payments, accounts, finances, paperwork, etc. By simplifying supply-chain management and delivery, e-commerce may help cut transaction costs. By integrating later eCommerce transactions, you can make purchasing more affordable and convenient for your customers, therefore increasing your net income. - Daniel Barrett. Co-Founder of Pacific Precious Metals Read More: Factors to increase the trust of the visitors for your online business Take time to tally products with the demand One of the best ways to reduce operating costs in an ecommerce business is by ensuring to carry out regular inventory checks. This means taking the time to tally your products with the demand and make sure that you aren't hoarding too much stock in your inventory that could end up increasing your storage costs unnecessarily. You can also consider streamlining your supply chain by switching to a drop-shipping business model, for example. This works because it doesn't require you to hold any stock, but instead allows you to ship from the supplier to the customer directly. Another great strategy is by automating some of your business activities, which should help you to minimize human error, and manual work, and improve process completion times, thereby enhancing productivity, efficiency, and business continuity in the process. Furthermore, automating some of your repetitive tasks like email marketing or recording sales, which can help you reduce the need for hiring full-time staff and save you money in the process. You can also choose to outsource some tasks like payroll processing, bookkeeping, or customer service to a virtual assistant, which is also a much more affordable option, rather than hiring a full-time employee. Plus, doing so will often help you to save on the costs of buying and maintaining any extra hardware and software, which ultimately helps you to reduce your ecommerce operating costs as well. - Eden Cheng, Co-Founder of PeopleFinderFree Want to hire the best custom software development company in USA?  Contact us now A significant way to reduce operating costs is to optimize the number of different products offered on e-commerce websites. Often—especially for smaller retailers—having too many product offerings can often lead to decreased profits because it makes it difficult for customers to choose. Since people only really want a few specific items, customers will choose something they feel confident in rather than risking their time searching through more options that may not be worth the risk. It is why removing unnecessary items from your site can substantially positively impact your business's profitability by making your website more accessible for consumers to use and purchase from while also reducing costs! It leads to lower conversion rates and fewer sales, meaning higher operating costs overall. - DanielVeiga, CEO of Danny Veiga Marketing Process automation and precise Product descriptions When you have a brick-and-mortar store, you need to have numerous employees to perform different roles, such as managing departments, handling check-out and assisting customers. However, with an e-commerce store, you don’t need all these employees. You can automate processes such as check-out, billing and inventory management. Furthermore, you can write attractive product descriptions for customers on your e-commerce store, so you don’t require additional personnel to assist customers. This reduces your operational costs significantly. - Elisa Bender, Co-founder of RevenueGeeks Read More: Top benefits of E-Commerce for small businesses in 2022 As an eCommerce business owner, one of the things that at most of the budget is the operation cost. However, there are some specific things that you can do to reduce these costs and have more budget for other things. As for me, the best way to reduce operating costs in an eCommerce business is to automate your business. You can do more and earn more if you have more time and that’s the main goal of investing in business automation. There are a lot of automation tools that will fit your needs which will help you cut down operation time hence, also its costs. - April Maccario, Founder of Ask April Integrate IMS software into your operations It is necessary to invest in cost-effective order fulfillment software. A reliable alternative to online order management is an inventory management system that automates the process, improves workflows, and moves orders to the next step with high precision. Implementing software also reduces the likelihood of human error as a large workforce is no longer required to process orders. In short, integrating IMS software into your operations will enable you to reduce your ordering operating costs over the long term. - Nataliya CEO of Lasting Trend Inventory counting regularly aids in lowering a company's eCommerce operational costs. Inventory counting enables businesses to identify which items may be discounted to customers and which products need to be replaced. By integrating precise inventory counts with sales trend software, eCommerce firms may discover sales patterns that will help them in making orders in the future. - Shiv Gupta, Directors of Incrementors SEO Services Budget-friendly marketing, supplier negotiation, and Packaging The success of your eCommerce company is based on how good you are at reducing costs. High costs can consume your profits and render your business unprofitable. Here is some tip you may use: Budget-friendly marketing. We all know that marketing is a big part of any business, but it does not necessarily have to be expensive. You have to make sure the money you spend in marketing will generate income and not just an additional expense. Searching for a reputed Node.js development company ? Connect us now. Supplier negotiation. You also have to be very good at negotiating with your suppliers. What I did was I always buy in bulk and pay within a short time. You have to build trust to be able to get good deals from them. Packaging. In shipping products to the customers, eliminate additional cushioning. Keep it eco-friendly and light because shipping companies charge per weight. - Amanda Royle, Co-founder of Imgkits Studio Keep focus on your best-selling items Top-tier products are expensive to ship and store in a warehouse. Reducing the number of things, you provide is one method to save money on this. Instead of shipping and keeping everything, focus on your best-selling items. It's pointless to hold a product in a warehouse if it'll take months to sell. Instead, concentrate on the things that are already performing well and reduce the number of products that aren't. It may also free up funds for you to try out new products. Understanding these figures will also aid in better planning for future orders. - Austin LaRoche, CEO of ATAK Interactive Avoid needless debts to prevent cash flow issues Reduce financial expenditure: My go-to tip for a retail business is to decrease its operating cost is to reduce the cost of financial expenditures. As a leading eCommerce development company, you should make sure that you take your costs very seriously, this includes the insurance expense as well as other day-to-day expenses. My advice would be to save money on insurance by finding it at the most competitive rate. Moreover, make sure you don't take unnecessary debt to avoid having cash flow problems. Do a proper cost-benefit analysis because taking debts can directly increase your operational costs. Routine inventory checks Another critical strategy to cut operational expenses is to do frequent inventory checks to ensure that inventory is not piling since there is a high cost of storing it. You must determine which products in the inventory must be sold promptly to lower the cost of storage and which items must be held. A supplier-managed method or system that is time effective can reduce these costs while freeing up space and finances for other business operations. - Mike Bran, founder of Thrill Appeal Read More: Top 16 mistakes to avoid when developing an eCommerce store in 2022 Outsource content creation or employ qualified interns *Marketing can eat up 20% of your budget, and many small businesses have little or no budget for a marketing department. But keeping up with your blog posting and social media engagement yourself can really eat up your time and distract you from running your business. So, seeking alternatives for outsourcing content creation is essential to keep growing your audience and your client base. Many college students are taking advantage of employment websites to find internships and part-time jobs in various industries. By posting a social media internship opportunity on a job search site, business owners can find qualified student applicants looking to apply the knowledge and skills they've learned in their digital marketing classes to a professional setting. So, students gain real-world experience they can include in their resumes, and businesses get the extra help they need. And, since digital marketing is online, your new intern can work from anywhere and around their busy school schedule.* - Alix Greenberg, founder of ArtSugar Minimize product returns, improve business terms Cutting costs is what every business is on the lookout for. Especially during turbulent times like the past few years, it’s important to keep a business liquid and profitable. Here are a few ways to do that. Minimize Returns Every customer wants an option to return a product they don’t like, so you have to offer it. But the idea is to produce such an incredible product and offer so many options that a customer rarely needs to return anything. That’s because returns lead to many additional costs: shipping, labor, packaging and the cost of the actual product if it’s faulty. Improve Terms Trying to negotiate with suppliers, especially on payment terms and order sizes, is a great way to reduce costs. Typically, early bird discounts range from 2 to 5%, but, depending on the relationship, it’s possible to work out a better deal. It’s also possible to negotiate credit card terms such as set up fees, annual fees and statement fees. Looking for hire .NET Core developers for your project ? Contact now Invest now, save later Nobody likes to hear this, but investments into a business should be treated as such and not confused with costs that bring nothing in return. Investing into smoother operations, automated processes, inventory management and shipping integrations are all vital for running a successful business online. In the long run, automation does save a lot of money and resources. The same is true for inventory management, order management, and shipping. Many ecommerce platforms offer features like these to help automate many of the mundane tasks. - Maria Vasserman, Marketing Specialist at Maropost Focus on long-term SEO and email marketing rather than PPC Operating expenses can get expensive real fast but there are plenty of ways to reduce them without sacrificing the quality of your products or services. It's a matter of identifying and re-evaluating what expenses bring value (ROI) to your business and how necessary they are for its operation. One way is to re-negotiate product prices with suppliers. This is best done when you can prove that you get strong sales from such items. Another is to re-align the current marketing strategy by paying less attention to pay-per-click ads and more to long-term SEO and email marketing. Lastly, business owners should consider outsourcing tasks through virtual assistants. Remote workers cost less than full time employees because there are no overheads, benefits, or taxes involved. When you have a remote assistant, small businesses can free some of their valuable time to doing other core tasks for further business growth. This allows you to stay ahead of the competition and scale your small business securely and safely while staying cost-efficient. - Catherine vanVonno, CEO of 20four7VA Read More: 7 proven Tips to Secure Your Ecommerce Website Engage your high-paying employees in crucial tasks To decrease our business's running expenses, we must examine our financial expenditures, including insurance policies and bank accounts. We may save money on insurance by purchasing it at the lowest possible price. Consolidating our insurance plans whenever feasible to avoid over-insuring or duplicate coverage is also advisable. We should never incur unneeded debt. Conducting a comprehensive cost-benefit analysis and considering potential company growth is the key. While taking debt, we must consider the impact of debt payments on cash flow, as it may influence the company's rating, interest rates, and future borrowing capacity. Sometimes, outsourcing our business functions is also beneficial. Hiring someone from the outside to do the tasks that are less productive or repetitive and non-critical is more practical. We can engage our high-paying employees in more meaningful work. We should check marketing budgets. The smart and targeted market strategy proves to be more efficient than general marketing. We can also save money on marketing by contacting suppliers and informing them that we seek marketing services at a cheaper rate. In addition, we should reassess our marketing vendors. Traditional outsourcing and queries may also cause our existing vendor to reduce marketing service rates. - Daniela Sawyer, Founder of FindPeopleFast Process optimization and technology adoption in the business Process optimization is the key to lowering your costs. Growing businesses tend to stick with what they know, so instead of putting new solutions in place they put more effort into doing things the way they always have at a larger scale. Taking a look at some of these can be the key to not only saving money but being more productive. The best example I can think of is packing and shipping products. If you still have a person measuring boxes and shopping for the lowest shipping rate between carriers you're spending a lot of money on labor. There are several services that allow you to automate package sizes and do the shipping cost quoting for you in batches so you can create all your shipping labels at once with the click of a button. The technology does usually come with a monthly fee and requires custom set up for your business but once it's in place you save time and labor costs. Looking for custom Retail software development company ? Your search ends here. Connect us Now Another small but impactful thing to look at is reducing your Office Supplies expenses by buying off-brands. For businesses that can't go all digital this is a big area of savings, you can buy compatible off-brand or remanufactured ink and toner for much cheaper than name brand. Paperclips, highlighters, post-it notes and paper are other examples of supplies you can buy that have off-brand options. And where you shop matters, big box retailers aren't as price competitive because they don't need to be, you may be able to find the item cheaper with a simple Google search. - Sarah Melton, VP of Supplies Outlet Resource reusability might help with cost saving *Manufacturers should really look at reducing operation costs by cutting the amount of water they use. Some large manufacturers can actually reuse water twice or even more - you’re basically refueling your processes with water that would be wasted otherwise. Examples include water that collects while operating boilers, rinse water from cleaning bottles and cans, and even air conditioner condensation. * *This can greatly reduce the cost of sourcing and dumping wastewater. Although manufacturers may have to upgrade the tanks and pumps to make a more efficient system, it’s worth the investment -- businesses often see savings within a year. Additionally, consumers are attracted to businesses that are doing their best to reduce environmental waste. It’s a win-win.* - Hector Gutierrez, CEO of JOI Read More: Top 10 Emerging Technology Trends for Retail Industry One metric to play close attention to is shipping Ecommerce businesses can produce high operational costs, especially when they're not always watching KPIs and the data. One metric to play close attention to is shipping. Since the pandemic especially, shipping costs have changed periodically, often making a once-cheaper carrier the most expensive option. Also, take note of what you're shipping, and if one carrier seems to specialize more in that department. Even if the shipping prices are carried over to the consumer, they still may balk at making a purchase when the shipping costs are too high, which equates to a loss in revenue. And if you offer free shipping, then this should most definitely be on your radar! - Dylan Fox, CEO Assembly AI Avoid using big boxes for small items Use packaging that is appropriate to the size and characteristics of the product. Avoid using big boxes for small items. If you do not handle fragile products that can break easily, use only one layer of bubble wrap. Additionally, use eco-friendly packaging. These boxes, as well as being made of lighter material (thus leading to less weight-lower shipping cost), will also convey a positive message of a brand that cares about the environment. So, as well as reducing costs, it also increases reputation, which can then be transformed into increased profit. - Rafal Mlodzki CEO & Co-founder at Passport-Photo Online Multiple reasons Some tips I have learnt through the years to help keep costs down include: Stay close to the warm customers- it’s thought that the average shopping basket rate is around 70%! By having an automated trigger sequence in place to email those customers and alert them of their baskets can help remind them to checkout. You may need to send a subsequent email with a discount or incentive to purchase but contacting those customers that already know who you are and what you sell is tapping into an audience that is extremely close to purchasing - they may just need an extra nudge. Once you have got those customers, keep them! It’s cheaper to encourage your previous customer to shop with you again than it is to buy brand new ones. Know your market there isn’t any point buying stock that won’t sell or is priced incorrectly. Research, research, and research some more to make sure the product is the right one and that your audience would be willing to pay the prices you need to make enough profit. Planning to hire an Angular development company ? Contact us now Don’t splash out on packaging- yes, you want to keep your parcels smart and delivered in one piece but assess what is really needed. Many customers like to receive items that are recyclable, and as a business we have a responsibility to be sustainable… often paper or card is cheaper than plastic and you will be hitting two birds with one stone by switching from plastic. Have your own store- rather than sell through Etsy, Amazon, Ebay etc invest your money in having your own e-commerce website. There are multiple platforms available that are relatively simple to set up (Wix, Square Space, WooCommerce) or you could employ someone to do the initial build for you. That way you aren’t giving a chunk of your profits to the bigger companies and helping to bring more in directly. Fulfilment- although it may seem cheaper to handle your fulfilment in house, once your volumes get high it can often be more cost effective, slicker and aligned or better than your competitor if you use the picking and delivery service of a 3PL. It’s worth calculating the costs of your staff, the time it takes them to complete the orders, and then compare to an e-fulfillment company. - Alison Townshend, Founder of Luella Fashion Use digital billing and paying software programs to reduce the costs spent on physical papers, receipts, and multiple employees who are responsible at different steps here. Use project management software and make the most out of work-from-home durations. This will also reduce the need of paying rent for a bigger office which is mostly unused. Outsource the occasional works to freelancers to prevent paying full-time employees for work, which is not an everyday need in the business Use software for accounting, marketing, and releasing payrolls instead of hiring multiple people for different tasks. Not only will it reduce the potential expenses, but it will also decrease the risks of human errors, which tend to incur more expenses too! - Zarina Bahadur, CEO of  123 Baby Box * Evaluate your overhead cost; the first step in minimizing overhead cost is to assess your overhead expenses and mark those that are unnecessary, too expensive, and lastly, those that are open to efficiencies. After you have identified the ones that you can reduce or do without, it is prudent that you remove them from your expenditures. * Get rid of all unproductive marketing expenditures. Marketing has nowadays gone digital with social media (Facebook Twitter WhatsApp) dominating the marketing space. This has made marketing to be more targeted and more cost-effective. * Cut down on the travel expenditures. Travelling can be pretty expensive and reducing these trips can save you a lot of money. * Re-assess your business needs and identify and eliminate unnecessary expenditures. Additionally, you can negotiate with your suppliers and vendors for a better price than what they are currently offering. * Think of outsourcing tasks; Instead of hiring new staff to perform certain duties such as accounting, cleaning, website maintenance or tax deduction, why don't you outsource them to third parties? This will help in cutting -off employee-related costs such as pension and health benefits. * Reevaluate software upgrade: Software upgrades are expensive and not all upgrades are mandatory. There is very minimal resale value for software and computers. So, even though your staff is pressuring you for software upgrades, consider scaling down. Instead of purchasing the rather costly software for your entire team, why don't you instead purchase licenses for employees who truly need them? * Open a business bank account and acquire a business credit card. The first thing you need to do after starting a business is to open a separate business account. This will enable you to distinguish between your personal money and income from the business. Secondly, separating your bank account allows you to organize your finances and makes monitoring cash flow much easy. It also makes things a bit easier during tax time. - Michael Hammelburger, CEO of Sales Therapy Conclusion Establishing an online store can be more cost-effective than operating a physical retail store. Because it provides you the freedom to sell and purchase items anywhere, anytime without any hassle. However, as the business grows, so will the obligations and expenses. As a result, good planning is critical. Implementing cost-reduction strategies for your e-commerce business is essential as it helps run the business smoothly and remain competitive. This article, like our last one, has addressed remarkable cost-cutting strategies to help you eliminate unwanted expenditures in your eCommerce business.