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The cost of living in every country is inevitably increasing. So, we expect our business expenses to increase as well. However, as much as we would want to meet our target market’s needs, we would also want to sustain our business by both increasing our profit and lowering our business costs.
In an ecommerce business, you may not have a physical store where you pay for rent and utilities, but maintaining an online store can also be expensive. Every expense that we have for our business counts, and while many of these costs are crucial to our daily operations, some may be reduced or negotiated.
Why reduce expenses on your business?
Reducing expenses plays a crucial role in sustaining your overall business. It can increase profit and allow you to reinvest the funds in other important business areas like marketing and promotion. Apart from that, you can allocate these funds to pay off debt or save more cash on hand for future campaigns.
Ways to Lower Your Ecommerce Business Costs
Reducing business expenses is easier said than done. It is significantly important that you have to be mindful of the areas where you cut costs, so you won’t have to compromise the quality of your product and service.
Create a budget
Creating a budget is generally essential in business, more so with your online store. You need to allocate a budget for each department or area, so you don’t overspend. We sometimes tend to overlook our expenses if we don’t set a limit on them. But, by having a budget and sticking to it, you are creating a long-term business growth plan that can eventually allow you to invest in new opportunities in the future.
Choose more efficient packaging
Do not forget the packaging when computing your expenses. Even when it seems cheap per piece, it can accumulate a higher cost when multiplied. Use only the necessary packaging for your products. Unless your item is fragile, you won’t need a lot of bubble wrap for your package. This will also save you from paying the extra weight and can be a plus point for consumers who support a sustainable and zero-waste lifestyle.
Find better shipping options
Shipping and customs charges are also a significant part of your expenses. You need these for the items to be delivered to your customers’ doorsteps and finding ways to cut the cost can go a long way for your business. You can maximize the use of free ecommerce shipping software and choose the shipping option with the lowest rate. Apart from cutting costs, switching to better shipping options can enhance customer satisfaction as you provide efficient and affordable shipping services for them.
Outsource tasks
As you grow your business, the things that need to be done will also increase. If some tasks make you feel overwhelmed or take your focus away from the most important part of your business, maybe it’s time to outsource. Maybe your website needs a revamp, and instead of hiring an in-house website designer, you can find a professional who can finish the project for a specific period. Other activities you can outsource may be bookkeeping, social media marketing, and content creation.
Consider working remotely
For your existing team members, you can consider allowing them to work remotely instead of renting office space. Since you are focused on your online stores, certain tasks can be done without having to meet with them face to face. Unless they are assigned with packing and delivery, trust that your employees will do their job without being micromanaged. This will not only cut costs on rent expenses but also utility costs and workplace amenities.
Leverage automation
Another great approach to lower your e-commerce business costs is to automate. If you’d like to make your customer service open 24/7, you can opt to automate your chat support instead of hiring employees who will work different shifts. To help you with shipping, inventory, and warehouse management, you can take advantage of Veeqo, a free but powerful all-in-one software. It is the only Amazon-owned shipping software, and gives A to Z protection, 100% Valid Tracking Rate when you buy labels for your Amazon orders on time and provides your carrier preference without any hidden charges. This post was sponsored by Veeqo Limited, who compensated me for sharing my thoughts and experiences.
Increase customer retention
Attracting new customers is a great thing, but retaining the existing ones can be more cost-effective in the long run. How do you increase customer retention? Take care of them. Know more about their purchasing decisions and their preferences, then create campaigns specially designed for them. Attracting new customers costs you five times more than keeping the current ones so make sure to prioritize customer satisfaction.
Focus on your best-selling products
As you check your sales, you will determine the items that sell best and those that do not. List down your top-selling products and focus on improving these. You can omit those that do not sell well. When launching new products, make sure to test the waters first before producing in bulk, to minimize storage costs as well.
Negotiate with suppliers
When you have established a good working relationship with your suppliers, negotiating better deals will be much easier. Purchasing in bulk can be a great negotiating strategy that you employ with them. But take note of the items that you can sell effectively as stocking too many products can cost you more money in storage fees. Make sure to check offers from your suppliers and if possible, review your contract to know the perks that you can utilize when collaborating with them.
Reduce product returns
Receiving returned products from customers is something that we don’t want to happen. Repairing and selling a damaged good will be more difficult to do, not to mention the money and effort lost during labor and shipment. To avoid these from happening, you can revise your return policy. You may extend the return period, provide sizing charts for wearable items, or provide a video of their orders to ensure customers that they have received the items in good condition.
As an ecommerce business owner, it is crucial to keep your competitive spirit alive or you’ll risk losing your customers. Reducing costs doesn’t have to mean compromising the quality of your products or neglecting the needs of your customers. Taking a deeper look at all of your operating and overhead expenses will open new expansion opportunities and maintain a healthy business flow. By maximizing free tools, revising your business policies, and implementing more efficient strategies, you will surely keep up with the online competition and make your business thrive better.
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