The cost of living is rising rapidly across the globe, which makes doing business more expensive for everyone, including owners of eCommerce businesses. If you want to keep your e-commerce business afloat, you need to find ways to cut costs so that you can maximise your margins. Let’s dive into some cost-cutting strategies that will help you save money and boost your bottom line.
#1 – Minimise Returns
A smaller portion of orders returned means more money in your pocket. The more you can do to minimise returns, the better off you will be, not only because this results in a higher sales volume but also because the returns process is costly for e-commerce businesses.
It’s fairly easy to reduce product returns and cancellations by ensuring that your customers know exactly what they’re getting when purchasing from your site. Use detailed descriptions and high-quality images to showcase your products, and make sure that your return policy is clear and easy to understand.
Don’t be tempted to cut the returns period short, either. Research by Terms Feed found that 60% of customers review a returns policy before making an online order, so a small window may put them off of making a purchase. Furthermore, a study by the University of Texas found that a more lenient return time limit actually resulted in a reduction in returns.
#2 – Build Supplier Relationships
Building strong supplier relationships is another key to cost-effective e-commerce. When you work with suppliers who are familiar with your business and what you’re looking for, it’s easier to get the best prices and terms.
Not only should you negotiate pricing and delivery schedules upfront, but also be sure to maintain good communication with your suppliers. This will help to prevent any misunderstandings that could lead to higher costs down the road.
Building good supplier relationships also takes time and effort, but it’s worth it in the long run. By taking the time to cultivate strong partnerships, you’ll be able to save money on your e-commerce operations while still getting high-quality products.
#3 – Adjust Your Marketing Strategy
Don’t be tempted to slash your marketing budget for the sake of cutting costs. When you cease marketing your online business, sales drop and your margins shrink.
Instead, take a look at your current marketing strategy and see where you could make adjustments to save money without sacrificing results. For example, consider using less expensive channels such as social media or search engine optimisation rather than paid advertising.
The key is to be strategic about how you spend your marketing dollars so that you can get the most bang for your buck.
#4 – Use Promotions to Cut Inventory Costs
One way to reduce inventory costs is to use promotions and discounts to move products. This can be a great way to clear out old stock or seasonal items that are no longer in demand. It may seem counter-intuitive, but storing outdated stock that just isn’t moving actually costs your business money.
In addition to cutting costs in the short term, strategically offering discounts can help to boost your long-term profits by encouraging repeat purchases from customers who have purchased discounted products.
This is a great way to build brand loyalty while also clearing out old inventory. It’s especially important to keep an eye on inventory that expires, since if it expires you will lose 100% of the cost.
Final Thoughts
There are many ways to cut costs for your e-commerce business, and these are just a few of the most effective strategies. By using these tips, you can streamline your operations while still delivering high-quality products and services to your customers. Happy cost cutting!
