Selling online is a great way to make some extra cash, and if treated right, can even become a full-time business. Whatever your reasons for starting an online store, it’s never wise to rest on your laurels and hope for the best. The world of e-commerce changes rapidly, and that means you may have missed out on some valuable additions to your online outlet that could save you money. When cash is tight, and you’re spending almost as much on your digital presence as you are on your products, it’s useful to identify the best ways to cut those costs.
If you’re spending more than you’d like on running your e-commerce business, here are some essential cost-cutting tips.
It may not have happened yet, but your online store is extremely vulnerable to scammers and cybercriminals. If you do get attacked and suffer from a security breach, then the costs could end up ruining the future of your e-commerce brand. Always make sure that you invest in a tough firewall and remember to add two-factor authentication to every platform that you use.
Yes, you’ll be spending money on security, but the financial aftermath of a ransomware attack or phishing scam could end your e-commerce dreams. Reducing the costs of running your business is all well and good, but if you try to cut down on the price of your security, then the costs of a breach could be far higher than you expect.
If you’re still taking orders manually, searching through your inventory, packaging, labeling, and then posting your products, then you’re wasting time and money that could be better spent elsewhere. Ideally, you should try to remove yourself from the equation as much as possible. Luckily, this is easier to do than ever. Sign up for order fulfillment, which will dramatically cut down on wasted time so that you can focus on more profitable tasks. When order fulfillment is so accessible, it simply makes sense to add this to your e-commerce arsenal. You can check one sample on sites like Red Stag Fulfillment.
Change Payment Processors
While it’s always the best idea to make sure that you allow all of your customers to pay in the ways that they want, you need to remember that costs can vary wildly. For example, PayPal is quick and easy to use, but the rates that they charge in fees can mean that your profits have a huge chunk removed with every sale. Have a look around at some alternative options that will see you keeping hold of a lot more of the money that customers want to give you.
The Importance of Customer Retention
It is proven to be a lot more expensive to attract a new customer than it is to keep an existing one. That makes customer retention one of the best ways to reduce your running costs. There are many easy to introduce and more focused customer retention approaches, so remember to do the following:
- Give the best service experience you can
- Deal with any potential problems quickly and professionally
- Keep in contact with those that buy from you
- Include loyalty rewards
- Always take time to thank your customers
When it can be up to 25 times more expensive to attract a new customer, focusing on your existing ones can be a big money-saver.
Learn to Negotiate
There are lots of opportunities to open negotiations when it comes to e-commerce. The most popular options are with your suppliers and the manufacturers that you deal with and rely on. Talk to them about standard options like discounts for larger, bulk orders or getting a price cut whenever you can pay in advance. It can be hard to negotiate, especially when you’re not used to it. Learn some basic tips for negotiation with suppliers, and you could save yourself a lot more money than you think.
Own Your Store
Most e-commerce entrepreneurs focus at first on establishing a presence on the big marketplaces like Amazon or eBay. The problem with this approach is that you can end up paying a lot more in fees than you prefer. If you want to keep a larger portion of every sale, then having your own website is crucial. You can still have a presence on those all-important marketplaces, but the more that you can encourage customers to buy directly from your owned website, the more of the profits you get to keep. It can take a little more work to set up an online store for yourself, but the profits will be worth it.
Learn Budget Management
Managing your budget is one of the best ways to ensure that you’re not spending money unnecessarily. Your initial business plan should have had extensive research into running costs, and the money that you have to manage those costs needs to be kept hold of tightly.
If you go over budget, then your business is at risk. Just as importantly, by taking a more proactive approach to your budget, you’ll be able to spot more quickly when you’re spending money where you don’t need to be. Those small expenses that you can miss if you’re not micromanaging your budget will soon add up.
Not every e-commerce business needs to use paid marketing methods. There are more ways to get free marketing than ever, and all it takes is a little research. Digital marketing can be a very big area to explore, but even knowing some basics can go a long way to keeping your marketing budget to a minimum. Look at email marketing if you’re looking for the best ROI on your marketing choices, but never forget that social media can massively expand your reach. Of course, the goal is to go viral so that your brand is in the cultural eye, even if only briefly. Manage this and you will suddenly have a lot more marketing options (and a lot more customers).
Running an e-commerce business is not a get-rich-quick-scheme. It takes hard work and plenty of time to build something new from scratch, and money management is always going to be a factor that determines your success. Make sure that you are always looking for ways to reduce your costs without harming the customer experience, and your e-commerce business will be in a much better position for growth.