Profit margins are very slim when it comes to e-commerce stores. The competition is fierce so they need to keep prices very low. The choices are to raise prices or to cut costs. Raising prices usually results in fewer sales.
As an e-commerce store owner, it is essential to understand the areas where costs can be cut. There is always some fat that can be trimmed from just about every part of the process.
In this article, we will go over how you can cut your costs and enjoy wider profit margins from your e-commerce store.
1 – Shipping
After the manufacturing costs, shipping is your biggest expense. There is also ample opportunity to cut costs here.
Don’t be loyal to any particular shipping company if they aren’t helping your business. Shop around for the best price as rates can vary wildly between companies. Once you have a quote that is lower than what your current provider charges you can ask them to match it or beat it.
Look to local shipping providers like CaliforniaCourierServices.com. The big names in shipping are not as desperate for new clients and may not budge much on the price. Regional and small shipping companies are much more human-sized and are willing to make deals to keep or gain new clients.
2 – Minimize packaging
Kill two birds with one stone and reduce the size and weight of your packaging. The first benefit is that it reduces the cost of packaging and shipping. It also has the added benefit of being better for the environment.
The cost of packaging drops, but so does the cost to ship when the total weight of the item is lowered. It may only be pennies per item in savings, but it adds up to thousands per year.
Advertising that your packaging is minimal will also win over potential customers that are looking to support businesses that take the environment seriously.
3 – Optimize your PPC ads
Using Pay Per Click ads is a bit of a science. It takes a lot of testing to find the right ads for your keywords. Although it takes time and patience, it can pay off. Once you zero in on the right formula it will save you a lot of money on your ad spend. And it will be more effective at driving sales.
Hiring a PPC ad agency is a good way to make sure the campaign is running as effectively and efficiently as possible. If you plan to handle this yourself then make sure to pay close attention to negative keywords. This will prevent you from paying for clicks to keywords that are not relevant to your product or don’t contribute to sales.
4 – Minimize returns
It is important to have a reasonable return policy. At the same time, it shouldn’t be so generous that people return products often. An overly generous return policy results in too many returns that cut into your profit margins.
Having good customer service can prevent many needless returns. Customers that can talk to a person are less likely to send a product back if they can troubleshoot themselves.