4 Ideas to Cut Costs on Your Ecommerce Business
Reducing unnecessary spending will help your ecommerce company become more efficient and might increase its profits. But how can you cut costs right now without hurting your company's future?
Here are four tips for cutting costs today. Not all these will be applicable to your specific ecommerce business, but in the event that you can find only one tip that will help you save, those recovered dollars should fall right to your bottom line.
Ecommerce Is Thrifty By Nature
Compared to other business segments, ecommerce may have a relatively low cost of entry and upkeep.
You do not need to rent a huge office or shop -- actually many ecommerce companies start in kitchens or garages. You don't need to hire a good deal of help or perhaps invest in furniture and fittings. Your costs are normally in inventory, marketing, order fulfillment, and website or application development.
This is great news, but you can do more to save.
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Make the Most of Prepayment and Early-Payment Discounts
Many vendors will provide you with a discount if you prepay or pay early to your product. When these types of discounts are available, it might make sense to put up a bit more money at the beginning to save in the long term.
The trick to this cost cutting tip is to make certain the discount being offered -- 2 to 5% is common -- is greater than your money could have earned interest if you'd waited 30, 60, or 90 days to cover terms. And more return than if you'd used those dollars elsewhere.
Do Not Pay for Freight
Those exact vendors that will provide you a small discount for pre-or-early payment, may also forgo freight charges if your purchases exceed a predetermined level or amount.
For instance, I address a toy vendor that does not charge freight on orders over $1,500. By comparison, a $1,000 purchase will include something like an extra $125 at UPS-related charges. Forking over the $375 to place a larger order will save money long term, assuming I will sell the extra inventory. Typically, it is going to make sense to not pay the freight.
Search Co-Op Dollars
Brick-and-mortar retailers almost always get some kind of"co-op" advertising dollars from their vendors. Increasingly, ecommerce company -- even small ones -- can also have co-op bucks, which"reimburse" you for your vendor, brand-specific advertising.
By way of example, you can request co-op if you (a) buy pay-per-click advertising around a specific vendor manufacturer, (b) purchase online banner advertising with a vendor brand, or (c) purchase traditional advertising like print advertisements that promote a specific vendor brand.
Additionally, some vendors will cover banner ads or landing pages on your own ecommerce site or invest in your social networking marketing.
You should request co-op dollars at the start of the year. Show the vendor how you'll be promoting its products on your advertisements or on site, and request a reasonable contribution.
By way of instance, if a brand-specific landing page on your website gets 5,000 page views per month and if you invest, say, $10,000 annually with the vendor, you might want to request something like $150 per quarter in co-op for this landing page.
The co-op bucks you receive mitigate both stock and advertising costs. The secret here is to not hesitate to ask. Some vendors will say no. But others might say yes.
Focus on Social Networking
Social media might be the hottest topic in marketing now. While some fear it could be too early to know for certain that social media works for ecommerce, I am a firm believer that you can and should use social media to market your ecommerce business.
One of societal networking's strongest attractions is that if can take less for results than using pay-per-click advertising, for instance.
As a cost cutting measure try this. Have a percentage -- I recommend a third -- of your monthly PPC advertising budget. Slice that dollar amount to two halves. Remove that half, and spend the other half at a social networking campaign. By way of instance, you could give away something and need registration to enter the giveaway competition.
More specifically, if you invest $1,500 a month on PPC advertising, try spending only $1,000 following month. Keep $250 on your bank and giveaway $250 worth of product on your site using Facebook and Twitter to market the giveaways. Request registration with each entry on your competition, and include those new registered users on your email marketing.
If you get similar results, you reduce more than 15 percent from your PPC advertising spend without harming your company.
Summing Up
There are certainly a great deal of things you might do to save money and reduce costs at your ecommerce business. In this guide, I have described my favourite money saving strategies. I am hoping that you will let me know what you think in the comments below.
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