7 Ways to Cut Expenses for Your Ecommerce Business

Published on January 4, 2022
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Filed under Selling Channels
Read time 9 Minutes

Valery Travers is a marketing and eCommerce specialist who’s consulted with many small and medium-size businesses to grow their profit margin while decreasing and improving overhead costs.  

Increasing sales becomes more challenging with each passing year as more competition enters even the most niche of markets. Meanwhile, as your company grows it can be difficult to reduce business expenses. Here are seven effective ways to cut costs for your online store.

Efficient Packing

Most ecommerce vendors purchase and pack with the most affordable option. This often means utilizing oversized boxes and extra packing material. The use of more packing supplies adds a dollar worth of additional expenses per order. Overtime this small fee could cost you up to hundreds of dollars every month, and even more over the course of a year. Block out time next quarter to research different packing options. Get boxes that are the right size for your most common orders, and only use the right amount of packing material to ensure that orders arrive safely.

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Buy your boxes and packing material in bulk once a quarter. This saves time on procuring them, and can qualify you for bulk discounts to save you even more money.

Use All the Discounts

Your vendors, shippers, web hosting, marketing—basically everybody you work with—offer discounts of one kind. Some discounts are available only at certain times, while others are available anytime but require you to change how orders are placed. Some of the discounts available to ecommerce entrepreneurs include:

  • Bulk discounts
  • Bundling discounts
  • Holiday discounts
  • Co-advertising credits
  • End-of quarter discounts
  • Clearance discounts

You may also receive discounts from your vendor by recognizing how long and profitable the relationship has been, or by implying a competitor is offering a more affordable rate.

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You can “manufacture a discount” by using a business credit card with cashback rewards. Use that card and whatever other discounts you can find to add up to serious cost cutting.

Reduce Your Number of Products

Here’s the thing. All of your products cost you money to sell.

Some of your products may be highly profitable, generating a majority of your income, while others may not be performing as well. Identify products that are not generating significant revenue for your business and consider removing them from your online store. Every product you stop offering removes an entire expense off your balance sheet.We live in an age of specialization. Choose the products that make you the most money and focus your efforts on them.

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Consider adding non-physical products to your store.  An ebook guide, video course, or something related to the niche you’re in can make for high-profit sales without costing you anything other than the time it takes to put it together.

Find the Free Shipping Sweet Spot

Okay. Maybe it won’t be free. But it is when everything works just right.

Whether it’s a standard policy, or something you negotiate, your suppliers can reduce their shipping and handling charges if you order enough product at the same time. Sometimes this means buying in bulk once in a while. Sometimes it just means timing your order for when your supplier has a weak week. The key is to find out what qualifies you for discounted or free shipping, and then planning your ordering schedule to qualify.

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Look for opportunities like this in every stage of your supply and shipping logistics lines. Just cutting out a few percentage points from each can drastically alter your bottom line.

Market to Existing Customers

Selling to an existing customer costs 1/7th of what you spend to onboard a new one, so it’s important to keep in touch with the people who have already purchased from you.

Starting a monthly newsletter is an inexpensive way to reach your target audience. Consider including a coupon or special discount to give customers incentive to buy from you again. From there you can grow a loyal fan base that follows you on social media and continues to share the word about your ecommerce brand. Offer loyalty deals regularly to keep customers coming back.

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Make at least one of your products a consumable item that people have to repurchase. This keeps your customers interacting with your site and brand.

Use Marketing Metrics

In the 20th century, everybody loved the saying “You waste half of the money you spend on advertising. The trouble is figuring out which half.”

This century data and metrics make it easy to identify where your marketing money is going. You can even track it in real time. In fact, the most effective marketing methods for ecommerce include automatic reporting on performance for all of your ad spends.

Take time to review those reports, altering your marketing methods so that you are only spending money where it produces the best return.

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Make your social media marketing a full initiative, not just an afterthought like it is for many brands. That marketing is free. And free marketing is the best kind of marketing.

Reduce Your Interchange and Chargeback Fees

Interchange fees are what a bank charges you for processing purchases customers make from you. Chargeback fees are what your credit card processor charges you when a customer changes his mind. In either case, these fees can account for a serious portion of your monthly expenses.

In every case, the banks and credit card processors you deal with have a sliding scale for those charges. They’re not always immediately forthcoming about what’s on that scale, but you will be able to find someone who can tell you. Ask about it. Learn the details. Then chase the lowest possible rates.

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Do the same for your bank to eliminate as many fees as possible. Many banks have no-fee accounts for businesses, so with a little research you can make a lot of profit.

Final Thoughts

Decreasing expenses can benefit your ecommerce site. Cutting costs and boosting sales can supply you with extra cash flow each quarter. Start today by implementing some of the ideas above, and end with far more money in your pocket than you thought was possible.

Get organized and efficient with ShipStation the best online shipping platform for your ecommerce business.

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