• Team Powerhouse91

5 Ways To Cut Costs and Increase Profit in Your eCommerce Business

The physical marketplace has long been facing intense competition from the eCommerce space when it comes to sales generation. Easier access, more options, and better pricing have made many customers shift to buying everything from daily essentials to high fashion apparel online. This shift is most obvious during online events such as an Amazon sale.

Several businesses have adopted the eCommerce business model leading to an increase in supply online, but this has also led to increased competition in the online space. For companies to now make a profit, they require a loyal customer base and a plan for optimizing their processes to meet the current trends.


Unfortunately, the fast-moving world of eCommerce and the increasing demands of customers can cut into profits by increasing operational costs. This could adversely affect sustainability even if demand among customers keeps growing and the products are Amazon bestsellers. Profitability requires constant reassessment and efforts to keep the variable costs as low as possible.



Entering the eCommerce space today may be as easy as opening an Amazon seller account, but it is important to strategize to fight off competition. Here are some ways you can cut costs in an eCommerce business.


1. Optimize online sales campaigns


Sales campaigns can be an effective way to drive online sales, but you can derive the most benefit from these if you keep your strategy dynamic. A simple Pay-Per-Click campaign could cost you more than the sales you make. Being open to understanding your customers and changing your campaign strategy accordingly will save you from falling into this trap.

Collecting past data for your brand and similar brands in your category to understand the days when your customers are most active is a good way to approach things. Once you have this data, you can take your campaign live during these days to ensure you get maximum exposure to your target audience. This is more likely to push sales than just putting your sales campaign in front of a mixed audience who might not be in the market for the product you are selling.


Knowing your customers and their preferences allows you to sell to those people who want to buy, making the entire sales process easier and cost-effective.


2. Optimize packaging costs


Packaging may seem like something standard but it can contribute a great deal towards lowering the overhead costs of your eCommerce business. General cardboard packaging for products that don’t require it is a waste of additional resources, which can prove costly.

One of the strategies to bring this cost under control is to use customized packaging according to your product. Though it may seem like a more expensive option, in the long run, it can reduce your packaging cost drastically.


Customized packaging may involve the use of less expensive material than cardboard for packaging. It can be especially beneficial for products such as apparel that do not have hard materials that can get damaged in transit. The size and shape of your delivery package might also change to fit your particular product optimally.


As long as the product can reach the customer without any kind of damage or loss of quality, the packaging does not have to be a drain on your profits. Customers will be keener to get your product at affordable rates than be interested in the packaging material. However, for your company, it could be a big profit driver.


3. Ensure receipt of reimbursements


Companies that work in the eCommerce sector can get reimbursements from a selling platform for products that are lost in transit or damaged before they reach the customer. Selling through Amazon, for example, provides this kind of assurance that helps you breathe easily during the delivery process.


However, though these policies exist for the benefit of sellers, it can get difficult for the platform to keep track of reimbursements at times. This could lead to your reimbursements being stuck without either you or the platform realizing it. To avoid such situations, it is best to regularly keep track of all your reimbursements and contact the platform to clear any pending dues. This can be a semi-annual process that becomes a part of your regular business review.


While dealing with the costs of running a business, the last thing you would want is to lose out on money owed to you due to oversight. With a simple review, this cost can be reduced or eliminated.


4. Optimize return policy and handling


Without a doubt, a customer-friendly return policy helps customer acquisition and retention. Bearing the cost of free returns and having a no-questions-asked policy in this regard can help you gain the trust of your customers by exhibiting confidence in your products.

Optimizing returns, however, also involves optimizing the back end of your business to ensure the customers are getting exactly what they ordered. Your products need to be sorted and marked neatly and clearly so that the delivery of a product is not only quick but also accurate. Taking the time to do this will help organize your business so you are in complete control of what goes out. Having a plethora of details that a customer might need to know about the product clearly mentioned can also help you reduce returns.

Another factor you can optimize in your returns policy is the number of days allowed for returns. This becomes particularly important for companies in the fashion sector since designs change according to seasons, and being stuck with an outdated design makes it difficult to resell a product. However, even for other businesses, it is difficult to resell a product if it is outdated.


5. Optimize inventory and storage

Finally, inventory management is one of the most obvious ways of cutting costs. You have to optimize your inventory to make sure you aren’t short of products when the demand arises. But you also have to see that you don’t overstock your shelves, leading to an unnecessary requirement of a bigger storage unit.


Having large amounts of inventory makes sense if you have one of the best-selling products on Amazon, but if your product has seasonal or variable demand, you should ensure you don’t overstock when demand is low. This process could take some time to analyze, but the effort will be worth it since this is a long-term fix for a frequent problem.


The eCommerce space might seem difficult to navigate, with reducing costs being just one of the factors towards making a business profitable. Powerhouse91 can help you here by buying your brand for lump-sum benefits, helping your brand optimize costs, and accelerating the brand growth exponentially in just a few months. Their eCommerce expertise and long-term value enhancement will undoubtedly help your business unlock its true potential.


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