Guest Post by ChannelReply
If you run an ecommerce business, you probably face extreme price competition. You can’t turn a profit unless you can keep your costs down. Here’s how to reduce expenses in business online and protect your margins:
1. Fix Inefficiencies
Something always wastes time and money. That something is often poorly motivated workers. 7 out of 10 U.S. employees put minimal effort into their jobs, costing $500 billion per year. In most other countries, the rate of employee disengagement is even higher: a crippling 8 out of 10. Other times, it’s poor systems. As just one example, disconnected or outdated programs slow down 4 out of 10 support agents. Maybe you thought you were running a tight ship. But those stats prove that almost every company has massive inefficiencies somewhere. And believe it or not, one improvement often solves both problems: enabling infrastructure.
What’s That and How Does It Improve Efficiency?
“Enabling infrastructure” refers to the tools employees need to do their jobs, and it is the top driver of employee engagement.
Here’s an example that affects many online retailers: Your company sells on Amazon, eBay, and its own site. That means your support team has to juggle Amazon messaging, eBay messaging, and standard emails. This wastes time and causes disengagement.
You can fix that situation with the enabling infrastructure of ChannelReply. It sends all your ecommerce messages to one helpdesk. It also delivers customer and order info, so agents have everything they need on one screen.
Infrastructure like this improves productivity, of course. But it also boosts engagement, which can be the biggest source of ROI.
Plenty of other programs exist to provide enabling infrastructure in other areas of ecommerce. For example, ecomdash can manage inventory tracking on eBay, Amazon, Walmart and more. Look for such solutions wherever your employees are the most bogged down and disengaged for maximum ROI.
2. Negotiate & Comparison Shop
Almost everything is negotiable. You can and should haggle down two of the biggest costs of running an ecommerce business: supplies and shipping. The same negotiation strategy applies to both.
First, figure out what you have to offer. Can you promise regular purchases in exchange for a discount, and prove your stability by showing off your sales record? Can you make a large purchase right now if they cut their price?
Next, contact potential suppliers or carriers. Let them know you’re looking for the best deal available.
Try to get them to offer a price rather than saying how much you’d be willing to pay. If their offer isn’t as good as those you’ve received elsewhere, let them know. They may volunteer to undercut their competition.
You can then go back to the competitors and ask if they’ll beat that deal. In other words, you can start a bidding war over your business.
Note that you may have to spend money to save money here. Particularly when dealing with suppliers, you may win lower prices if you offer to buy more up front.
3. Use Space Effectively
Space is important to any business. In ecommerce, providing space for both people and inventory can eat through your budget.
Space for People
If you have offices, ask yourself, do these employees really need to work in the office? Or can they do the same job just as effectively from home?
Most remote workers have higher morale, lower stress, and call out sick less often than their colleagues in cubicles. And in ecommerce, so much work can be done just fine from home. Many support reps, accountants, writers, and even managers can work better from a quiet space in their house than at the office.
Not everyone works well from home, not every home is appropriate for work, and not every job can be done from a distance. But it usually works, and when it does, it can reduce your needs for office space and improve employee engagement. Give it serious thought.
Space for Inventory
The same goes for your inventory. Inventory takes up space. Space costs money, especially if you’re using third-party warehouse services like Fulfillment by Amazon.
Build a system for tracking storage costs and liquidating slow-moving inventory. If storage is on its way to costing more than you’d make from selling the items, get rid of them. Slash prices, sell to liquidators, or donate (if allowed by your supplier) or recycle what can’t be sold.
Most large corporations have this down to a science, but many new sellers hesitate to toss inventory they spent good money on. This is a classic case of the sunk cost fallacy. Don’t keep wasting money on something that’s already a loss.
4. Spend Money to Save Money
If you have a hole in your roof, fixing it will cost money. But compare that to the costs of leaving the hole: water damage, mold, insects, lower climate control efficiency. Spending money to fix the roof saves you money, and the sooner you do it, the more you save.
Spending money on software like ChannelReply will cost money up front, but reduce business expenses rapidly. Spending big on large quantities of inventory requires a major investment, but can provide major savings per unit.
But what if you don’t have the money you’d need right now?
You can always get a loan (if you have the credit) or use a credit card (if you’re not afraid of the interest rates). But successful Amazon sellers can also turn to Payability. Payability provides financing based not on your credit, but your Amazon sales record. It’s a fantastic way to get the money you need today to save tomorrow.
How to Reduce Expenses in Business for Online Retailers
You don’t have to lay anyone off to reduce expenses in business online. Cut costs through smart practices and enabling infrastructure like ChannelReply. If you don’t have the cash you need for crucial improvements, get immediate funding from Payability. Soon, you’ll have lower costs, happier employees, and best of all, higher profits.