It is likely that most of your ecommerce business tasks are completed manually. This slows down operations, thus resulting in increased stress on resources and a lot of time wastage. From inventory management to order processing, manual processes can also increase your operating costs. These costs can accumulate over time and can affect your business’ bottom line.
So, what steps can you take to reduce your operational costs? Here are 5 things you must do to reduce these costs and increase your profits.
1. Automate Your Business Processes
Automating many of your operational processes can help eliminate the consequences of human error and inefficiencies. Automation also reduces the need for constant supervision.
You can automate processes in different areas of operations, including:
- Order processing
- Customer service
- Inventory management
This can help streamline your business’ workflows while boosting efficiency.
Some of the steps you can take to automate your ecommerce processes include:
- Implementing chatbots
- Use the right tools for running marketing campaigns
- Use the right applications to optimize stock levels, reduce storage costs, and prevent overstocking
- Integrate the right order fulfillment software
2. Get Rid of any Excess Merchandise
When it comes to an ecommerce business, real estate is expensive. Storing inventory requires more space and when you have excess merchandise, it increases your operational costs. Some of the steps you can take to get rid of surplus merchandise include:
- Provide discounts on the excess merchandise
- Explore tax rebate options for charity donations
- Bundle the products together and offer them to brick-and-mortar sellers
It is recommended to constantly keep track of your inventory so that you can take the right steps at the right time.
3. Explore Ways to Cut Down on Shipping Costs
Shipping has a significant part in your ecommerce business’ operational costs. These costs increase as the size and weight of the items increases. If you can lower shipping expenses, you will be able to offer better pricing to your customers.
The following steps can help you reduce your shipping costs:
- Reduce shipping weight by using lighter packaging materials
- Offer free shipping to customers on placing orders above a certain amount
- Negotiate better rates with carriers
- Position strategically located warehouses closer to your key markets to decrease shipping distances
- Invest in the right ecommerce shipping software
Following more efficient shipping policies can also translate into faster deliveries. This can further have a positive impact on customer satisfaction.
4. Outsource Tasks
As a small business, you cannot afford to maintain a large team. Outsourcing is a great way to cut down on your operational costs. Virtual assistants cost less compared to full-time employees. You can outsource non-core and administrative tasks and free up your time and resources while focusing on core business activities.
The business areas you can outsource include:
- Customer service
- IT support and maintenance
- Finance and accounting
- Digital marketing and content development
5. Minimize Your Returns
Returns can have a big impact on your ecommerce business’ operational costs. They can not only affect your profits but also bog down your logistical resources. Implement the right strategies to reduce returns. Some of these steps include:
- Providing more detailed product descriptions
- Provide virtual try-ons
- Create strict quality control measures to minimize any instances of defective products
- Optimize sizing guides to simplify the process of choosing the right fit
Remember handling returns can consume a significant part of your storage space and manpower.
So, it is recommended to take these steps to bring down your ecommerce business’ operational costs. Pursuing operational efficiency can make a big difference to your small e-commerce company.
