We know running an eCommerce business can be expensive. Expenses like rent, processing fees, subscription charges, excess inventory, and many more can significantly affect your bottom line. While many of these expenses aren't avoidable, some can be negotiated down or significantly reduced, allowing you to optimize cash flow and free up valuable capital.
Fewer expenses mean your company can:
Pay off outstanding debt
Invest more into marketing and advertising
Focus on technology
Hire new employees
Have a cash on hand for future initiatives
1. Do what you do best and outsource the rest
Many companies avoid outsourcing simply because they don't want to lose control. However, outsourcing can save you a considerable amount of money and time in the long run.
Start by outsourcing any task that takes your focus away from your business goals. For example, bookkeeping, marketing, and fulfillment activities are easily outsourced to other professionals who can get the job done faster and with more precision.
By outsourcing your accounting and bookkeeping , you are placing your company's financial well-being in the trained hands of experts who work to become part of your team. Remember, you didn't start your business to become an accountant, so why focus your time on these tedious financial tasks? Instead, let the experts handle this while you focus on scaling your business.
2. Negotiate Payment Processing Fees
Payment processing fees are charged every time a customer purchases something from our eCommerce store using their debit or credit card. While these fees are usually small, they can add up over time as your sales begin to increase.
Many online stores assume these fees are non-negotiable; however, this isn't the case. Discuss how mark-up, assessment, transaction, and interchange fees can result in lower charges with your financial institution. Even a slight reduction in costs can result in substantial savings over time.
3. Develop a budget, and stick with it
Developing a budget is vital to the health and longevity of your business. Budgets assist in creating a long-term growth plan, show when is the right time to invest in new opportunities, and when you can hire new employees. It also can determine how much your online store spends on expenses.
Creating a budget will allow you to see exactly what your costs are and highlight areas in which you could save money are reduce overall expenses.
4. Consider Minimizing Packaging
Working on using limited packaging not only to benefit the environment but also to help reduce your cost. For example, using inexpensive packaging that is lightweight will minimize the packaging costs and keep shipping costs reasonably low.
5. Reduce Freight Fees
Transporting the items that you sell through your eCommerce store can be an expensive endeavor. Finding ways to cut freight fees will help reduce the cost of these goods and increase your bottom line.
How you ship your products, where your products ship from, the weight and size of the package, plus customs charges all play a role in your shipping expenses.
Find ways to decrease these expenses by placing larger, bulk orders or choosing the most inexpensive shipping option. Try ordering from suppliers that are closer to home.
6. Increase Customer Retention
Many business owners don't realize that paying attention to their current customers can go a long way in saving them a ton of money. Of course, growing your customer base is essential, but retaining your existing customers and promoting repeat business can help to reduce your overall expenses.
Obtaining new customers can be an expensive venture. Marketing programs designed to drive further potential clients to your store can be costly. On the other hand, retaining current customers is virtually costless. To encourage your existing customer base to make more frequent purchases, engage in activities like email campaigns, special offers, or discounts through social media.
7. Focus on your best selling product
It's no secret that having excess inventory on hand can be expensive. Likewise, storing products that aren't performing well can cost your business. To correctly manage your expenses, identify your best-selling products to improve your ROI and profitability. At the same time, reduce the number of products you carry by eliminating the ones performing poorly; doing this can free up cash for more viable products.
For many eCommerce stores, the main focus is to expand and increase profits quickly; however, profits mean nothing if your expenses are out of control. So, take an in-depth look at all of your eCommerce store's operating costs and overhead costs and do everything possible to reduce these.
At Basis 365, we know that accurate accounting practices is one of the best ways to increase profit and reduce expenses. Our outsourced accounting services can give your business the upper hand. All it takes is the click of a mouse to connect with one of our experienced accounting experts.