There’s mass adoption of Ecommerce businesses by consumers and retailers for various reasons. For starters, eCommerce stores are more affordable than brick-and-mortar stores. However, competition from other online stores and the fight back from brick-and-mortar shops, who can match the prices of online stores 72% of the time, makes running eCommerce stores challenging. Among the many things eCommerce store owners should do to stay afloat is find ways of managing expenses. The first step is choosing the right eCommerce platform for your eCommerce store. With the right platform, you can then explore the following shopify cost-saving tips:
1. Focus On Retaining Existing Customers
Converting leads and attracting new customers is more expensive than retaining existing customers. Ecommerce stores can retain their client base by:
- Providing excellent customer service – Customers are more likely to engage in repeat businesses with brands they’ve engaged before. However, you should provide satisfactory customer service for such customers to keep buying from your store.
- Offer unbeatable deals and discounts – Offering deals and discounts to existing customers is powerful. Repeat customers often feel neglected if stores offer discounts exclusive to new customers. While new customer deals can help attract new clients, you should have tempting deals and discounts for repeat customers.
- Take complaints seriously – Interestingly, 95% of dissatisfied customers don’t raise complaints. Any time you receive complaints or problems from your systems, products, or services, handle them with maximum attention.
Acquiring new customers is more expensive than keeping existing customers. Existing customers are five times more likely to purchase products than new prospects.
2. Minimize Product Returns
Reducing product returns is another way to manage expenses for eCommerce stores. Product returns typically mean undoing the sale. Returns have associated shipping, labor, and packaging costs, which can quickly add up. You should also inspect to check if the product is damaged. However, how can you reduce product returns?
- Give accurate product descriptions – You should ensure that buyers know what they are buying before purchasing. Give accurate product descriptions, photos, and videos.
- Extend the time frame for returns – While it sounds counter-intuitive, extending the time frame for returns reduces return rates. Extending creates an endowment effect, where the longer customers own the product, the more they become attached.
- Avoid high-risk customers – Isolating customers with high risks and not marketing to them reduces return rates. Ecommerce store owners can check previous sales data to identify customers in this group.
3. Reduce Transaction Costs
Most payment options have transaction costs that significantly add up when order volume increases. Some options charge monthly fees, set-up fees, and transaction fees. You should first start by evaluating your customer base. If your customers are domestic, use offline payment options, such as e-checks, online bank transfers, and ATM deposits.
If your eCommerce business is still new, use popular payment gateways, such as PayPal. Similarly, if your business is well established, you can negotiate the transaction costs with payment outlets. Gateways don’t want to lose customers, especially developed businesses.
Managing expenses is an excellent way of improving your business’s bottom line. However, you should cut costs carefully to avoid affecting other significant operations. Budgeting marketing funds, using efficient packaging, and automating menial business processes, such as accounting processes, also save costs.