The ecommerce industry is getting more competitive than ever, wouldn’t you agree? As a marketer, you feel the need to crush the competition before it crushes you. One determinant of success is profit margin.
A business’ profit margin reveals a lot about its profitability and is expressed in percentage. It tells how much money is left after you deduct the cost of acquiring or producing your products from your revenue, and divide the number by the same revenue. Even if an ecommerce company’s revenue and profits are high but they have a low profit margin, they aren’t performing well enough.
There are a few things you can do today to boost this important number no matter what products you sell. Below, we teach you seven strategies that are worth your time and effort:
1. Raise your prices.
The thought of increasing the price of your items may scare you off but it’s a very practical means to boost your ecommerce business. Don’t worry, you still get to avoid the risk of losing your best customers. You could provide occasional discounts and deals, bundle certain products, reduce the size of the items (to make the increase less obvious), and offer extras.
Also, make sure that people find your price increase reasonable. When was the last time you changed your prices? Does the quality of your product justify the raise? If your audiences are happy to begin with, a slight increase in price won’t be a big deal.
2. Leverage a faster and cheaper shipping method.
You’re probably practicing dropshipping but having problems with delivery times. You know how delays in receiving orders can affect your relationship with customers. No shopper wants to do repeat business with a company that creates poor experiences. Customers don’t have a lot of options for courier services except those that are offered by the ecommerce store.
Fortunately, you can rely on a solution that combines affordability and convenience. An example of this kind of service is the ePacket shipping method. Customers from over 30 countries are now beneficiaries of the ePacket. They’re able to track their orders and enjoy free returns.
3. Improve customer retention.
Too many businesses focus more of their efforts on customer acquisition and sales but less on customer retention. A study conducted by Bain & Company revealed that improving retention rates boosts profits for up to 95%. Most companies also attest that keeping your customers costs less than acquiring new ones.
The first step to improving customer retention is to identify factors that make a customer leave – and work on avoiding those things. For example, you could prevent poor customer experiences by hiring an expert customer support. He should be responsible for answering emails and handling live chats. Other ways to boost retention include building personal relationships with them through email, running live webinars, and social media sharing.
4. Upsell and cross-sell.
Upsell, cross-sell… What are these two techniques and how do they differ? Upsell and cross-sell are often used interchangeably.
Here are their definitions: An upsell happens when a customer is about to purchase a product but you recommend an upgrade or more advanced version of the same product. Cross-selling is when you get customers to spend more by suggesting other products that relate to the original product they want. Regardless of whether you upsell or cross-sell, what’s important is that you recommend products that add immense value.
5. Manage your expenses better.
In the early stages of your ecommerce business, you’re more inclined to watch where you spend your dollars on. However, as your business grows, cost management somehow takes a backseat. You’ll be able to avoid financial leaks by planning out an effective and organized tracking system from the start.
One technique is to keep different types of business receipts. If there’s anything that you use for both your personal life and ecommerce business (such as home office and internet), have those recorded as well. You might also consider hiring a bookkeeper to keep an eye on your business’ cash flow.
There’s no point in running a business if you don’t do anything to boost its profitability. You’re just going to waste your valuable investments in that case. The five simple techniques mentioned in this post will hopefully open your mind to areas that affect your ecommerce business’ financial health – starting with your prices to cost management. Let us know what you think in the comments below.