This is a guest post from the Expandly team. Expandly is a multi-channel eCommerce tool that helps online sellers to manage multiple sales channels, stock levels, accounting platforms, and reports from one simple dashboard.
Money makes the world go around, but if your eCommerce profits are only getting you as far as the backyard, then you seriously need to reduce your online selling costs.
eCommerce is pitched as the ultimate low barrier to entry business idea, with little startup costs and multiple opportunities to explore. However, online selling costs can soon spiral out of control, with marketplace fees, advertising costs, shipping rates, and eCommerce software all adding up.
Unless you’re smart about it.
Smart online sellers use a variety of different techniques, processes, and multi-channel eCommerce software to reduce online selling costs while maximizing profits at the same time. And we’re here to share how.
5 tips to reduce your online selling costs
Reducing your online selling costs comes down to five steps.
1. Know your online selling costs
Knowing your online selling costs is so simple that it’s often forgotten about. However, knowing exactly how much you’re paying to sell online and who you’re paying is crucial for identifying unnecessary, excessive, or even fraudulent costs.
Download your bank statements and begin tallying up all of your online selling costs, including:
- Marketplace fees
- Transaction costs
- Advertising spend
- Software costs
- Third-party fees (e.g., outsourced marketing or fulfillment)
- Shipping costs (e.g., carrier costs and packaging)
- Business administration costs (e.g., accounting or legal costs)
- Other business expenses (e.g., rent, bills, and wages)
2. Reduce your marketplace fees
While you certainly can’t haggle with Amazon or eBay on their fees, you can be savvy about how much it costs to sell on these platforms.
Choose the right package for your needs
It can be tempting to opt for the cheapest marketplace seller plan, however, the cheapest monthly plan is sometimes the most expensive. Let us explain.
Amazon’s Individual plan costs $0.00 per month but charges a $0.99 per item selling fee. Amazon’s Professional plan costs $39.99 per month but doesn’t charge the $0.99 selling fee. Therefore, if you sell more than 40 items a month, the Professional Plan is actually cheaper.
Optimize listing upgrades
Picking listing upgrades feels like picking ice cream toppings – you want them all. However, many listing upgrades fail to generate a return on investment and, in some cases, can be obtained by other means. For example, you can schedule eBay listings for free using an eCommerce listing tool that delays pushing your listing live rather than paying eBay to do it for you.
Build your own eCommerce website
By launching your own eCommerce website, you can direct return customers straight to your store and reduce the amount you’re paying online marketplaces for processing transactions. Of course, eCommerce platforms come with their own fees, but with more control over branding, customer experience, and competition, you can increase conversions and enhance the ROI from those fees.
3. Control your ad spend
Spending money on Google and marketplace ads is a worthwhile investment, generating brand awareness, clicks, and sales. However, it’s easy to get carried away with high-value keywords that don’t necessarily generate high-value sales.
The complexities of eCommerce advertising deserve a blog of their own (Deliverr have a great overview of advertising on Amazon, eBay, and Walmart), but in short:
- Take time to learn and understand eCommerce advertising before you start spending big
- Consider using eBay or Amazon advertising tools to find profitable keywords that generate sales
- If it’s not working, change things
4. Maximize your time
Time is money. Therefore any time you spend on your eCommerce business must generate a significant return on investment. For example, is spending an hour optimizing your listings to improve SEO and customer conversions a worthwhile investment of your time? Almost definitely. Is spending two hours duplicating that listing on your other sales channels and eCommerce website a worthwhile investment of your time? Probably not.
You can discover the tasks costing you unnecessary time and money by asking the following four questions:
1) Do I need to do this?
Some tasks you must complete and others you simple complete because you’ve always done so. Ask yourself if the task (or the way you complete the task) is necessary for running your eCommerce business. For example, you might need to transfer Shopify orders into Xero, but that doesn’t mean you need to perform that task manually.
2) Can eCommerce software perform this task quicker, better, and/or cheaper?
There’s a variety of eCommerce software, plugins, and tools that can perform everyday tasks quicker and better than you can. For example, you could duplicate your optimized listings across your sales channels at a click of a button using multi-channel listing software – allowing you to invest the time saved into more impactful tasks.
3) Can someone else perform this task quicker, better, and/or cheaper?
If there’s no software available to complete the task, what about someone else? Outsourcing tasks and operations to someone else allows you to benefit from expertise and speed that can save you time and money. For example, outsourcing your fulfillment operation can give you access to lower carrier costs while expanding your 2-day delivery locations and increasing sales.
4) Do I want to do this?
If you don’t love a certain task of your eCommerce business, it’s going to take you longer and give you less capacity to complete the tasks you do love.
5. Multiply your return
Once you’ve reduced your online selling costs as much as possible, it’s time to make those costs work harder for you by multiplying your return. This can be achieved by:
- Increasing your online marketplace sales by winning the buy box, qualifying for fast shipping programs, and selling internationally on Amazon or eBay.
- Boosting your ad clicks by selling on multiple sales channels that appeal to different audiences.
- Using an all-in-one eCommerce tool that combines multi-channel listing with order management, inventory sync, Xero integration, and reporting.
- Using a third-party fulfillment provider who integrates with multiple sales channels and fast shipping programs.
All that’s left to do is decide how you’re going to spend this extra money!