Starting an ecommerce brand usually requires 3 things; hard work, long hours, and money. With the barriers to entry being generally low due to globalization of the economy, it is relatively low-cost to get an ecommerce brand up and running, but scaling a business can get expensive if costs are not maintained. I’ve got some helpful tips below on how to cut costs while growing your business, but if you have any others I would love to hear about them. E-mail me directly at Matt@snapship.it!
This may seem obvious for an experienced ecommerce brand, but for those who handle their own fulfillment or have a lackluster 3PL….package optimization matters! Shipping carriers charge based on weight, dimensions, and final destination. Costs can get out of hand if you’re using a large box to ship all your items, so always try to use the smallest package possible in terms of dimensions and weight. It may not seem like a big cost-saver, but over time this will save you serious cash on shipping costs.
I know what your thinking…….won’t this increase my amount of returns? In reality, extending the timeframe for returns can not only reduce the quantity, which saves you money, it can also increase the likelihood of repeat purchases. This idea is called the “endowment effect”, which proposes that the longer a customer owns the product, the stronger their attachment to it becomes. A simple returns process with a healthy timeframe alleviates a lot of buyer anxiety that comes with a first time purchase, helping boost the chances for repeat purchases and larger average orders.
As a business owner, the most valuable resource besides cash on hand is your valuable time! Scaling an ecommerce business takes a ton of work, you don’t have time to focus on things that can be automated. Having an order/inventory management system that seamlessly integrates with your 3PL’s WMS (Warehouse Management System) gives you optimum visibility across all your sales channels, so you can get back to focusing on growing your business.
This tip may be a difficult one to pull off unless you are working with a cutting-edge 3PL partner, but if you do work with one, make sure they are leveraging carriers outside of the major 4. Most 3PL’s will tell you they work with a ton of carriers to get you the best price possible, then turn around and negotiate an exclusive contract with a major carrier. A fulfillment partner who truly has your business costs in mind will leverage large and small carriers to get your packages shipped at a low cost, while still maintaining the service levels you promise your customers. We recommend doing some research into several 3PL’s and how they go about securing their lowest shipping rates.
Building a lean supply chain is a process that can take many attempts and iterations, but keeping in mind lead times and inventory count at the early stages of your ecommerce brand can speed up your growth rate exponentially. A smart business owner is aligned with their manufacturer, so they know exactly when a new shipment will arrive and how much inventory is left over from the last re-stock. If you handle your fulfillment in-house, having great order and inventory management software will help you stay organized and allow you to diversify your sales channels.