With a global audience of 2.14 billion digital buyers, eCommerce is ramping up to become the most popular shopping method. So, if you have a product to sell, it is easy to see the opportunities that the world of online selling is offering today.
But running an online selling business can be more expensive than you’d think. At the same time, your ability to keep costs low at the beginning of your venture can truly make or break your success.
Here are some alternative ways to save money while growing your online store.
Make Sure You Know What You Can Write Off On Your Tax
Without an advantageous strategy, you might see a chunk of your earnings disappear in taxes every year. While this is a cost you need to account for, there are plenty of expenses linked to running your online business that are tax-deductible.
Learning about all the tax write-offs for online sellers can help you reduce the amount you own, free up extra cash, and have a greater budget to dedicate to growing your business.
* Extra tip – be sure to check industry- and niche-specific write-offs! Some are not as obvious as you might think. For example, did you know that most expenses related to education, online ads, card processing fees, and photography equipment are deductible?
Streamline Your Inventory
Building, storing, and managing your inventory represents one of the main costs you’ll face when running an online selling business. And, getting your inventory right can make all the difference in how heavily it will weigh on your budget.
For example, narrowing your product range can help you reduce the costs of storing and managing the different items. Additionally, a smaller collection can help you focus on quality, thus reducing returns and refunds.
But, no matter the niche you operate in, you should always consider the benefits of outsourcing your warehouse management and investing in a pick and pack software to manage your online store.
Market To Your Target Audience – and Keep Your Customers!
When starting an online business, you’ll face steep marketing costs. Better understanding your audience – as well as crafting a laser-sharp marketing campaign to target that specific segment – can help you lower your advertising costs and improve your ROI.
But don’t forget that acquiring new customers can cost you between 5 and 25 times more than retaining existing ones. So, even a 5% increase in customer retention rate can boost your profits by 25% or more!
Build Relationships With Your Suppliers
No business is an island, and the relationships you cultivate throughout the years can help you reduce your expenses and expand your venture. And, while customer relationships are certainly vital, it is important not to overlook the importance of networking with your suppliers.
Finding reliable and trustworthy suppliers, as well as being a punctual and respectable buyer, will play an important role in helping you unlock discounts, benefits, and personalized services.
Reduce Shipping Costs
Shipping costs and timings are a decisive factor in a customer’s buying decision process – and represent a significant cost for online sellers.
But, while free shipping is often expected, it can be challenging for small eCommerce businesses to compete against giants such as Amazon – which, thanks to their large shipping volumes, enjoy a much greater bargaining power.
At the same time, customers are shifting towards smaller, local, and transparent businesses that share their values.
So, whether you are looking to absorb all of the shipping costs or charge a flat rate, you can make any shipping strategy work for you – as long as you budget for the right costs and understand what your customers want.
* Extra tip – shipping internationally is an entirely different matter with a whole other range of associated costs. So, consider international shipping carefully!
Review Your Packaging Strategy
Packaging is an integral part of your product, brand, and service. With the right packaging, you can communicate your business’s values and enhance the product itself.
While you should not skimp on your packaging strategy, you could opt for a sleek and more affordable minimalist style. Or, you could consider adding value to your offer through a sustainable or reusable packaging option.
In any case, remember that choosing the right packaging size and quality for your product, as well as streamlining your inventory, can help you keep costs low.
Ultimately, reducing the operating costs of your online store can be challenging – especially as the same strategy might not work as well for two different sellers.
However, becoming a specialist in your niche, rather than a generalist, and working with a small business financial advisor can help you reduce overhead costs and boost profits.