business operations

Top 6 ways eCommerce companies are cutting costs and improving operational efficiency

Photo of Mikayla Fuller
by   Mikayla Fuller
November 9, 2022

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In business, every penny counts. For your eCommerce business, saving money where you can allows you to offer less expensive products that will increase demand and profits. Initiating an optimized process that cuts costs and keeps quality high will put you above competitors and keep customers happy. 

Whether you have 2 team members or 2,000, these practical tips can help you cut eCommerce costs and streamline your business!

6 simple ways to cut eCommerce costs 

1. Automate 

If tasks have a high volume at scale or are repetitive, automating these tasks can help to avoid human error, save time, and reduce costs. According to Invesp…

Automation in sales boosts productivity within the department by 14.5% while bringing down marketing costs by 12.2%. 

Common tasks to automate include monitoring and collecting information, adding customers to your newsletter or specific segments, or automated emails such as confirmations, abandoned cart recovery, or back-in-stock products. Time is money. Decreasing the energy employees have to spend on the minutiae of your eCommerce business frees up space to focus on other big wins. 

2. Reduce product returns

When a customer returns a product, for whatever reason, it can cut into your bottom line. Product returns require additional resources to process, issue refunds, and maintain positive communications. However, there are easy fixes to reduce product returns. Here are a few of them…

  • Make sure every product has high-quality images and descriptions. Enhance their visual appeal by utilizing an AI photo editor. Show and describe exactly what a customer will receive when they order that product. 
  • Share reviews and testimonials on your website. 
  • Get every order right the first time. Human error is inevitable, but paying that extra second of attention to detail is important. 
  • Implement product quality checks, especially when customizing products to ensure that it is exactly as ordered. 
  • Lengthen your return policy. Hear us out…removing the urgency of immediate product returns can help customers to spend a bit more time with your product and allow them to get attached.  

Unfortunately, product returns are unavoidable but doing everything in your power to be transparent with customers will help to cut down on returns and inevitably, unnecessary costs. 

3. Spend marketing funds efficiently 

First and foremost, there are less expensive digital marketing tactics known for their effectiveness such as social media, email marketing, blog posts, influencer marketing, or referral programs. Of course, you’ll need someone to create all of this content and manage the accounts, but other than that, these are relatively inexpensive efforts that have the power to produce great results. 

If you have a marketing budget or are looking to maximize your marketing expenses, consider campaigns on the platforms that have yielded the highest return on investment and set aside a small amount to test others. Most likely there is an advertising platform that outperforms your campaigns on others. To get the most out of your advertising budget, consider allocating to wherever you achieve the best results. 

Other simple ways to save money on marketing costs are to repurpose your content and to ditch what isn’t working. Evergreen content that can easily be reworded or reposted with small changes will help save time on content creation. And by ditching what isn’t working, you have a better chance of meeting your target audience based on the best response. 

4. Outsource non-critical 

It is common practice for businesses to outsource various aspects of their business and for good reason. Outsourcing can drastically cut costs by ensuring that tasks are completed by a dedicated team as opposed to keeping the work in-house. Not only that, but outsourcing means you gain access to new or expensive tools, the latest updates, and experts in that field without having to spend time and money on internal training or upkeep. 

Common eCommerce roles to outsource include: 

Customer service 

eCommerce customer support is different than in-store support in terms of access to channels. There’s voice support, chat support, social media or email response, or omnichannel support. Each of these channels requires expertise that may be hard to find locally and can be expensive to hire and train. Outsourcing customer support to an agency that is trained in your brand’s voice will guarantee that your customers receive the help they need, when they need it, from agents who know what they’re doing. 

Website design 

Gaining access to a web designer’s expertise ensures that your site is functioning at a pinnacle with search engine optimization, user experience, or even just a professional aesthetic. 

Digital marketing

Marketing can make or break a business. Outsourcing to a marketing agency often exposes your business to a team of individuals with expertise in that specific area such as content creation, advertising platforms, campaign execution, or graphic design. 

Outsourcing allows you to flex and scale as needed with the help of experts. If you’re looking to cut back on business costs, take a closer look at what tasks you feel comfortable handing over. 

5. Reduce packaging costs

Packaging plays a key role in costs throughout the supply chain. Efficient packaging is beneficial for several reasons: reducing your carbon footprint, reduced costs, and correctly sized packaging that can allow more space for storage or cheaper shipping.

Because shipping can sometimes be a bumpy ride, you’ll want to maintain quality to ensure that products aren’t damaged. There are four different categories your money typically goes into for packaging expenses…

  • Standard packaging: boxes, labels, etc.
  • Inserts: anything that includes flyers, business cards, user manuals, etc. 
  • Freight
  • Storage

Take a look at each of these four categories and any others that pertain to your business regarding packaging costs. To optimize and reduce your packaging costs you’ll want to keep boxes as small as possible to pair the product with the package. If you include inserts in your shipments, consider going digital or reducing inserts to only one with a QR code that offers access to all information. 

And finally, keep costs low on where you source packaging materials. Perhaps there is a bulk company that offers discounts for large orders or a local business you can support while also decreasing costs. Either way, cutting down on package costs is one way to reduce eCommerce expenses. 

6. Negotiate shipping rates with carriers 

A deciding factor in any eCommerce purchase is shipping cost. Many consumers expect quick, free shipping thanks to Amazon, but the truth of the matter is that this is not always achievable. However, if shipping costs are too high it can turn customers away. 

Here’s a quick example…last week I saw a product being advertised for $5. It was affordable and I wanted it. After adding it to my cart shipping came out to $12, which almost quadrupled the total after taxes. I’m sure you can imagine what happened next. I didn’t buy it. 

One of the best strategies to boost your revenue is to lower delivery expenses by negotiating shipping costs with your carrier. To achieve this you’ll want to speak with your account manager after establishing a relationship with them, and this part is important. If you don’t have an account manager get one as soon as possible and begin establishing a strong rapport. Then, ask for information on your account’s eligibility for discounted shipping alternatives as a practical way to negotiate shipping prices.

Here are a few tips when negotiating your rates: 

  • Understand what you need and what you want. 
  • Review your contract and read the fine print. 
  • Ask for protection against rate spikes. 
  • Review your shipping data and point toward the high volume of goods you ship with numbers to back it up. 
  • Since you most likely hit a certain number of orders every month, discuss volume discounts with your account manager. 
  • If you ship to multiple zones and reach a high volume of shipments per month, this is also something to bring up. Although shipping to different zones is more expensive, you’re shipping countless orders and could receive cheaper rates. 

You don’t want to lose customers with high shipping costs, and alternatively, carriers don’t want to lose your business either. Keeping costs reasonable by negotiating your rates is one way to keep the orders coming in and the customers coming back. 

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About the author

Photo of Mikayla Fuller

Mikayla Fuller

Mikayla is an avid copywriter. If she’s not out on an adventure, you can find her somewhere with a book in hand.