Three tips to improve your e-commerce margins

March 26, 2014

Whilst choosing the right fulfilment, distribution, and supply chain management partner may be the most important step to success as an e-tailer, there are quite a few things you can do to make life in e-commerce easier on your end as well.

Let’s take a look at how you can improve your e-commerce business

First, keep your inventory close to your customers. If you are only going to have one warehousing and distribution point in England, that means using a fulfilment house in or around greater London. Even if you have several fulfilment partners across the country, you’ll need one (or more) in the South, near the largest population concentrations.

Shipping and transport costs continue to rise, especially for individual order-scale shipping. The closer your products are to your end buyers, the less these increased costs will affect you, and the greater your profit margins will remain.

Second, make sure you are selling across every possible channel. Do not be the last one to jump on the multi-channel band wagon. Selling to retailers, whether brick-and-mortar or online marketplaces like Amazon, lets you tap into a huge distribution network, as well as benefiting from their marketing and name recognition. You pay for it, though, by selling at wholesale prices. It’s an excellent way to sell your products, but it should not be your only way. Similarly, if you sell only from your own website or online store, you get full value for your own marketing efforts and hard-won name recognition, but you miss out on the kind of broad exposure that can make that work really pay off.

You need to diversify your sales strategies. Make the benefits reinforce each other, and try to make the disadvantages cancel each other out. Then if your website goes down for a week you don’t lose all of your income. If Amazon’s credit system gets hacked, you still sell product. Don’t overlook international distribution partners, either.

Third, you need to specialise. Find your niche, and fill it. Most of the goods sold online today aren’t ground-breaking. They are everyday products that common people need – by the millions. Most ecommerce sellers have a lot of competition, so you have to focus on your strengths and provide something unique to the customer, even if it is only a unique shopping experience. Something about you, either your design, your manufacture, your website or your service needs to stand out.

That means it is often most efficient to partner with a top quality fulfilment house, who can handle your entire back-end, and let you focus on your strengths. Every minute you spend not playing to those strengths is wasted.

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