When it comes to being a successful entrepreneur, one of the gauges of success is how much profit you are bringing in. Sure, it is cool to say, “I have an online business selling widgets” or “You can buy my awesome new ‘Merch is Sexy’ shirts on Amazon.com” but, it is even BETTER to be able to say, “Last month I had a net profit of $3,000!”
Yeah, that’s where it’s at – MONEY, MONEY, MONEY, MONEY – MON-AY!
So again, what is the formula regarding profit:
Revenue (sales) – Costs (expenses for production) – taxes = net profit
It is pretty easy math, actually, even for someone who is not at all math-minded like myself. The less costs impact your revenue the more money you will profit. In part I of this blog we explored a few ways to keep costs down, but there are more yet to explore. It is always smart to re-evaluate your business and to make the appropriate adjustments when necessary. Otherwise your business may be generating a fraction of the profit it could be. We don’t want that, we want to maximize profits!
So, what are some other ways you can cut expenses with your e-commerce business? Let’s explore some more. . .and yes, there is going to be a Part III to this series . . .
BE A SOCIAL BUTTERFLY: Social media is a HUGE, free resource! Think about the millions of people who are on Facebook, Instagram, Twitter, and Snapchat to name the big platforms. Each and every day, these people are an untapped resource of free advertising for your e- commerce shop! No matter where you are selling your items (Amazon Merch, Etsy, Shopify) you can still advertise for free on these social media sites! Have a Facebook page for your e-commerce business and link to your online store. Link your private Facebook account to your business account. Send Facebook invites to show people your new items. Put up pictures of your designs and items and get feedback from a whole host of people for free.
In case you didn’t know, free = no cost to you = ideal! Use free when you can!
Listen, social media is a great resource for getting free (yes, there is that word again) target testing to see what people like and what they hate. You can run contests, offer free samples and even link to all the different e-commerce platforms where you sell. Instagram can be used to draw people into learning more about your business by posting pictures of your products or people wearing / using them. Twitter can spread news of your business like wildfire! One tweet can be re-tweeted hundreds or thousands of times, reaching new people all over the world. Advertising is a HUGE part of costs and this is a fantastic way to cut way down on them because it is, well, FREE!
INVESTIGATE INVENTORY INVESTMENTS: It stands to reason that if you are carrying more inventory than you are selling that your surplus inventory becomes wasted profit. When you use Amazon Merch as a seller platform you do not risk excess inventory because Amazon prints your shirts to order. However, if you have a product that requires manufacturing, or, requires you to invest in materials to make the products, it is advisable not to have too much inventory in stock (nor too much material). No one can guarantee how long something will be a hot item, so just because you sold an unprecedented amount of a product last month, this does not guarantee that it will be so every month after. As much as I would love to tell you that it would be so.
For example, remember last year’s Hatchimal craze? You literally could not get one anywhere. Stores were given a small number of them and people were going cray-cray trying to get their hands on just one. Now you can find 20 of them just sitting around in random stores. Why? The craze doesn’t last forever. Trends come and go – and sometimes come back again – but they are rarely consistent. Therefore, it is better to sell out all your stock then to have a warehouse full of product that no one wants any longer.
I know, you are talking to your computer screen right now, “But if I sell out, and people want my product, then am I not missing out on that money?”
Let me answer by just reminding you of our Hatchimal example. Do you think that the parents of the kids who wanted those ridiculous items just gave up when their local Target didn’t have them? HELL NO! They got on waiting lists and waited and searched until they could get theirs. If you have a product that people want, they will wait a fair amount of time to have it.
PERFECT PACKAGING: Have you ever ordered something, let’s say a mug, and it comes in a box that a microwave would fit in? It is packed in the middle of this HUGE box with enough bubble wrap and those little packing peanuts to fill 20 “mug-sized” boxes. This is literally money just flying out of your bank account! Those peanuts do not cost peanuts (bad pun?) and they will eat up your profit. Yes, you want to ship your product securely so that it doesn’t break. However, if you spend $15 dollars to ship it (box, packaging, cost for the larger / heavier box to be shipped) when you could have spent $6 dollars, well, that is $9 of profit you just pissed away. If you combine this with the smart shipping ideas from the previous blog, you may actually save even more than you thought! Being smart about your packaging and shipping will keep your costs low.
Thoughts for next time . . . ask yourself, “am I using the free resource of social media to my fullest advantage? Am I overzealous with my inventory? What about how I package my items? Am I over bubble wrapping my t-shirt . . . wait, why am I bubble wrapping a t-shirt?” It is time to take a long look at every aspect of your e-commerce business and scrutinize your expenses!