Go to the top

Jorge Zuñiga Blanco discusses how to optimize operations in an eCommerce business

Jorge Zuñiga Blanco / Blog /

Running an eCommerce store can be a deeply rewarding experience whether you consider it a hobby, an extra ticket, or your career as such. Knowing that something you’ve created is paying your bills is a feeling that’s unmatched. Unfortunately, that eCommerce store is also a source of many expenses. Among hosting fees, credit card rates, gross margins, shipping costs, and marketing, you might feel that your eCommerce store is costing even more than it actually generates. Jorge Zuñiga Blanco, an entrepreneur and eCommerce expert, explains how an eCommerce business can ensure that it has optimized its activity to increase the return.

About 60-80% of the shopping carts are abandoned before the customer even makes a purchase. That’s a lot of money to leave on the table. The good news is, recovering those abandoned carts is relatively easy. Simply create a sequence on your email server, which contacts these people, reminding them of their abandoned items. For some, a quick reminder will suffice. While for others, you may need to offer, some kind of incentive like a discount, or free shipping. But even with these small costs, you can be a winner.

Like it or not, fraud is a big problem in the online world, which could cost your eCommerce store a lot of money. Explains Zuñiga, “From payment and shipping fraud to stealing your digital content, they’re all costs you could never recover again. This is why security should be part of your budget. Consider investing in cybersecurity, just as you would invest in health insurance for yourself. It’s not a fun expense to do, but it could definitely save you a lot of money.”

You might want to show off with a sleek packaging, but this one is just an expense you could easily eliminate if you’re looking to reduce your operating costs. To cut your shipping costs, consider buying wholesale packaging materials. If your product is small enough, such as cosmetics, jewelry, etc., you could send them in padded envelopes, rather than expensive boxes. Finally, do not abuse bubblewrap. A simple layer of bubblewrap is more than enough for most delicate items. By cutting on these materials, you will not only spend less on packaging, as you will also save on shipping rates by reducing the weight of one of your items.

It’s tempting to use a simple payment processor like PayPal, but the high cost of fees on your credit and debit cards could quickly eat your winnings. Instead of choosing a payment processing system, consider using software that allows you to bill, with no additional fees. Sites like QuickBooks allow you to bill your customers at no extra cost. On other payment sites, such as PaySimple, you’ll be able to process a certain number of transactions for a convenient monthly fee. “To determine if a monthly fee for paid services is ideal for you,” explains Zuñiga, “calculate 3% of your sales per month. This will be the average amount you’ll pay at sites like PayPal. If the monthly service fee is less than 3% of your monthly sales, then this path will help you save your money.”

It’s more expensive to get a new customer than to keep an old one. This means that your customer retention rate (CRR) is a very important factor in keeping your operating costs low. You might think there’s nothing you can do to reduce your CRR, but this isn’t true. To get started, consider sending each customer an “exit survey” after they have completed a purchase. Ask them about the sales process, your prices, the quality of your products, and their overall experience. Then take some time to evaluate these reviews, and take action in those situations, which arise frequently. For example, if a considerable number of people are upset about the high shipping costs, it would be worth incorporating shipping rates into the main price, thus offering “free shipping.” In the end, you’ll end up charging the same thing, and your customers will feel much happier and more listened to.

‍If you sell white-label products, you could negotiate with your suppliers and manufacturers. Find out about discounts for purchase volumes, or the signing of some type of contract, in which you commit to buy a certain number of products, from time to time. Some vendors offer discounts if you pay them in advance, or if you authorize an automatic payment upon arrival of the product. You never know what kind of deals your suppliers or manufacturers are willing to offer you if you don’t ask.

Advertising can be expensive, but a good viral campaign on social media is totally free. Harness the power of social media by using “Stories” on Facebook and Instagram to bring traffic directly to your eCommerce store. You could also organize challenges and attract your audience, so they share your website. Create hashtags from your brand to spread the word, and use popular or trending hashtags to bring your content to a wider audience.

Returned merchandise is one of the fastest ways for money to slip out of your hands. Fortunately, there are a few things you can do to reduce the number of returns you have to handle. First, extend the allowed time limit for returns. Human nature indicates that we are more willing to take action, when we feel that the matter is urgent. If making a return is not urgent, chances are your customers will postpone it, and eventually, some will even forget it. This is a quick way, to instantly decrease the rate of returns. Of course, leaving people feeling “stagnant” with your merchandise can hardly be a long-term plan for the success of an eCommerce store.

Lastly, learn how to manage your expenses and keep your costs down. Asserts Zuñiga, “Creating a budget and sticking to it allows you to be in control of what you invest in your marketing efforts. Remember that small expenses can come together quickly if you’re not careful. One of the best ways to be thrifty, when building an eCommerce store, is to create a website that actively attracts users, so that they are guided later to a purchase decision. After all, the more money between, the less you’ll worry about marketing costs.”