E-commerce has exploded as a result of the pandemic. The competition in e-commerce grew during this time as many physical stores were compelled to move their operations online. In Q2 2023, there were more than 185% more active Shopify stores than there were in Q1 2019. Nevertheless, customers are going back to traditional stores in the post-pandemic era. Due to the fact that customer acquisition costs for e-commerce reached a record high and increased by 60% over the previous five years, small businesses and sole proprietors found themselves in a dire situation.
This article will concentrate on 10 practical strategies that Shopify business owners can use to cut expenses and boost sales. Without further ado, let’s dive into the details!
1. Diversify Traffic Sources
Don’t be over-dependent on Google Ads and Facebook Ads. Although they can bring target audiences to your Shopify store immediately, this is not a long-term approach. As the average bid keeps increasing, you’ve got to invest more, which leads to an adverse effect on profitability.
Therefore, to reduce costs for your Shopify store, you should attach great importance to SEO, develop a content strategy, and build your social media following. Proactively create useful content for your audiences and interact with them, and you’ll be well off without ads.
2. Minimize Abandoned Carts
Baymard Institute unveils that the average cart abandonment rate of online shopping is about 70%. What prevents people interested in your products from completing checkout?
Here are some of the best ways to reduce abandoned carts for Shopify businesses:
●Allow guest checkout
●Build trust with customer reviews
●Offer free shipping & money-back guarantee
●Display the estimated delivery day
●Provide flexible payment options, including BNPL plans
●Ensure transparency of all costs (shipping fees, taxes, etc.)
●Offer promo codes and tempting discounts
●Send abandoned cart emails to save lost sales
3. Streamline Shipping & Fulfillment
According to Hopstack, shipping costs usually take up 10 to 15% of the total order value in e-commerce. Looking outside the box, you’ll find that the fulfillment cost per order is more about shipping — it is involved with warehousing, picking, packing, shipping, reverse logistics, and returns processing.
With regard to this, you’ll be able to make substantial savings if you streamline shipping & fulfillment. You can achieve the goal by investing in technology & automation and ensuring full shipment visibility for your supply chain management team with a Shopify order tracking app like ParcelPanel.
4. Reduce WISMO Calls
Without self-service order tracking, the more orders you get, the more WISMO (“Where is My Order”) inquiries you will get.
If you’re running a Shopify dropshipping store and taking it as a side hustle, you’re likely to be notorious for the post-purchase experience as you always fail to respond in time. Even though you have an in-house customer service team, its bandwidth shouldn’t be limited by this kind of inquiry. Otherwise, your expenses will soar drastically.
The best course of action is to make customers easily accessible to the most recent shipment status information and to regularly update them via email. If possible, you should be able to increase your revenue when customers visit your store again to check on their orders. These are major benefits you can get by using the ParcelPanel Order Tracking app.
5. Explore Alternative Shipping Methods
Facing soaring shipping costs, if you have to raise the product prices to maintain the offer of free shipping, don’t ignore price-conscious consumers. According to Forbes, successful brands are now embracing price-conscious consumerism as budget sensitivity is prevailing.
To cater to these consumers, apart from appropriate product strategies, you should avoid being blinded by the fame of major players in the logistics industry. Consider diversifying your carrier mix by partnering with reliable shipping carriers that offer more competitive rates and lower shipping fees for less-than-urgent needs!
6. Automate Returns & Incentivize Exchanges
In 2022, US retailers lost a total of $816 billion due to returns (NRF), which accounts for 16.5% of total goods sold. There is no denying that you need a returns management solution to save lost sales and reduce costs.
Luckily, there are many returns management apps for Shopify merchants, one of which is ParcelPanel Return & Exchange. It allows you to open a 24/7 return center to accept return/exchange requests from customers. With it, you can centralize management, set up non-returnable items, allow customers to easily exchange products, and keep them informed of the progress in real-time via email.
7. Mitigate Risks with Insurance
You have embarked on an uncertain and risky journey as an entrepreneur. But you should take precautions to safeguard your company. Without insurance, you might suffer from irreparable loss. Here’s just the tip of the iceberg: in 2022, three Amazon warehouses caught fire mysteriously; in the same year, 661 containers were reported lost at sea.
Apart from general liability insurance, you’d better have shipping insurance that protects goods from loss, damage, and theft, especially if the total order value is considerable. To get started, you may launch self-funded insurance and gain absolute control of the insurance fee when compensation is needed.
8. Foster Loyalty for Incremental Growth
According to studies, selling to existing customers is cheaper (5–10 times more expensive), and existing customers typically spend 67% more than new ones (OmniShop).
On the other hand, failing to forge long-term relationships with customers forces businesses to increase their spending on customer acquisition, creating a vicious cycle.
Because of this, you should start a customer loyalty program to cut costs. This will help your company grow over the long run.
9. Leverage User-Generated Content
You should start prioritizing user-generated content going forward rather than working with numerous influencers, which would exhaust your budget and force you to increase the prices. This approach will not set you back a lot of money. More importantly, potential customers appreciate authentic feedback. By showcasing reviews on product pages and a page like “Why Customers Like Us,” you can effectively improve the conversion rate.
10. Keep Analyzing & Optimizing Expenses
Use a bookkeeping app to track all business expenses (including human resources, utility bills, rent, etc.) and find out what takes away most of your money. If you notice that your Shopify business is stuck in the red somehow, watch out for your expenditures, estimate & calculate the ROIs of each marketing campaign, figure out the customer lifetime value, identify key areas of improvement in time, and effectively mobilize everyone involved to make a turnaround. In this way, you’ll start earning decent profits soon.
Final Words
If you find the 10 best ways to reduce costs for your Shopify store helpfully, take action from now on to ensure the sustainable development and profitability of your business
