How To Boost Your eCommerce Profits

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How To Boost Your eCommerce Profits

It’s never been easier to stand up a professional eCommerce entity, but brands are finding it hard to make a dollar. The Wall Street Journal recently released an article stating that Amazon has posted its first quarterly loss since 2015, mainly due to supply chain issues, inflation, and a slump in online shopping. 

If an eCommerce giant like Amazon has trouble generating profits, what does this mean for your eCommerce brand? Is there a way to become more profitable?

What’s Consuming Your Profits?

Profits

Why aren’t companies making money on their eCommerce platforms? Two likely culprits are engulfing your profits: the cost of consumer acquisition and supply chain and fulfillment difficulties.

According to Michael Zakkour of 5 New Digital, the average cost of consumer acquisition for a large retailer was $124 two years ago. This year, the average cost of acquisition is $505. If you're spending that much money on marketing and advertising to get people to buy from you once, make sure you have a plan in place to turn them into long-term customers.

In addition to the cost of customer acquisition and loyalty, brands are losing profits due to supply chain and fulfillment costs. There's been extreme pressure on the supply chain overall, particularly during the last year and a half. As the cost of manufacturing, transportation, and distribution has risen, inflation has also affected fulfillment. The expenses for simply shipping packages have hit highs. So, now you've got downward pressure on the supply chain and downward pressure on fulfillment.

The Unified Commerce Approach

Rather than just selling on digital channels, it’s vital that your brand takes a unified commerce approach if you want to survive. This means connecting channels in meaningful ways. For example, try asking yourself, “How does livestreaming create an in-store purchase? How does an in-store browse turn into a QR code purchase in a new CRM acquisition?” 

A principle supporting unified commerce is the ability to diversify your channels. Especially when you're looking at new channels, this step is crucial. Livestream, QR codes, social commerce, Roblox, TikTok, and The Metaverse are just a few strategies and platforms where you can generate sales, reach a wider audience, and increase profits.

Along the same lines, think about physical retail in addition to eCommerce. Simply being online or offline won't produce success. To have a prosperous enterprise, invest in various types of retail platforms and shape a cohesive strategy. 

Essential Strategies To Become More Profitable

The unified commerce approach is key to boosting eCommerce profitability. But what specific actions should you take? First, do a complete and honest assessment of your eCommerce business and financials.

Next, assess your service level and supply chain pain points. Look at what people expect in terms of customization and personalization because it’s not a one-size-fits-all approach. During these assessments, it’s important to recognize that technology, data science, and digital tools are the power sources for profitability.

Finally, it’s crucial to sell on profitable channels and create an operation with a unified marketing approach and sales strategy. Consumers expect an eCommerce presence, so you need to develop new strategies across diversified channels to meet their needs and create long-term customers (and sales).

BRINGING TOGETHER INFLUENTIAL EXECUTIVES AND SENIOR PROFESSIONALS

What is BWG Connect?

BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.

Guest's Company Profile

5 New Digital

5 New Digital is Digital Commerce, New Retail, & Unified Commerce Consultancy focused on strategy and construction for brands, retailers & services companies. Their services are built around the "5 New" realities of digital commerce: New Retail, New Consumption, New Technology, New Finance, and New Supply Chain. ​ 5 New Digital was built to address the “5 New” realities of the digital revolution: New Retail, New Consumption, New Technology, New Finance, and New Supply Chain. ​ Our clients engage us to provide them with research, strategy, and implementation across the commercial value chain and to help them engage in the Mega-Ecosystems of commerce and to build their own.

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