Shopcreator - ecommerce services

The "big three" of ecommerce - part 3

Posted At : May 6, 2008 3:54 PM | Posted By : Shopcreator
Related Categories: Getting Started in eCommerce

Being an Efficient Online Retailer

Over the past few days I have rapidly summarized the first two major areas retailers need to focus on to drive success online. The final area I'm going to cover is driving up margins from the products sold through a website. To do this a retailer will need to make sure that they have great control over the costs of sourcing and delivering goods and indeed the pricing of products on the web.

The level of sophistication ranges widely between retailers from the smallest to the largest. However, tools are available that allow any retailer to maximize their profit by managing their costs. Here are some important points to focus on:

Buying Smarter: The first and most important step is to throw the net wide and source your product from as many suppliers as possible. Take into account not only the basic unit price of the goods you are buying, but also the delivery method and timing, minimum orders (can you really shift 2,000 units?!?) and any feedback you can get on supplier reliability. The broader your sourcing strategy the better chance you have of increasing your margins and improving stock control.

Stock Control: Making sure you don't end up dropping your prices to shift a huge batch of iPods after Christmas or running out just as people are buying is always difficult. Finding flexible suppliers is key. If you are selling through multiple channels (eBay, online, from retail premises) you need to make sure you keep track of what stock is available for each channel to avoid over selling or promising goods you can't deliver.

Competition: You need to keep a close track on the prices your direct competitors are selling at. If your prices are not competitive people will stop coming to your site, but you may end up giving up all your margin if you try to be best price on everything. Chose what products you need to be price sensitive on to drive traffic but try to maximize profits from those where consumers are less price sensitive. Review pricing as regularly as possible to make sure you come out top on price searches.

Quality Delivery: Nothing annoys customers more than delivery delays or damaged goods needing to be returned. Find a good partner who will deliver on time and at a decent price. If your supplier offers drop shipping services at a fair price consider this option as it will save you warehousing goods.

Financial Management: Keep regular accounts. Work out for each product the margin you are making when you include all costs, how long it takes to sell and when you need to re-order stock. Keep a close eye on the cash you will need to cover re-orders and paying your overheads. The last thing you want is to run out of cash preventing stock re-ordering.

Before you start selling online it is always good to produce a business plan and financial forecasts.Running a store online can be a simple way of getting into running your own business. Like all businesses costs need to be managed. With retailing, however, the costs involved in your business can be quite dynamic. Working out the cost to source, store, market and fulfill goods is key. It is also important to make sure that the margin you receive on each sale covers the costs to keep the lights on.