in

8 eCommerce Money Management Tips that will Improve Your Bottom Line

8 eCommerce Money Management Tips that will Improve Your Bottom Line

It is difficult to run an online shop. Managers and business owners are often overwhelmed by the demands of managing customer relations and product quality. This is combined with the fact that money is everything, it’s not surprising that many business owners struggle with money management.

Because of cash flow, 82% of small businesses have to close their doors. This is why it is so important for brands.

This post will cover 8 money management tips that can help you increase your bottom line. These include increasing your working capital, budgeting better, and making sure that your money is going where it’s needed most to grow your business.

Why is capital so important for the success of a business ?

What’s working capital?

Your working capital is the money you have at any one time. It’s important to manage your money well so your business can survive and thrive.

It is easy for businesses to run low on capital, even though they don’t realize it. Many businesses make the mistake to spend too much on inventory and then rely on sales to get them through. They can become behind in their bills and it can be difficult to catch up.

Many businesses could have been more successful by simply changing their money management strategies to ensure that they had enough funds when they needed them.

These are 8 money management tips that will help you increase your bottom line.

  1. Account to cover recurring annual expenses
  2. Allocate enough to market
  3. Consider seasonal trends
  4. Use proper inventory management strategies
  5. Select the best eCommerce platform
  6. Leave space for returns
  7. Learn about funding options
  8. Lower shipping costs

01. Consider recurring annual expenses

Neglecting to create a budget is one of the biggest money management errors new businesses make. While many are able to quickly put together budgets to cover the monthly expenses, they forget to include annual recurring costs. They are in great trouble when annual costs, which can be quite high, suddenly appear.

 

See our services : Blockchain developers, Backbase Vietnam

 

Let’s suppose you have $1,000 of working capital each month after all your monthly recurring costs are paid. This could be used to fund new product inventory, marketing campaigns, or employee bonuses. This is great, but you will soon be in the red if you spend $1,000 on your keyword research tool and then pay a $1,200 per year fee.

Consider the annual, biannual and quarterly costs of your business. These costs could include taxes, licensing fees and one-year subscriptions. These costs should be included in your budget so they aren’t forgotten.

This can be done with expense-tracking and accounting software. This feature is available in many tools, including Freshbooks or Quickbooks.

It is important to keep your personal finances separate (bank accounts, credit cards etc.). Separate your personal finances (bank account, credit cards, etc.) from the business’s financial affairs. It will be easier to monitor your cash flow and business health while protecting your personal assets.

02. Marketing is a big deal.

It’s common to avoid investing your limited budget in marketing if you have a tight budget. This is a serious mistake you should avoid. However, allocating sufficient funds for eCommerce Marketing is a vital money management tip.

You don’t want your budget to be spent on expensive campaigns or new platforms you haven’t tried, but the truth is that you need to market your business to stay in good shape.

Remember that you cannot expect to acquire new customers if you don’t actively seek them out. You’ll eventually experience natural churn and will struggle to sustain profitability.

For eCommerce businesses, the average churn rate can be as high as 5% to 7%. However, this could increase depending on industry. You should aim to gain enough customers each month so you are not only maintaining client numbers, but exceeding them. To build relationships with customers, generate leads and drive sales, you will also need to re-engage them.

Marketing is essential for reaching new customers and connecting with existing ones. Your business may dry up quicker than you might expect if your marketing stops.

It is recommended that you spend 5% of your monthly budget on marketing. You can invest up to 10% if you are trying to establish yourself early with PPC campaigns or aggressively pushing new products.

If you are having trouble coming up with a marketing budget, consider incorporating low-cost platforms such as blogging and email marketing.

03. Consider seasonal trends

You need to be ready for seasonal ups, downs, and other challenges that eCommerce presents if you are to manage your money effectively.

For example, your online store may be selling beachwear and making a lot of sales in March. However, this doesn’t necessarily mean you will keep these sales year round. In March, people plan spring break and summer vacations. People will be shopping for scarves, boots and other accessories in November.

Realistic expectations are important so you don’t assume that high peak points in your business are normal. To cover your low points, it’s best to keep money aside for your highest points.

It is important to be ready for any economic downturns or ups. We all know how quickly the economy was hit by COVID-19. But smaller fluctuations are normal. You can prepare by having enough working capital and minimising your debt. This will increase the chances that you’ll be able to weather any downturns.

It’s useful to use financial and business forecasting to predict seasonal ups or downs. Wix offers an analytics tool that allows you to view sales reports from the past year. To compare trends across different periods, you can analyze the “Sales Over Time” report. To understand where and when people are buying, you can also break down traffic by region.

To see the number of customers buying each month or day, use the “Customers over Time” report. It can also be used to determine how many customers your store has gained in a given time period and to understand when peak seasons are.

If there are industry standards regarding ups and downs, you should pay attention. For example, eCommerce businesses that sell candles may experience peak sales in the months of November and January, just before Mother’s Day.

04. Use proper inventory management strategies

Even though they appear to be two separate entities, inventory management is essential for money management. You can easily run out of inventory strategies that include inventory forecasting and high-cost products that don’t sell. This could lead to backorders for items that do sell. This allows you to put your money where it is needed, and maximize your working capital.

A strong inventory management system will allow you to determine how much inventory you should keep and what quantity you require. This will ensure that no inventory is damaged, lost or misplaced. These two tools will help you increase your revenue and maximize your profit.

Wix allows you to keep track of your inventory , and manage orders directly from your website’s dashboard. This includes tracking the product variants and sales on multiple channels. Your site will update your product listing immediately if a product is out of stock.

It is possible to integrate Multiorders into your store, allowing you to manage all your inventory from one platform.

These are just a few of the other tools that you can use to help with inventory management or forecasting.

Dropshipping is a great option if you are struggling to move inventory, or need to expand your product offering but are worried about how to tie up working capital. Dropshipping opens up a world of possibilities for amazing products. You don’t even need to store them. They go directly from the wholesaler to customers, so you can make a profit with no risk.

05. Select the best eCommerce platforms

Although it may seem minor, this is a crucial decision. Choose your eCommerce platforms carefully so that you don’t have a second chance or lose too much money. If you use a platform that isn’t working for you, both of these things can happen.

Remember that every eCommerce platform has its own set of monthly fees, commission fees and listing fees. There may also be transaction fees. You’re losing money if you choose to use a platform that charges you 4% for credit card rates, while a competitor like Payments charges 2.9% credit card fees.

This is something you should pay attention to when using third-party marketplaces such as Amazon and Etsy. These platforms can be a great way to reach people in the right situations, but they can also quickly eat into your profits. These costs should be included in your expenses or they could quickly derail your profit margins.

It is worth taking the time to look at all of your options. Remember that you can have your own website with an excellent eCommerce platform. Hosting your own website allows you to control the user experience and often costs are lower. Wix, a platform that allows eCommerce, offers many features including multi-channel selling and currency converters.

06. There is always room for return

It’s possible to sell a near-perfect product, one that is top-of the-line and designed to maximize customer satisfaction. Doesn’t matter. You’ll still get returns.

It is impossible to please all customers. If you don’t allow returns (which our company doesn’t recommend), then you will end up getting returns. It’s normal and expected. Budgeting for this is important.

You should account for broken merchandise and items that cannot be resold. This is especially important if you are selling personalized goods, food, socks or other products. 10%-40% of your products will be returned. Include return shipping costs in your budget. Also, consider restocking and repackaging fees.

These tips can help you reduce returns.

Create a clear Return Policy HTML4_ HTML5_ HTML5_ HTML5_ HTML6_ HTML7_ HTML8_ HTML5_ HTML4_ HTML5_ HTML5_ HTML5_ HTML4_ HTML5_ HTML5_

Accept returns but insist that items be returned in their original packaging. To prevent abuse, set a time limit for returns; typically, 30 days is a good rule.

Excellent product pages that include reviews.

Multiple photos, detailed product descriptions and exact dimensions are all good options. Customers will make better purchasing decisions if they have all the information at their disposal. If they are more likely to buy the product they want, it will be less likely that they will come back to you.

You can ship items quickly and securely.

Customers who receive their orders quickly and in good condition are more likely to be satisfied. The right to return damaged products will be granted. Customers who have to wait for three weeks may choose to purchase from a competitor.

07. Make sure you are aware of your funding options

It is normal to require some funding assistance. Our working capital can get clogged up by unexpected costs and inventory purchases. Sometimes we reach a financial plateau. To achieve true profitability, it is necessary to scale up more. However, this requires more marketing funds.

It’s wise to reduce your overall debt, but it’s also smart to use debt and funding as a tool when necessary. It’s a great strategy for money management to be aware of what funding options are available.

Revolving credit allows you to draw funds as you need them for a specific period of time and only charge interest on the outstanding balance. This allows you to access the funds you need to grow and scale, and can be paid off when things become more profitable.

You can also get small business loans, which you can use however you like. These are only available as a one-time event. They can be paid off over a agreed-upon time period.

Online lenders, local banks and credit unions can help you get business financing.

Remember that grants, relief funds and low-interest loans are available for those in economic distress. There are many options for COVID-19 relief right now. These are some of the options:

08. Shipping costs reduced

This is a simple tip for money management, but it is important. Spending too much eCommerce shipping can lead to you spending money that could have been used for investing or pocketing.

When choosing an eCommerce platform, this is something you should consider. Wix is one of many platforms that have partnered with apps to help business owners find the best shipping options. You may also find discounts on shipping. Shippo and ShipBob offer simple integrations that will help you manage shipping costs and keep your costs down.

You should also ensure that shipping costs are reasonable. You should account for the item’s weight, packaging and customer location. If possible, expedited shipping costs can be included.

Conclusion

Although money management is not the most exciting aspect of managing a business, it is essential to keep your business thriving. The best tools and basic money management strategies can simplify the process to ensure your business thrives.

source https://www.wix.com/blog/ecommerce/2020/08/ecommerce-money-management-tips

Leave a Reply

Your email address will not be published. Required fields are marked *