3 tips for reducing costs in your online store

Setting up a web store as a lucrative business model is associated with major challenges. In addition to the actual marketing of the products, a precise cost analysis is also important. In the following, we would like to provide an overview of some cost items relating to logistics, together with ways to reduce costs.

Point 1: Use an external fulfillment service provider

Setting up your own warehouse, trained staff, IT infrastructure, material costs and much more – the list of fixed costs for operating your own warehouse is long. Especially at the beginning, it can make sense to set up your own warehouse. Especially if the stock requirement is low at the beginning, I sell small products or cannot yet predict sales. But at the latest when I need to hire my own warehouse and additional logistics staff, it is worth considering using a fulfillment provider.

The advantages of an external fulfillment service provider

• Variable costs: You only pay for the storage space you use. If you send less, the total costs are also reduced. The costs are thus distributed between fixed costs and variable, easily calculable costs.
• Lower internal personnel costs: By outsourcing logistics processes, processes such as returns processing can also be outsourced – a major time waster!
• Favorable shipping conditions: A fulfillment provider negotiates with the shipping service providers for you! You can achieve cost benefits by bundling volumes with other customers. You also benefit from later cut-off times, as fulfillment providers receive special pick-ups from carriers and are located close to distribution centers.

Your own individual packaging for your product

Do you use standard packaging for your products? Then think about having a completely individual packaging solution developed. This increases your customers’ identification with your products immensely!

The good thing is: RHIEM also develops packaging – the best thing to do is to read up on it.

Point 3: Less is more!

You should work on ensuring that your product range is not too broad. The more article numbers you offer, the higher your storage costs and your tied-up capital. After all, you need to have sufficient stock for each item.

Together with your external service provider, you should regularly evaluate

• Do I have products that sell very poorly? Does it make sense to discount them or change the marketing for certain products?
• Do I have products that only do well seasonally?
• Are there any products that are not doing well even after a discount and that I should remove from the range?

It should be noted here that your service provider should offer good visibility in the form of a customer portal. You should be able to see which items sell how often and create the report regularly. Such functionality is possible in the RHIEM customer portal.