When it comes to e-commerce businesses, there’s a lot more than just the bottom line that needs to be managed.
Along with ensuring business profitability, you also need to make sure that your finances are in good health. Because of the highly dynamic and competitive e-commerce environment, business owners are losing money rapidly. In fact, e-commerce companies lose $756 billion because of poor personalization.
That’s just one aspect. E-commerce companies are struggling on the finance front due to various aspects, making them feel more overwhelmed than ever.
As an e-commerce business owner, you need to ensure different financial aspects. These include having enough cash on hand at all times, managing your debt and cash flow, and making sure you’re in compliance with any laws or regulations.
If you’re an e-commerce business owner, managing these financial matters can feel overwhelming. But there are strategies you can use to help ensure success.
Develop a Strong Foundation of Customer Experience
With the advent of technology and digitalization, the customer experience can be a key for e-commerce businesses to unlock massive potential and save their hard-earned money from draining.
Customer experience is one of the most important factors that determine how satisfied customers are with their purchases and whether they will return to buy again in the future.
An improved customer experience can definitely help you attract new customers and retain the current ones, thus helping you prevent any cash crisis. According to research by McKinsey, 71% of consumers want a personalized experience from companies, and 76% feel frustrated when they don’t receive one.
With such large numbers of potential customers demanding personalized service, it’s imperative for you to focus on customer experience. As an owner of an e-commerce business, you can improve customer experience, engagement, and satisfaction through a variety of channels such as email, social media, call centers, online chatbots, etc.
Improved customer experience is inversely proportional to the churn rate. This can help you cater to customers’ expectations which enables you to optimize existing revenue streams. This helps keep costs down while improving your bottom line.
Moreover, customer satisfaction impacts conversion rates, which improves revenue as well as the long-term sustainability of the business model.
Leverage a 3PL Partner
With the massive penetration of smartphones, it’s a fact that e-commerce is thriving across the globe. By the end of 2022, US e-commerce sales will touch $1 trillion for the first time, according to Insider Intelligence. That’s a lot of money!
But as many companies grow, they often struggle with how to effectively manage their finances. Fulfillment is one area where this is often a problem. Luckily, there are ways to mitigate the problem by working with a 3PL fulfillment partner.
Today, a number of e-commerce businesses outsource their operations to their 3PL partners, thus creating an overall optimistic environment for the 3PL industry. In fact, according to Statista, the total valuation of the U.S. 3PL industry was estimated to be $348 billion in 2021. And that number only continues to grow.
A 3PL can help you reduce costs and increase efficiency by providing you with warehouse space, labor and management services, pick/pack operations, inventory management services, shipping services, and more.
Additionally, 3PL partners can help you manage financial headwinds by providing insight into how you can better handle your operations to increase efficiencies and reduce costs. This will enable you to create a better pricing model for customers while staying relevant to your company’s bottom line.
Focus on Automation and Process Efficiency
As e-commerce businesses face increasing financial headwinds, they need to focus on automation and process efficiency. When you think of automation, you don’t need to think of something very complex. In e-commerce, automation could simply mean using a chatbot.
According to recent research from Juniper Research, there will be 22 billion successful retail chatbot interactions worldwide by 2023. Moreover, 27% of consumers would prefer to purchase a basic item with the help of a chatbot, as revealed by Drift. This means that consumers’ preferences for using chatbots are increasing rapidly.
Chatbots can help you automate processes and increase efficiency by allowing customers to complete basic tasks like returning items or checking out without having to talk with a human employee. This automation allows you to save money without sacrificing customer satisfaction or cutting back on other resources like staffing levels or warehouse space used for storage of inventory.
Eventually, automation is a huge opportunity for e-commerce businesses to find new ways of engaging with their customers and creating value and improving financial health.
Implement Data Analytics
E-commerce businesses have to be nimble and adaptable to survive and thrive in a rapidly changing industry. Many of the challenges that e-commerce businesses face are financial, but they can also be managed through advanced technologies like data analytics.
Data analytics can be a powerful tool for your e-commerce business, as it enables you to better understand your customers and their needs. By understanding customers and having data about their past interactions, you can create pricing models that better suits them.
A recent report from Deloitte showed that data-backed price management initiatives produce notable results in the short term. Such initiatives can surge business margins by 2% to 7% and average growth in ROI by 200% to 350% during a period of one year. This means that you can use data analytics to improve your price management initiatives by identifying which products are more popular, where shoppers are coming from, and more.
By implementing data analytics, e-commerce business owners can better manage financial challenges. For example, you may be able to decrease costs by reducing returns and improving customer satisfaction. You could also increase revenue by offering personalized recommendations based on customer preferences and purchasing history.
There you have it: four strategies for e-commerce businesses to manage financial headwinds.
The key to success is not only coming up with a strategy but also putting it into practice. The most important thing is to be prepared for the challenges while still being optimistic about what the future holds. You can never predict what will happen in the future, but if you have a plan in place and keep your eyes on the prize, you’ll be ready when challenges come your way.