4 Simple Ways To Boost eCommerce Profitability
Rebecca Fox

March 12, 2023

The journey towards improving eCommerce profitability twists and turns throughout your entire business, constantly evolving together with changing customer needs, beliefs, and behaviors.

To boost your profitability, you need to assess every part of your business, identify areas for cost savings, and determine ways to improve the customer experience.

It’s time to craft a long-term profitability strategy in order to remain competitive and continue growing your business.

4 Strategies To Improve Your Profitability

Take action to generate new, sustainable revenue streams while optimizing existing processes to save time and money.  

1. Focus on Customer Retention

Customer retention is the ultimate growth strategy and should be a key focus for all eCommerce businesses. 

Keeping customers loyal to your store is way more cost-effective than acquiring new customers.

In a world where mediocre service is the norm, customers are blown away when a company goes the extra mile to resolve an issue in a proactive manner or offers personalized emails, discounts, and designs.

  • Create a welcoming homepage that makes a good first impression on new shoppers.
  • Provide detailed product descriptions and precise search results.
  • Share your brand story to help customers get to know you.
  • Offer customer loyalty programs and personalized recommendations.
  • Display social proof such as reviews.
  • Make costs and pricing transparent.

By going above and beyond to make your customers trust your store and have confidence in you, you’ll score life-long customers and receive referrals and recommendations that are extremely valuable.

If you want your eCommerce store to stand out, create an unforgettable experience for your customers.

2. Increase Your Average Order Value

To increase your profits, focus on increasing your Average Order Value (AOV). Your AOV is the average amount of money your customers spend each time they order from your eCommerce store. 

To calculate your Average Order Value, divide your total revenue by the number of orders.

For example, if your total revenue this year was $20,000 and you fulfilled 1,550 orders, your AOV would be $12.90: 20,000 / 1,550 = 12.90

Strategies you can use to increase your Average Order Value: 

  • Add product recommendations to product and checkout pages. 
  • Upsell or cross-sell complementary products. 
  • Provide order minimum incentives such as free shipping or a discount on orders over a certain amount. 
  • Offer coupons or deals on higher-margin products.

A great way to implement these strategies is to segment your customers into groups such as small and big spenders or low and high-frequency customers, depending on purchase history – then target each group with different offers.

The higher your AOV, the more you get out of every customer.

3. Automate and Outsource Your Supply Chain

You can generate significant profitability gains in fulfillment and returns by refining your supply chain. 83% of eCommerce retailers do not yet use AI technology to support their supply chain and returns management. Be one of the first to jump on the wave that is the future of eCommerce. 

Even small changes can significantly reduce your costs and make your business run more efficiently.

Outsource Order Fulfillment

Optimize your fulfillment costs by outsourcing your shipping and inventory management to a 3rd Party Logistics (3PL) company. Minimizing losses, delays, and stockouts as well as utilizing the most cost-effective fulfillment options can help to improve your bottom line.

Automate Product Returns

Automate your returns process through a returns management system. A strategic approach to reducing returns is crucial to eCommerce success, and automating your returns helps you manage your returns more effectively and reduce your return rates.

A high return rate can have a big impact on your profit margins, and can often signal the end of customer relationships. 

Streamline your returns process to reduce return rates, encourage repeat business, bring down your expenses, and reflect well on your store.

4. Provide an Easy-to-Navigate Website

Your website is the face of your business and so it needs to be enticing enough to lure customers into your eCommerce store. 

In order to grab your readers’ attention within the first few seconds, your site needs to be interesting and easy to read. Make it easy to browse through your online store, and make every page skimmable.

Focus on optimizing:

Checkout Process

When customers decide to purchase a product, the last thing they want is a long checkout process. Make sure your checkout process is streamlined and easy to navigate.

An average of 81% of customers abandon their carts before buying, and half of your customers are less likely to go through with the purchase if the checkout process takes longer than half a minute. 

Focus on making the checkout experience seamless for your customers, and offer easy payment options to ensure higher conversion rates.

Return Policy

Returns have a huge impact on customer loyalty. Clearly defining how your returns process works and advertising it appropriately will let your customers know what to expect. 

Clearly display your return policy on your website. Use a visible button or place links in easy-to-find places, such as in your website footer, on the checkout page, and in emails to your customers. 

66% of customers read the return policy before purchasing, so make sure to display your policy in a way that’s impossible to miss.

Craft a Long-Term Profitability Strategy

Running a profitable eCommerce business isn’t a matter of luck – it’s a calculated effort that requires continual work.

Technology, trends, and customer taste all change over time, and you must evolve with them if you want to succeed in the eCommerce world. 

Take steps to reduce your costs and enhance the customer experience to ultimately boost your business’s profitability.

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Streamline your return process and ensure a great post-purchase experience for your customers.