9 Ways to Reduce Costs in an Online Store and Increase Revenue

Every morning Alexey opened the door of his online store with the same thought: “How to reduce costs and increase profits?” This question haunted him, forcing him to look for new ways and solutions. Before moving on to specific tips, remember that reducing costs is not just saving on everything you can. It is important to approach this process wisely, analyzing and planning every action. Studying new technologies, automation, precise marketing - all this helps reduce costs and increase profits. And this is just the beginning of the path to your success!

Glossary

• 📉 Costs are the company's costs for producing and selling goods or services.
• 🏪 Online store is a commercial site where users can buy goods or services online.
• 💼 Profit - remaining funds after deducting all expenses and expenses from total revenue.
• 🛒 Assortment - selection of products offered by the online store.
• 🔄 Cost rationalization - optimization of expenses in order to increase efficiency and reduce costs.
• 📊 Cost analysis is the process of studying and evaluating all of a company's expenses in order to reduce them.
• 🏢 Office rent - the cost of using the premises to operate an online store.
• 🖥️ Equipment and furniture - equipment and interior items necessary for office operation and performance of work tasks.
• 🌐 Website creation is the process of developing and launching a website for an online store.
• 🚚 Suppliers are companies or individuals that supply goods or services to an online store.
• 👨💻 Employees are employees who take part in the activities of the online store.
• 📢 Advertising - marketing efforts to promote the goods or services of an online store.
• 🤝 Clients are people and companies who buy goods or services in an online store.
• 🌍 Taxation system - legal norms governing the payment of taxes and fees by a company.
• 📦 Inventory - the number of goods stored in the warehouse of the online store for subsequent sale.

What you should NOT save on

When I started my journey in online trading, I made many mistakes, trying to cut costs wherever possible. But one of the most important lessons for me was the understanding that there are aspects on which you should not skimp. Let's look at some of them.

📉 Product quality

I understand perfectly well that the temptation to buy a product cheaper and sell it at a higher price is great, but skimping on the quality of the product can turn into a disaster for your business. I myself once found myself in a situation where I decided to purchase goods at a lower price in order to save money. This eventually led to customers complaining about the quality and my store's reputation suffered.

Saving on quality:

• Customer trust is lost
• Returns and complaints increase
• Repeat sales fall

📜 Company registration

Systematizing the process of registering a business is one of the most important conditions for successfully running an online store. Working without registering a sole proprietorship or LLC is suicide for business. The tax office can easily close your store, and cooperation with large suppliers and clients will become impossible. In one of my projects, I was faced with the fact that an important client refused to work with me due to lack of registration, and I lost a lucrative contract.

Saving on registration:

• Risk of tax audits and fines
• Potential clients and suppliers refuse to cooperate

If you want to learn more about registration of a sole proprietor or LLC, I recommend reading this article.

💼 Employees

In the early stages of my business, I tried to get by with a minimal staff, which resulted in overload and inefficiency. It was experienced and reliable employees who became the key to the success of my online store. I became convinced that hiring 2-3 responsible people, rather than trying to cope alone, is the best way.

Saving on employees:

• Efficiency decreases
• Number of errors increases
• Service quality decreases

📣 Promotion and Marketing

Another mistake I made at the very beginning was underestimating the importance of promotion. Faced with high advertising costs, I decided to cut costs, which resulted in my online store simply remaining invisible to my target audience. Once I was sure that I was promoting my products quite effectively, but the results showed the opposite: only a few people visited the site. Then I revised my strategy and rescheduled my advertising budget, which brought excellent results.

Saving on promotion:

• Brand awareness decreases
• The flow of potential customers decreases
• Marketing budget payback stops

📊 Business process optimization

I have always strived for efficiency and understood the importance of process optimization. However, in the initial stages, to save money, I neglected analytics and systematization. As a result, the work did not go as smoothly as we would like. When I realized my mistakes and began to actively optimize processes, introducing automation and modern management systems, this immediately led to significant cost reductions and increased profits.

Optimization savings:

• Processes become non-functional
• Time and labor costs increase
• Overall efficiency decreases
  
  

Review Table

Comparing all the above, I am convinced that saving on important aspects can result in significant losses. Now that I realized this and stopped saving where it was not necessary, my business is thriving. Choose quality, reliability and long-term strategies - this is the key to the success of your online store!

Identifying priority and necessary expenses: how I optimized my business

If you run an online store, it's important to understand how to allocate expenses to reduce costs and increase profits.

🎯 Necessary expenses: what you can’t do without

I have personally experienced what expenses are absolutely necessary for the operation of an online store. These expenses include:

• 🛒 Procurement of goods: Without the availability of products, your store simply cannot operate. Moreover, I always advise you to carefully monitor the quality of goods and the rates on them.

• 🌐 Website creation and support: this is the business card of any online store. Without a well-functioning website, you risk losing customers.

• 🖥️ Online cash registers: without this item it is impossible to conduct a legal business. One day I decided to postpone the purchase of an online cash register, and this resulted in fines for me. Don't repeat this mistake.

• 👩💼 Employee salaries: if you don’t pay salaries on time, you risk losing qualified specialists. Plus, this is a violation of the Labor Code. I strongly advise to comply with this expense item.

⚡ Priority expenses: important, but not critical

The following type of expenses includes those that you can do without, but I would not do this:

• 🎨 Advertising and promotion costs: I tell you also I recommend considering this as an important element. However, if things are not going well, you can reduce the budget. Having experience managing advertising campaigns, I am convinced that proper promotion is important to attract target audience.
• 🕴️ Image costs: these costs are also important, because a good image helps to gain the trust of customers. However, during times of financial difficulties, this item can be slightly reduced.

🌟 Allowable expenses: nice, but not necessary

Next are expenses that can be avoided during difficult times:

• 🍻 Payment for corporate events: this is a good boost to team morale, but is not a necessity. For example, when I had difficult times, I reduced the number of such events, which helped reduce costs.

• 🎫 Rewards for good work: an important element of motivation, but if the budget is limited, I would advise considering other forms of reward .

🚫 Non-target expenses: avoid them

And, finally, expenses that, in my opinion, should be excluded completely:

• 🚘 Buying expensive cars or trips to expensive resorts at the expense of the company budget. Such expenses may cause losses. I have been in this situation and strongly recommend to avoid such expenses.

I is convinced that reasonable distribution of expenses is the key to the success of your online store and increased profits. Look at your costs carefully and cut unnecessary expenses so you can allocate more resources to what really matters.

How you can reduce costs

Method No. 1 : Saving on the tax system

I am personally convinced that one of the most effective ways to reduce costs is to optimize taxation. From my experience, I can say that choosing the right tax system can have a significant impact on the finances of your online store. For example, we use the simplified taxation system (STS), which offers two options: 6% on income or 15% on income minus expenses.

Method No. 2: Save on office rent

I am convinced that one of the easiest and most effective ways to save money is to not spend money on office rent. At the beginning of our business, we worked from home, using modern digital tools for communication and management. For example:

• 📱 By working from home, we saved on rent, utilities and office furniture.
• 💻 Our employees, including sales managers and couriers, also worked remotely, which helped reduce costs.

Method number 3: Save on appliances and furniture

When we finally decided To open an office, I recommend saving on purchasing equipment and furniture. A real example from our practice - we bought used equipment and saved thousands of hryvnia. We looked for reliable but inexpensive models:

• 🖥 Basic workstations and printers
• 📠 Online cash registers

In addition to equipment, we purchased furniture at friendly prices, which also significantly reduced our initial costs.

Method #4: Save money on creating a website

Creating an online store website can be an expensive process, but I highly recommend consider ready-made solutions that are much cheaper than individual developments. For example, we used the ELBUZ platform:

• 🌐 ELBUZ provided us with the full functionality of an online store, including adaptive design and integration with payment systems.
• 🔧 Using ready-made templates and minimal modifications, we launched the site in the shortest possible time and at minimal cost.

Method No. 5: Save on assortment

I can confidently say that proper assortment management is one of the key success factors. We removed unprofitable products from sales and focused on high-margin ones:

• 📊 Demand analysis using Google Adwords
• 📈 High-margin products brought big profits from each sale

Method No. 6: Save on suppliers

From personal experience, I can recommend choosing your suppliers carefully. We analyzed offers and observed the quality of the goods:

• 📦 Wholesale quantities at minimum prices
• 📉 Possibility of returning remaining goods
• 🇨🇳 Working with Chinese suppliers after studying their reputation

Method No. 7: Saving on employees

In our team, combining positions turned out to be an effective way to save money. For example, our sales manager also managed the store’s social networks:

• 🛎 Employees performed several roles
• 💼 Remote work and outsourcing have also helped reduce costs

Method #8: Save on advertising

Marketing expenses can be a significant part of the budget, so we looked for low-cost and free ways to promote:

• 🏷 Cross-marketing and barter advertising
• 📹 Blogging and media publications

In addition, we tested various advertising channels and abandoned those that did not produce results.

Method number 9: Saving on clients

I am sure that regular customers are gold for any business. We actively used email newsletters and useful content to maintain interest in our store:

• 📧 Regular newsletters with new offers
• ⭐ High quality of service maintained customer loyalty

Saving tips:

Helpful	Not helpful
Using the simplified tax system	Ignoring analysis market
Working from home	Buying expensive equipment
Using ready-made platforms	Neglecting ready-made solutions
Assortment optimization	Wrong choice of products
Working with reliable suppliers	Purchasing without analyzing reviews
Combination of positions	Employee overload
Free advertising methods	Uncontrollable marketing expenses
Customer Retention	Ignoring Feedback

Hilti expertise

Hilti is one of the leading global manufacturers of tools and equipment for the construction industry. The company's main goal is to provide high quality products that help professionals achieve better results on construction sites.

Main goals and objectives

The main goal of the project is to optimize internal business processes of the Hilti online store in order to reduce costs and, accordingly, increase profit. Key tasks include:

• Operating cost audit;
• Identification of savings opportunities;
• Implementation of effective cost optimization methods.

Problem formulation

The company is faced with rising costs for maintaining an online store, which is negative affected profitability. It was important to determine which costs could be optimized without compromising the quality of service and products.

Target Audience Characteristics

Hilti's target audience includes construction industry professionals, various contractors and engineering companies. Main interests of clients:

• High reliability and durability of tools;
• Availability of technical support ;
• Warranties and service.

Key points for potential clients

To attract potential clients, it is important to focus on:

• High product quality ;
• Save time and money with innovative solutions;
• Special loyalty and discount programs.

Project Implementation

Cost Review Table

Project results

As a result of the implementation of the complex Hilti managed to achieve the following results:

🛠️ Office rental costs were reduced by 33% due to the transition to the model of remote work and the use of coworking spaces.
👷 The purchase of equipment and furniture has been optimized by 40% through tenders and cooperation with local manufacturers.
🌍 Reduced advertising costs by 25% , thanks to more accurate analytics tools and focusing on targeted advertising campaigns.

In addition:

• 🎯 Increased efficiency of budget use for advertising.
• 🏗️ supply chains have been improved and shipping costs have been reduced thanks to new partnerships.

The cost optimization project in the Hilti online store showed that competent management and cost planning can significantly increase business profitability. The introduction of effective methods, analysis of current expenses and their optimization help not only reduce costs, but also improve the quality of customer service, which undoubtedly leads to increased profits.

Frequently asked questions on the topic: 9 Ways to reduce costs in an online store and increase income

Thank you for reading and your skill🧐

And just like that: now you are a professional!🎉 By reading this article, you have plunged into the world of effective cost reduction methods in the online store. I hope that my stories and advice have become useful to you and that you are ready to put the knowledge you have gained into practice. Saving on little things can make a big difference to your bottom line, and you know it. Go for it, your business deserves the best! Share your thoughts in the comments 👇.

Author: Vladimir Kosygin, independent expert at Elbuz.

Words are tools, and my mission is to breathe life into online store automation. Welcome to the world of my texts, where every line fills business with meaning and efficiency.