Online sales. How to increase the product margin
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Technologies similar to Cookies
Similar technologies are technics or tools, using certain characteristics to identify devices so that visits to a website can be analyzed. It includes, for example, HTML5 local storage, local Shared objects, fingerprinting techniques, tracking pixels and plugins.
For ease of reference, cookies and similar technologies are referred as "Cookies".
Usage of Cookies
Cookies enable us to provide users with certain features and supply us with information about website visits.
We also make use of cookies to make our site more user-friendly, to better understand our existing and prospective customers, including associating a user with different devices and browsers that they may use for online targeting and advertising purposes.
You have your own small trading website or online shop. In addition to this, you also sell goods on one of the marketplaces. And of course you want to earn more, but you are not yet ready to increase your assortment. Where to look for hidden reserves and how can you increase the margin of existing products?
Fincraft Capital company specialists will tell you how to squeeze the most out of what you already have. It doesn't matter whether you run a small online shop, are dropshipping or are just planning to start up. Even if you're new to online sales or just thinking about starting your own business, you'll find these tips useful.
Method #1. Increase the share of repeat purchases
The longer a customer stays with you, the less you spend on attracting them, and this directly increases your profits. Retain customers with loyalty programmes, discounts and special offers.
It is important to constantly collect data on your customers' preferences by studying data, for example by analysing Google Analytics. Use cookies and track user behaviour. Retargeting tools such as Facebook Ads or Google Ads allow you to show adverts to users who have already interacted with your website.
Method #2. Increase average cheque
One of the most effective ways to increase your dropshipping margin is to offer related products or more expensive products. Offer customers a more expensive version of a product (up-sell) that includes additional features or accessories. Or after the customer has paid for the product, recommend complementary products to the order that may be useful.
Method #3. Competitor analysis
Analyse, competitors' offers on marketplaces. Track their resources and prices. This will help you identify niches where you can stand out and raise the cost of goods.
Use third-party analytics systems to analyse marketplaces. These services show key metrics, provide data on competitors' prices. This way, you can track competitors' periodic discounts or promotions.
Fincraft Capital s.r.o. recommends conducting competitive intelligence about every fortnight and tracking changes in top cards. Update cards on marketplaces and product pages on the website at least once a season.
Fincraft Capital company specialists will tell you how to squeeze the most out of what you already have. It doesn't matter whether you run a small online shop, are dropshipping or are just planning to start up. Even if you're new to online sales or just thinking about starting your own business, you'll find these tips useful.
Method #1. Increase the share of repeat purchases
The longer a customer stays with you, the less you spend on attracting them, and this directly increases your profits. Retain customers with loyalty programmes, discounts and special offers.
It is important to constantly collect data on your customers' preferences by studying data, for example by analysing Google Analytics. Use cookies and track user behaviour. Retargeting tools such as Facebook Ads or Google Ads allow you to show adverts to users who have already interacted with your website.
Method #2. Increase average cheque
One of the most effective ways to increase your dropshipping margin is to offer related products or more expensive products. Offer customers a more expensive version of a product (up-sell) that includes additional features or accessories. Or after the customer has paid for the product, recommend complementary products to the order that may be useful.
Method #3. Competitor analysis
Analyse, competitors' offers on marketplaces. Track their resources and prices. This will help you identify niches where you can stand out and raise the cost of goods.
Use third-party analytics systems to analyse marketplaces. These services show key metrics, provide data on competitors' prices. This way, you can track competitors' periodic discounts or promotions.
Fincraft Capital s.r.o. recommends conducting competitive intelligence about every fortnight and tracking changes in top cards. Update cards on marketplaces and product pages on the website at least once a season.
Method #4. Effective use of marketplaces
Well-known marketplaces Shopify, Etsy, Amazon, Alibaba, Etsy, eBay - this is a large audience, but also considerable commission costs. Try to use marketplaces as a tool to attract new customers to your own website or online shop. Motivate them to visit your shop. Offer discount coupons, exclusive product previews or access to a loyalty programme.
Place QR codes on product packaging. Include in each order a card or postcard thanking them for their purchase, with contact information (website, email) and a discount coupon for their next purchase.
Method #5. Recalculate the current margin
Every retailer's assortment has leading products that are always in demand. Identify the most profitable products in the assortment of your shop. It is more profitable to sell a few items with high margins than a couple of dozen with low margins.
To find out the actual margin, it is important to take into account not only the cost of production, but also all the associated costs: site commission, taxes, advertising, logistics, salaries and returns. By collecting data on the sales of a particular product for a period and subtracting all costs, you can see the actual margin. This allows sellers to reject products with low profit margins and focus on promoting those that bring maximum profit.
Method #6. Keep track of turnover rate
Turnover is the length of time it takes for the entire stock of a product to sell out of the warehouse. If the turnover rate is high, the item is selling well, and if it is low, the item is selling poorly, the item is freezing the business' money. Calculate the turnover rate for all items to find out the average for each item. If the turnover rate is equal to or below the average, all is well.
Well-known marketplaces Shopify, Etsy, Amazon, Alibaba, Etsy, eBay - this is a large audience, but also considerable commission costs. Try to use marketplaces as a tool to attract new customers to your own website or online shop. Motivate them to visit your shop. Offer discount coupons, exclusive product previews or access to a loyalty programme.
Place QR codes on product packaging. Include in each order a card or postcard thanking them for their purchase, with contact information (website, email) and a discount coupon for their next purchase.
Method #5. Recalculate the current margin
Every retailer's assortment has leading products that are always in demand. Identify the most profitable products in the assortment of your shop. It is more profitable to sell a few items with high margins than a couple of dozen with low margins.
To find out the actual margin, it is important to take into account not only the cost of production, but also all the associated costs: site commission, taxes, advertising, logistics, salaries and returns. By collecting data on the sales of a particular product for a period and subtracting all costs, you can see the actual margin. This allows sellers to reject products with low profit margins and focus on promoting those that bring maximum profit.
Method #6. Keep track of turnover rate
Turnover is the length of time it takes for the entire stock of a product to sell out of the warehouse. If the turnover rate is high, the item is selling well, and if it is low, the item is selling poorly, the item is freezing the business' money. Calculate the turnover rate for all items to find out the average for each item. If the turnover rate is equal to or below the average, all is well.
Method #7. Choice of suppliers
The first way to improve margins is to reduce variable costs by changing suppliers or ordering goods in larger quantities. Usually, suppliers are willing to give discounts on such batches.
In the dropshipping business, margins are traditionally lower due to high competition. Since the goods are sold from the supplier's warehouse. Even a small reduction in the cost of goods from a new supplier can give a significant increase in margin. If you bring a stable volume of orders, do not hesitate to ask suppliers for individual terms or discounts on large orders.
Method #8. Strategic approach
To calculate the actual margin, it is important to take into account not only the cost of production, but also all the associated costs: site commission, taxes, advertising, logistics, salaries and returns. Having collected data on the sales of a particular product for the period and deducting all costs, you can see the actual margin. This allows sellers to drop products with low margins and focus on promoting those that maximise profit.
For the dropshipping business model, increasing margins is a challenge that requires a special approach, expertise and flexibility. Fincraft Capital Czech Republic's marketing experts develop personalised strategies that will allow you to successfully grow your business by increasing your margins without expanding your product range. Fincraft Capital s.r.o. finds reliable suppliers of goods and services. We help our partners to optimise their sales processes, increase awareness and engagement of their customers at all stages of the sales funnel.
The first way to improve margins is to reduce variable costs by changing suppliers or ordering goods in larger quantities. Usually, suppliers are willing to give discounts on such batches.
In the dropshipping business, margins are traditionally lower due to high competition. Since the goods are sold from the supplier's warehouse. Even a small reduction in the cost of goods from a new supplier can give a significant increase in margin. If you bring a stable volume of orders, do not hesitate to ask suppliers for individual terms or discounts on large orders.
Method #8. Strategic approach
To calculate the actual margin, it is important to take into account not only the cost of production, but also all the associated costs: site commission, taxes, advertising, logistics, salaries and returns. Having collected data on the sales of a particular product for the period and deducting all costs, you can see the actual margin. This allows sellers to drop products with low margins and focus on promoting those that maximise profit.
For the dropshipping business model, increasing margins is a challenge that requires a special approach, expertise and flexibility. Fincraft Capital Czech Republic's marketing experts develop personalised strategies that will allow you to successfully grow your business by increasing your margins without expanding your product range. Fincraft Capital s.r.o. finds reliable suppliers of goods and services. We help our partners to optimise their sales processes, increase awareness and engagement of their customers at all stages of the sales funnel.