The Hidden Costs Affecting Your Online Profit

Tags: Technology

Watch our video to discover the importance of calculating how much it really costs you to trade online and the dangers of under-investing in your Ecommerce operation.


Key Takeaways


  • The dangers of under-investing in your Ecommerce operation

  • Why it’s important to understand the true cost of trading online

  • The impact of delaying investment

  • 3 key questions to help identify your true costs



Video Transcript

Hi, I'm Gavin Masters, the Industry Principal for Ecommerce here at Maginus and I want to talk to you today about the hidden costs of under investment in your Ecommerce platform.

Did you know that on average retailers spend around 7% of their online revenues on maintaining their Ecommerce platforms.

Retailers often struggle to understand the true cost of fulfilling an order online and this is because they often think that their pricing structures are too complicated or they're too many factors that impact how much an order costs to fulfil.

Your business is never too big or too small to need to understand the costs associated with fulfilling orders.

Even those retailers who do make an effort to understand the cost of fulfilling an order don't often review it regularly.

Understanding the true cost of an order to your business is very very important because without doing so you don't understand the impact of promotions, on changes of supplier prices, or on things like free delivery.

So, there are a number of different types of costs to a business when they fulfil an order. There are simple costs which are incurred every time you send out a product or somebody places an order. But there are more complex costs which may be scaled depending on how many orders you place - or the value of the product that’s sent out.

The costs that need to be analysed a bit more closely are costs that often involve things like third parties or tiered pricing that may change once you hit a certain threshold and then your tier goes up - and you end up paying a lot more for only a small number of additional orders.

So how do you identify your costs?

Well, you can start by asking yourself some simple questions:

- Do you understand what your minimum order value is where you start breaking even?

- How much are you paying third party such as affiliates or voucher providers as part of every order that you receive on the site?

- How much is your PPC or your SEO influencing the value of orders??

The most important thing your business can realise is that a pound saved in cost is pure profit.

If you're looking to understand more about the factors that are influencing the profitability of your business online - download our checklist on the Maginus website.

There are a couple of different approaches when it comes to calculating how much it costs to trade online. To work out which one is best for you to download our checklist on the Maginus website.



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