Running an E-commerce Business: Easy Means to Lose Money


For any small to medium-sized business, every cent counts. Businesses that do not have the liberty to take a significant financial loss can not—quite literally—afford to let any money go to waste. That said, all small businesses need to know how to avoid the ways with which they can lose money. After all, maintaining good cash flow often means the difference between the death and survival of a business beyond its first year—especially in e-commerce.

Here are the most common ways online businesses can lose money, as well as how you can avoid them:

  1. Using improper packaging techniques

How you package your products plays a significant role in customer satisfaction. The bare minimum is to have the package arrive at your customers’ doorstep undamaged and in the quality that it’s supposed to be—and yet, so many online businesses fail to meet this simple standard. As a result, they would have to pay for replacements, re-shipping, return-to-sender fees, and other expenses in between.

The use of improper packaging techniques is usually to blame for packages that arrive damaged or tampered with. Thus, whether you are shipping balikbayan boxes or small parcels, it is imperative that you ensure each order goes through proper packaging.

Here are some tips on how to improve your packaging and ensure that your customers will receive their orders looking presentable and undamaged:

  • Use enough filler, such as shredded paper, newspaper, bubble wrap, etc., to prevent the product from jostling around in its poly mailer or box.
  • Use durable boxes for fragile and delicate items such as jewelry, watches, and glassware.
  • Tape your packages securely; do not rely on the courier to tape your packages for you.
  • Choose the right-sized box to prevent items from moving around during shipment.
  • Ensure that all fragile items are labeled as such on their packaging.
  • Consider adding ‘void’ tape on packages to avoid tampering.
  1. Paying for unnecessary software and services

Leveraging technology for your eCommerce business is a great practice. However, keep in mind that you do not need every type of software or digital service that comes your way.

For example, you don’t always need data analytics software to enhance your marketing strategies. Google offers Google Analytics for free, and it is one of the best analytics tools today. Another example of a service that you don’t need is SEO consulting that promises to put your website on the first page of search results—while SEO is important to the life cycle of a business, it’s not something you should be pouring all of your money into.

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  1. Not meeting customer expectations

One of the biggest problems in e-commerce is that sometimes, products fail to meet customers’ expectations. After all, an item can look very different in real life compared to a picture online. This is why you must be proactive in ensuring that all your product pictures accurately show what your products look like in real life and that your descriptions are as detailed as they can be. Why? Because when customers feel dismayed upon receiving their order, best believe that they will tell other people about it.

Bad feedback can easily drive away sales, especially if you’re using an online shopping platform like Amazon or Shopee that allows users to easily see reviews. Keep in mind that existing customers’ feedback plays a significant role in other customers’ buying decisions. So, if they read bad feedback on your products, they will most likely do business elsewhere.

  1. Choosing the wrong vendors

B2B (business-to-business) relationships are not always ideal. But finding the most suitable vendors can make your relationships as close to perfect as they can be. Whether it’s your logistics partner, packaging supplier, product supplier, or any other business that you work with, spend more than enough time finding the right one.

To do that, here are some tips that you should keep in mind:

  • Don’t rush to find the right supplier or vendor; shop around and find at least three to five options before making your final choice
  • Negotiate; most businesses will be willing to offer you discounts or perks if you buy in bulk
  • Consider what other clients are saying about them, their products, and services
  • Analyze quotations carefully; dig deeper to find out if there are hidden fees

Maintaining a good cash flow has a lot to do with patching up holes that leak your business’ money. And by avoiding the things we’ve mentioned in this article, you can not only avoid wasting money, but you can also improve your customers’ experience in the process.

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