Ecommerce Overhead & Operating Expenses?
“Overhead” refers to all the ongoing businesses expenses that aren’t related to labor costs, materials costs, or third-party expenses billed directly to customers (such as shipping costs). Overhead costs are paid on an ongoing basis, whether the company is doing well or not.
It is very important to know the overhead costs of a business for budgeting, but it is equally important to know in order to determine how much must be charged for products or services to make a profit.
Focus on Decreasing Overhead?
No matter how profitable your company is, there’s always that wee bit of fat that can be trimmed away to reveal a faster, shinier, more efficient version of the business. Cutting unnecessary expenses and keeping costs under check works best when not done under duress. The best time to do it, is in my opinion, during a year that has seen exceptional profits. That way, not only do you pad your profits a little more, the cuts don’t hurt as much either.
Businesses can automate key functionalities via technology, reducing or even eliminating human error. When you’re saving the time and cost associated with human error, you’ll be able to focus more on strategy and developing your business without any hiccups or roadblocks.
By employing technology you’ll be able to share information faster than ever before. Doing so allows you to save time, make well informed decisions faster and complete projects or tasks earlier.
Technology is impacting development and organizational growth in ways we’ve never seen before. To run a business, you must be innovative, that is you must be thinking not only profitability but responsibility and sustainability as well. You’ll need a strong business growth plan addressing how to increase profits and how to reduce operating costs by embracing technology.
Streamline the Supply Chain Process
integrated supply chainmethods, vendor managed inventory are some of the ways online companies can streamline their supply chain process and earn above average return on investment.
Regular tallying of inventory helps in reducing eCommerce costs. Inventory counting allows firms to determine which products can be offered to the customers at a discount, and which products need to be replaced. By combining accurate inventory count with sales trend software, eCommerce companies can also find out sales patterns that will guide them in placing orders in the future.
Set Up Automatic Reorder Alerts
Setting up reorder alerts will ensure that the supply is always up to date. This saves undue delay in fulfilling customer orders. In addition, the company doesn’t have to refund amounts submitted by the customers due to being out of stock. The transaction incurs a certain fee that have to be paid to the online payment company.
Another great way to save eCommerce costs is to eliminate excess merchandise. Storing inventory takes up additional space that incurs costs. Eliminating excess merchandise can help in reducing storage costs. Some of the ways that the unwanted merchandise can be eliminated include offering the merchandise at discounted price. Bundling the items together and offering to physical brick and mortar seller. And donating excess inventory to charity thereby benefiting from a tax write off.
Automate Process to Decrease Labor Costs
No matter how efficiently you manage your distribution center, there’s one part of it that’s almost impossible to control: the high cost of labor. Unless you’re operating a fully automated facility, what you pay for labor is typically the biggest component of your total operating costs, and it is a challenge for even the most competent warehouse manager to rein in labor costs without damaging customer service.
Applying advanced system technologies throughout the warehouse is one method of increasing throughput and reducing annual labor costs. High-tech applications reduce the time needed to perform activities, thereby decreasing the number of employees required overall.