Rising Costs Force Efficiencies for eBay and Amazon Sellers

- Posted by to Finance

The Royal Mail’s new pricing structure which came into effect on April 2nd has taken many marketplace sellers by surprise. Price increases have particularly impacted on sellers of smaller items (previously covered by packet post and now charged as a parcel) with some sellers reporting increases of more than 56% on their delivery costs.

Rising delivery costs coupled with Amazon’s recently announced increase in seller fees are making the business of selling online more expensive.

Any increase in costs will force many sellers to re-examine their delivery options in order to remain competitive. But delivery is just one area where marketplace sellers can build efficiencies into their business in order to drive profits.

6 Strategies to Take Control of Your Margins

  1. Test Delivery Options: Offering free delivery on eBay can improve your visibility in search and make your listings appear more competitive. However, if your margins cannot withstand the impact of higher postage costs you are either going to have to put your prices up, offer a cheaper (perhaps slower) delivery method or perhaps abandon free delivery altogether. How you handle this will depend on the nature of your product, your competition and the expectations of your customers. Before taking a leap of faith, take the opportunity to test various delivery models.
  2. Outsource Fulfilment: Consider taking your warehousing, packing, picking and dispatch completely out of the equation by outsourcing your fulfillment to a third party like Amazon’s Fulfilment by Amazon (FBA) program. Outsourcing will not only give you access to sophisticated delivery networks but also help manage returns and time consuming customer service enquiries. Outsourcing fulfillment will also allow you to scale up and down quickly and efficiently without worrying about the limitations of your warehouse and staffing levels. Outsourced fulfilment (even by Amazon) can take care of all your other marketplace (including eBay and Play) and own site sales.
  3. Invest in Software: Smart marketers find efficiencies through careful implementation of software. Inventory management software like SellerExpress, delivery management services like MetaPack, accountancy software like Tradebox can help you maximize your efficiencies, saving you time and ultimately money which you can invest in becoming a more competitive and profitable retailer.
  4. Drive Down Your Cost of Sale by Winning Repeat Business: The cost of acquiring customers via any channel can be very expensive. In the ideal world you should attempt to drive as much repeat business via your own website where you are more in control of costs. Email and social media marketing tools like iContact can help you build profitable retention marketing strategies even for marketplace sellers.
  5. Maximize Your Buying Power: The success of any retail business is often as much about buying than selling. Retailers with ready cash to buy in bulk and grab opportunities will secure the best prices and be able to manage the best margins. Companies like Kabbage can help marketplace sellers raise working capital and become more efficient buyers.
  6. Go Global: By increasing the number of international marketplaces you sell via you will increase you volumes and drive revenues. Companies like InterCultural Elements (ICE) can help with translating product descriptions as well as offering advice on the cultural expectations each international marketplace requires its sellers to adapt to.

How is your business affected by the price increase? Let us know via comments below.