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Can a new eCommerce platform increase profit margins?

1st May 2019 Print

If you're new to the eCommerce scene, you can reduce operational expenses and increase your profit margin by taking advantage of strategies like automation. For every dollar you save on operational expenses, you gain a dollar to invest in scaling your company. Offering discounts to increase average order value and delivering superior customer service are two additional ways to increase your profit margin. In order to deploy these strategies, you'll need a robust eCommerce platform.

What Is Net Profit Margin?

When analysts or investors refer to profit margin, they mean a company's net profit margin—the percentage of net income that you generate from your revenue. This percentage indicates whether an increase in revenue actually translates to an increase in profit. To calculate net profit margin, take your net income and divide it by your net sales. If your net sales is $100,000 and your net income is $28,000, then your net profit margin is 28 percent, meaning for every dollar you generate, your profit is $0.28.

Use Automation

When you upgrade to a new eCommerce platform like Magento, automation is right at your fingertips. With automation, repricing becomes a breeze. Easily offer special discounts and promotions without tying up your resources and time. As you learn how to use Magento, explore its vast range of compatible plugins. The Auto Add Promo Items plugin provides seamless user experience and makes it simple for you to focus on other core business objectives rather than backend coding. When you keep your manual operations to a minimum, you increase your profit margin.

Increase Average Order Value

The greater the dollar amount of a single order, the greater your profit margin. To boost average order value, you have to position the sale as a really great deal. Offering free shipping with a minimum order value, promoting items based on purchase history, and bundling products with a 10 percent discount are effective ways to increase average order value. In fact, you are likely to sell 73 percent more of a product if it comes with a discount. 

With the right eCommerce platform, it becomes simple to set up free shipping offers and to promote items based on your customers' purchase history. When you upgrade to Magento, all of your customers' purchases are stored in a single database. Using extensive analytics, you can view reports to see which items each customer is likely to be interested in.

Provide Superior Customer Service

You can command higher prices when you provide first-class customer service. Buyers would much rather pay a few dollars more for a product if that means it comes with immediate, omnichannel support. Magento allows you to offer support via email, social media, chatbots, your website, and even over the phone.

With a new eCommerce platform, you'll discover a whole new side of eCommerce. You can refine the user experience to boost sales, lower operational expenses, and increase your profit margin. What are you doing to increase your eCommerce profit margin?

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