Wednesday, March 14, 2012

How To Improve Profit Margins When Selling Goods Online

Operaters of online business that focus on selling goods have to grumble with one major cost: shipping. Shipping cost can eat up all your profit margins if you don't manage them well. Old e-commerce sites such as and were brought down by thin or non existent profit margin. proved you can make money online by making a few innovations and by learning from them You can learn how to scale up your small business website.

Tips of running a successful money making website.

In an interview with NYtimes, Marc Lore, chief executive of shared tips of running a successful money making website.

'When you're shipping diapers, wipes and formula, after shipping costs are taken out, there's really nothing left in the way of profits,'' said Mr. Lore

To overcome the high shipping charges of doing business online, added product selections. The new products had a higher profit margin. e.g baby shampoo, lotions and feeding bottle.

As customers added more items on the checkout, Mr. Lore said, gross profit margins jumped to about 13 percent, from 4.6 percent in 2005. About 45 percent of the site's orders now include something other than diapers, wipes and formula.

The real trick to making the business work, though, is in how the company ships its less profitable goods. Rather than simply stuffing packages of diapers into a box that is roughly the right size for shipping, wrote software to analyze a customer's order and select from among 25 different boxes to avoid United Parcel Service's' charge for oversize shipping.

That approach, Mr. Lore said, saves $2 to $3 in shipping costs on a typical $100 order. The two warehouses were selected according to U.P.S. shipping zones, so 45 percent of the site's customers can be upgraded to free overnight shipping.


Post a Comment