How Does eCommerce Reduce Business Transaction Costs?
Convenience and the ability to shop 24/7 makes online shopping an appealing way to go for many consumers. For ecommerce businesses, there’s no added cost for selling to buyers at all times of the day and night. Even better, the cost of doing business via ecommerce means reduced transaction fees since you incur fewer expenses that you need to pass on to the buyer.
Products sold via the Internet do not require the expense of a brick and mortar store. While prices vary according to location and size, costs associated with owning a storefront includes leasing or buy a space, remodeling to make the store fit your brand, paying utilities and hiring employees to man the floor and cash register. You still need to pay for web hosting, a shopping cart, a payment processing solution and updates your website, but these costs pale in comparison to signing a lease for and opening a storefront.
Some companies drop ship products they sell via ecommerce. This option is often available if you sell products manufactured by other companies. The savings comes from not needing to lease a warehouse or pay utilities for the space to house your inventory. You also save on the cost of employees to manage the warehouse. Plus, the cost of buying and keeping products on your shelves is eliminated by drop shipping as you only need to order the exact items required to fulfill orders, freeing your cash flow to use in other areas of your business.
Turnkey ecommerce solutions and automation of the buying process require less time, allowing you to offer your products at a lower cost than people who need to be in a store all the time. A wealth of shopping carts that do not require html coding skills are available on the market. In addition, automated emails alerting buyers that you received and shipped their order means the time spent handling details is minimal.
Some websites, such as eBay, Amazon and Etsy, allow you to sell your products without needing to secure your own shopping cart, website or payment processing system. This means you do not need to add in the costs of setting up your own online operation to the price of your products. Instead, thanks to the marketing these ecommerce sites do to bring buyers to their pages, you pay a small insertion or sales fee in exchange for getting your products exposed to lots of prospective buyers.
If you offer customers regularly scheduled delivery of products, you save marketing costs and time. Otherwise, you must spend time and money sending reminder promotions, often at a discounted rate, to persuade past customers to make a repeat purchase, a drain on your budget that gets reflected in higher prices. With online sales, software exists that allows customers to set their own schedules for reordering, eliminating the hassle and costs for you.