Simple, inexpensive proven ways to increase online profits

June 30, 2015 Written by Stephan Moen Category: eCommerce
Simple, inexpensive proven ways to increase online profits


Product bundles make sense when a product is likely to require complimentary accessories like a camera, smart phone or a computer. Price bundling promotes a higher average order value for the merchant's online profit margins, while providing a discount and convenience to the shopper. Consolidating separate products into a packaged bundle leads the shopper away from thinking price and showcases the value and benefits of purchasing a product bundle. The merchant is no longer competing on price– a tactic that is not sustainable for all but a few of the largest corporations.

Shoppers are drawn towards free shipping and free shipping cuts into the merchant’s profit margins. To alleviate some of the financial pain of reduced online product margins, clearly define on your site that shipping is free once a price threshold is reached. This not only makes the shopper aware you have a free shipping policy, they will be more inclined to spend a bit more to receive free shipping. You can derive this threshold number by calculating your average order value and average shipping cost, then add these numbers together to set the free shipping threshold.

When a product is placed in a shopping cart, you may trigger an up-sell of similar products with enhanced features and specifications or promote a product bundle that includes the product placed in the cart with complimentary accessories. To up-sell at checkout is a bit more challenging, since you don’t want the shopper to exit the checkout process to be up-sold. If possible, use an “Add To Order” button to retain the shopper within the checkout process.

One of every two shoppers expect to buy online and pickup their purchase at a local store. This is a benefit to the merchant because they have minimized or eliminated their shipping expense and they have another opportunity to sell to that customer once they arrive at the store to pickup their purchase. It is statistically proven that multichannel shoppers buy more than single channel shoppers; multichannel shoppers are the retailers MVP.

Studies have shown that 7 of 10 retailers state that product returns are the most costly aspect of multichannel eCommerce. To minimize these costs, merchant should encourage in-store returns to eliminate shipping costs. Another option is to provide free returns only when a customer purchases a threshold dollar amount online. As mentioned with free shipping, calculate your average order value and average shipping cost for returns, then add those numbers together to set your free return threshold policy.

This is more of a goal than a tactic, but the facts bear repeating. For a customer who has purchased from you before, if you can entice that same buyer into a second purchase within 30 days, there is a 30% chance that customer will buy again and better than a 50% chance a third, fourth and fifth purchase will occur within the year. Another way to view this is that a repeat customer has a conversion rate of 30%-50%, a rate any merchant would covet. Repeat customers not only convert more frequently but their average order value is higher than first time buyers (the top 10% shoppers spend 3x as much as the bottom 90%). If the average online storefront spends 80% of their marketing budget to acquire new customers and just 20% to retain them, think of the additional revenue gained, if these spending metrics were reversed. These metrics may not mirror your results but they provide valuable insight as to how much and what investments need to be made to improve your online profitability.

Need help to implement these suggestions? NetSphere Strategies is a full-service team of eCommerce experts that generates immediate results based on our service performance. Let us know how we can help you build your online business.

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Stephan Moen has thirty plus years of experience in the SaaS and cloud technologies, eCommerce and the digital marketing arena. Stephan was employed by such technology titans as AT&T and IBM and leveraged that experience to become a successful entrepreneur having attained the INC 500 status on multiple occasions.

Mr. Moen has a wealth of executive business insight and knowledge. What my lifetime of experience in the business world has taught me is that a business will reward those who work hard and think smart, while penalizing those who lead with excuses, mistakes, lack a vision and have no plan to move the business forward.

Core competencies revolve around corporate growth strategies for eCommerce, inbound and content marketing, sales and marketing automation and building professional services organizations. My one bit of advice, "start each and every day with a smile".