How do I drive eCommerce profitability?

There has often been a knee-jerk response to implementing eCommerce technology without adequate consideration of the basics of profitability and return on investment. We have seen many examples where the fundamental costs and revenues of an operation are a challenge to ever achieving profitability. Some areas where you may be able to challenge your thinking are:

Revenue

  • Is your product margin low, meaning that you have to constrain eCommerce spend/infrastructure?
  • Is your product a one-off spend meaning repeat revenue opportunities are low?
  • Are there ways to build your Average Order Value to improve profitability?
  • Is your ecommerce conversion so low that you are wasting your marketing spend?

Costs

  • Is your basic cost per order cost low enough to achieve profit per order?
  • re your direct or digital marketing costs in line with the scale of your operation?
  • Are you carrying too much overhead on your operation at this scale?
  • Is your technology spend commensurate with your profitability?

Either you should strive for Profit per order or be able to recognise that a customers profitability makes your eCommerce spend worthwhile. Either way achieving profit whilst growing is a key skill in eCommerce.

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