How to Make Your Online Store More Profitable in 2020
Running your own online store, whether it be through Amazon, eBay, Shopify, or even your own website, can be an exciting method for doing business. You require less overhead, no storefront to maintain, and by utilizing one of the many available eCommerce marketplaces you can easily drive traffic to your store and focus on providing an exceptional shopping experience. While this is all great news for potential entrepreneurs, there are some drawbacks to consider before diving in.
With marketplaces being so user friendly and available to everyone, you’ll likely be facing a vast amount of competition. Finding a competitive advantage will need to be a dedicated process, where you choose a niche target market to start with and work from there. Additionally, the margins can be thin if you start competing on price or can’t move enough volume month to month.
But here’s the thing, you don’t need to just go into this blindly. Instead, you can learn from successful entrepreneurs like, Jim Sinclair, to get a better idea of what it takes to successfully scale your business and become a top seller.
Meet Jim Sinclair — Our marketplace expert
Jim started selling auto parts on eBay in 2011 and has been one of our customers for years. His eBay store, 123AutoParts-Store, has a 98.7% rating based on over 60,000 reviews. He’s been a top-rated seller for the last 10 years on eBay Motors, won the eBay Motors Highest Mobile Sales Growth Award in 2015, and has reached $3 Million in annual auto parts sales on eBay and Amazon.
Needless to say, he’s an expert in the industry. He even made his field-tested tool, Channel Spyder, available to all marketplace auto parts sellers to help them avoid the pain points he experienced as a seller. Here’s what Jim had to say about successfully operating an online marketplace and how you can do the same.
Optimize for online selling
According to Jim, “What’s common sense in a regular retail world, in your brick-and-mortar or dot-com […], doesn’t necessarily fit with what you have to do in a marketplace.” Being successful in an online marketplace is less about building brand loyalty or recognition—areas traditional businesses are deeply concerned with.
Instead, it’s about optimizing specific customer service or product features and developing a competitive advantage around them. This might mean having fast order fulfillment, same-day shipping, the lowest price, or the best ratings from customers.
However, this won’t be a simple process where you pick one and hope for the best. You also need to have a deep understanding of the marketplace systems so you can use them to your advantage. Keeping those two things in mind, let’s dive into three tips you can employ to cut costs, provide better service, and minimize inefficiencies in your business.
1. Reduce costs
When running a store that operates on thin margins and typically competes on price first, cutting costs is an obvious step to become more profitable. But the actual act of cutting costs is such a broad concept it can be difficult to know where to start. Here’s what Jim recommends looking into.
Negotiate with shippers and suppliers
“Marketplace buyers tend to buy from the lowest-priced seller,” Jim says. “You can help meet this need using the economies of scale to negotiate better costs all around with supplies, vendors, shipping carriers, etc.”
You want to find ways to negotiate better prices or terms with shippers and suppliers. Maybe you offer to purchase larger quantities at a reduced price per unit, or are willing to buy more often if the payment terms are extended. Find ways to minimize the variable costs of your product wherever possible, it’s one of the biggest factors cutting into your revenue.
Minimize order fulfillment and labor costs
“A lot of sellers I talk to are new sellers, and they’re telling me, ‘I can’t understand why my competitors are able to sell for so much less than everybody else,’” Jim says.
“One big reason their competitors are selling for less than everybody else is that they’re not touching the parts. Labor is your highest cost of goods sold. The big eCommerce sellers don’t have the labor of stocking, tracking inventory, re-stocking, pulling, packing, and shipping products.”
Minimizing (or completely eliminating) your time spent on order fulfillment is a huge step toward reducing your labor costs. One simple way to do this is by implementing drop shipping. Dropshipping cuts out the time and labor associated with finding, packaging, and sending out orders. It’s an important part of being competitive, as it allows for lower prices.
You’ll be able to spend more time on areas like figuring out how to improve your conversion rates, optimize your listings, and manage your business’s health overall. Fortunately, these are areas where it’s easy to add tools that will help you manage your operations better and become more efficient.
2. Remove inefficiencies in your systems and workflows
Cutting costs is vital, but it often doesn’t mean much for your business if you’re not able to capitalize on those savings. While you may be saving money upfront, you’re burning it through inefficient and redundant processes that take up your time and finances.
Luckily, running a fully online marketplace means there are plenty of tools to help you get that under control. Here’s what Jim recommends looking into.
Multi-channel listing software and inventory management
One area you’ll devote the most attention to as a marketplace seller is your product data. The amount you’ll be organizing and managing does depend on your industry, but more than likely it’s a huge undertaking.
“[For] eBay motors, for example, you’re going to put in your year, make, model, engine, trim of your vehicle, and it will tell you the parts that fit your vehicle,” says Jim. “One product might fit 500 different vehicles, year, make, model, engine, trim combination. So, it’s just a lot of product data.”
Not only that but if you sell on multiple marketplaces, you’ll be managing listings in multiple places. This doesn’t just mean uploading many listings (and all the associated product information) on multiple platforms. It also means keeping track of:
- What is for sale where?
- What has been sold?
- What is still available?
You’ll also need to be aware of countless other small details and nuances across each marketplace.
While you can initially do all this manually, it is impossible to scale and become a top seller this way. It’s hard to keep your labor costs low when you’re spending countless hours on data entry and monitoring, after all. Plus, Jim points out that if you’re not taking the time to customize your listings and are using the same product data as everyone else (such as the exact same parts descriptions, and so on), your store isn’t going to stand out.
To help solve this problem, Jim recommends using a multi-channel listing tool to help you manage your data and listings in bulk.
It was for this reason that Jim created Channel Spyder, an inventory management tool that allows for easy management of drop shipping, as well as channel listing tools like bulk listing creation, monitoring, and managing bundled sales.
By using a tool like Channel Spyder, you can manage all of your listings in one place, instead of having to manually go into each and every one, on every platform. Plus, Channel Spyder can route orders directly to your dropshipping suppliers, which cuts out another step on your end.
While Channel Spyder is uniquely suited for the needs of auto parts sellers, there are other options for multi-channel listing software. The important thing is to find one that works for you and take advantage of it, rather than trying to do it all by hand.
Automation is essential to truly scale a multi-channel eCommerce business. Otherwise, you’ll reach a point where it just can’t be done manually.
“In automotive, the average seller that I have using Channel Spyder is listing upwards of 300 thousand listings on a single store,” says Jim. “We’re not talking about one or two thousand products that you can hire someone to create listings for—we’re talking about 300,000 unique listings. And I’ve got some sellers that are up into the millions of unique listings across multiple channel stores. So, that’s a lot of products listed out there, and a lot of things to be updated. It just can’t be done effectively without the right technology.”
Manage communication with a shared inbox
Managing many listings on multiple marketplaces means you’ll be receiving lots of buyer messages and order notifications. These messages will typically go to the inbox you have set up on each marketplace. You’ll have to log in, respond, log into another one, respond, rinse, repeat.
“This is where email management software like Outpost is very valuable,” says Jim. “Buyer communication is very difficult to automate, so human hours have to be put in. The idea is to minimize those required human hours.” With Outpost, sellers can view all emails coming and going from every online store mailbox all on a single screen. There’s no need to log into multiple inboxes or use different browser windows.
Additionally, anyone else on his team can log in with their own unique account information, so multiple people can work out of the same inbox without stepping on each other’s toes. “It allows a seller to sell with multiple eBay stores, multiple Amazon stores, multiple marketplaces—and handle all the communications seamlessly,” says Jim.
Using a tool like Outpost is another way to keep operations efficient while you scale. You might still need to add more team members as you grow. But, by using Outpost, you can keep your team lean and small.
Anytime you can automate general communication or questions can be a big win for your business. This is even better when it’s an application of a tool you’re already using, which is exactly the case with Outpost.
Beyond being able to read and reply to all your marketing messages in one inbox, a tool like Outpost gives functionality like saved templates and auto-responses, which are hugely important. “Using email templates and autoresponders is a really big part of building a scalable business,” says Jim. “Email templates in a tool like Outpost allows one staff person to handle hundreds of emails per day.”
Using complementary tools to help automate and streamline processes also gives sellers better visibility into what is happening inside their businesses.
“Sellers can have Outpost open on one screen and Channel Spyder open on another screen,” says Jim. “They can have the visibility into their orders, and visibility into their communications. Management can standardize responses for consistency and quality control with buyer communications coming from multiple different staff people.”
3. Provide exceptional customer service
Once you’ve identified and adopted tools to alleviate inefficiencies in your operation, you can shift your attention to what’s important. Your customers. When operating on a marketplace platform that is full of similar product and pricing options, providing exceptional pre and post-sale customer service can be the deciding factor. Here’s what Jim recommends focusing on.
Maintain timely response times
Responding quickly and making sure your emails are clear and informational is essential. Sometimes it’s even required in order to earn the status of top seller. This goes beyond just answering common product questions, as you’ll need to be just as responsive after a purchase. Making sure that you’re easy to reach, responsive, and courteous if something goes wrong with a purchase is one of the best ways to build trust.
Now your response time doesn’t just help you get good reviews and provide an enjoyable customer experience, it’s sometimes necessary to get the most out of specific marketplaces. To become a top seller on eBay, for example, you need to be able to resolve all cases. So, if a customer has an issue, you need to be able to resolve it for them—quickly. “You need to make sure that you do not have any cases closed without seller resolution,” says Jim.
“Quickly” isn’t just a general idea here—with eBay, you have 24 hours to respond to the buyer’s complaint. Similarly, Amazon Seller Central’s Performance Metrics determines a late response as any response longer than 24 hours. “So, the buyer says, ‘Hey, you shipped me the wrong part,” and you have 24 hours to reply,” says Jim.
Here again, Jim highlights the value of using email management software that puts all your email messages in one place. “That’s where Outpost comes in handy because it’s bringing everything together,” he says. “You don’t have to worry, ‘When was the last time I logged into this store or that store?’ Outpost gives you all the messages with the time they came in. You know exactly how old all your messages are in virtually real-time.”
This is where the process of automating general responses comes in handy. Jim recommends having multiple template responses ready that can be sent out immediately when a customer has an issue. “You want to have templates ready and staff trained to use them, so messages can be read and replied to quickly and efficiently,” he says. “Buyers get their answers quickly, and store ratings stay high.”
Maintain communication records
Having your responses in writing is especially important in marketplace sales. Just in case there is a defect or an issue, it’s necessary to have documentation.
“It’s encouraged by the marketplaces that you document in writing all of your communications with the buyers,” says Jim. Not only does this give you specific pieces of information to reference when communicating with customers, but it also ensures you’re never at risk of harming your business due to missing conversations or receipts.
For these reasons, Jim recommends using email as your primary customer communication tool. “Avoid going to the phones if you can. Email is not only more time-efficient, but it’s also preferred by the marketplaces for any conflict resolution, should they need to step in,” he says.
By building your customer service process around email and having a replicable system of reusable templates, you not only save time but also protect your business.
Refine your competitive advantage
By finding ways to cut costs, remove inefficiencies, and deliver exceptional customer service, you’ll have a much better shot at succeeding amongst the sea of competitors. Additionally, Jim recommends leaning further and further into leveraging emerging technology and productivity tools. “When it comes to online and marketplace sales, the competitive advantage comes from a willingness to work with all available technology, and the sellers with an aptitude for using technology have the potential to do well and compete with the big players online.
It is an online business after all and if you’re hesitant to understand and adopt effective tools before your competitors, you may struggle to find success. That doesn’t mean just blindly purchasing and working with every tool you find, but instead walking through the process Jim outlined in this article to identify what makes the most sense for you and your business.
Editor’s note: Thanks to Jim Sinclair of Channel Spyder for contributing! Jim can be reached at 800-898-1049.