(Akiit.com) Many people have a dream of setting up their own e-commerce store and cashing in on some of the success of companies like Etsy and Amazon. But as many keen sellers soon find out, it’s easier said than done. Making money in retail has been difficult traditionally. But making money online is even harder, thanks to the unique competitive landscape of the internet.
Check out the following reasons why your e-commerce business might not be making money.
You’ve Got Your Pricing Strategy Wrong
When it comes to making money on the internet, pricing strategy matters a lot. But the trick is to find out how much each customer is willing to pay and then capitalize on that.
Many online retailers don’t charge everyone the same price. Instead, they adjust prices to reflect the perceived ability of the customer to pay, maximizing the return to producers. For instance, many holiday sites have now begun charging customers different prices for trips abroad, based on their previous activity, and the activity of customers like them.
Stop Paying Too Much For Shipping
Changes to shipping rules have led to an increase in shipping costs. And for online retailers, this is a problem: the higher their shipping costs, the less competitive their prices.
Experts estimate that dimensional weight pricing has led to a 30 percent increase in shipping costs, incentivizing e-commerce businesses to change the way they package products. Want to find out how much your parcels cost to send? Use a dimensional weight calculator.
You’re Not Tracking Key Sales Metrics
If you want to perform in any business, it’s vital to track sales metrics. Without useful data, you have no idea whether you’re making money on a particular sale or not.
You may also have a good income but negative cash flow. For instance, suppose you offer customers the ability to buy products on credit. They commit to paying you money – which counts as your income – but you don’t receive the money until all the installments are paid, so your cash flow could be weak.
Don’t confuse cash flow with income. It might seem like your business isn’t making money, but that could just be because you haven’t taken your income into account.
You Are Making Money, You Just Don’t Realize It
At what point does a person become wealthy? When they have $100,000 in the bank? $1 million? $5 million? Did you know that just 28 percent of people worth between $1 million and $5 million considered themselves to be rich?
Perhaps you are making money from your e-commerce business, but you have different standards for what “making money” actually means. Not everyone can make billions, but that doesn’t mean that your income isn’t good already.
You Haven’t Defined A Market
Finally, you might not be making money because you haven’t defined your target market yet. Defining a target market is challenging to do for an e-commerce store, but understanding the customer persona will put you in an excellent position to sell to the people who want to buy your product. Do it right, and you’ll avoid wasting money on irrelevant marketing
Staff Writer; Brad Love