How to Reduce Costs and Stay Competitive When Moving Business Online
In 2019, there are very few retailers that can justify having no online presence – if a full e-commerce solution is unaffordable, a Facebook or Yelp page is essential to communicating basic information to customers and potential customers.
But being online isn’t cheap. Last year, retailers spent $6.1 billion just to maintain their cloud infrastructure. Factor in the cost of online advertising, shipping, and returns, and margins can get tight for retailers accustomed to the brick-and-mortar space.
Still, maintaining an online presence can be lucrative if handled properly: for one thing, being online makes you instantly visible to everyone everywhere through an internet connection, which increases your customer base significantly.
Here are strategies to optimize a retail website’s performance while managing the associated costs.
There’s a good chance you can make the margins of online selling work if your website lets you sell more and you find a way to minimize returns. One website feature that’s been shown to do both is the 360-degree spin image.
These images, which let shoppers virtually turn a product all the way around so they can see it from every angle, helps reduce unwelcome surprises upon delivery: because customers have seen the whole product, they’re more confident they know what they’re going to get. Deploying 360-spin images on an ecommerce website can reduce returns by up to 30%.
These images can also help online retailers sell more in the first place. Results vary by industry and product, but Forbes reports that one retailer saw an immediate six to eight percent increase in conversions after adding 360-degree spin images. Another enjoyed a 25% increase to topline revenue.
So the first step to a profitable e-commerce website is to include the kind of features that increase sales and minimize returns.
Even selling more product may not lead to a positive ROI, if the cost of maintaining the website itself is too high. To keep your infrastructure costs manageable, be sure to consider the following:
- Web presence vs. e-commerce: Smaller retailers with a single store can probably get away with having social media pages that list their hours of operation, address, phone number, and email. Larger retailers are likely better suited to maintaining a full e-commerce solution (that is, a website where customers can review product and make purchases). While maintaining an e-commerce site will cost more, it will likely also lead to more purchases.
- ISP vs. dark fiber: To power your website, you’ll need internet access. Smaller businesses can probably rely on internet service providers (ISPs) like Comcast and AT&T, which charge by the amount of data customers use. Larger retailers that are likely to use significant amounts of data may be able to save money by buying or leasing a dark fiber, which has a fixed cost regardless of how much data the company uses. This can be particularly beneficial for larger and/or fast-growing companies.
- Colocation vs. on-premise vs. cloud: Colocation involves hosting servers you own at a third party’s site. On-premise infrastructure means keeping your servers in your own data center. The cloud lets you rent server capacity without worrying about physical infrastructure. Each solution comes with its own costs, benefits, and security concerns. Choosing the best combination here can optimize a site’s performance and help a retailer keep costs manageable. Generally, the larger a retailer is, the more opportunity there is to realize cost savings by adjusting infrastructure.
Maybe the most important consideration for retailers looking to manage their e-commerce costs is to treat the website as an ongoing project. E-commerce has evolved rapidly in the last decade; sites that performed great on desktop screens might have lost serious revenue if they didn’t adapt for mobile. Mobile-friendly sites may lose ground to competitors with real-time, location-sensitive advertising.
The same is true for infrastructure: where retailers once had to maintain expensive data centers to prepare for bursty sporadic traffic (around the holidays, for example), today they can enjoy the same site performance by using flexible cloud solutions.
For peak performance as technology and online shopping behavior evolves, retailers must accept that a website and the infrastructure supporting it are not fixed entities; rather, they should adapt to suit the current reality of e-commerce.
-Brad Saguindel, VP at InterOptic