Money & Ecommerce: Why Your Online Shop Isn’t Profitable

There are approximately 24 million ecommerce websites across the globe. It’s a number that is constantly changing as sites are created or shut down. However, that doesn’t mean the ecommerce sector is too competitive for newcomers. On the contrary, there’s plenty of room for growth, as less than one million websites manage to sell $1000 per year. Experts estimate that by 2040, 95% of all purchases will occur only on ecommerce platforms. 

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This is good news. If you are struggling to establish a profitable online retail venture, competition is unlikely to harm your profits. Indeed, with the ecommerce sector growing, there’s enough demand to bring your business to the next level. Therefore, the question you want to ask is: What’s stopping my online shop from making money? 

Your pricing policy doesn’t put customers first

“I can find it cheaper elsewhere.”

This is the first reason why customers are unwilling to purchase from an ecommerce shop. Huge marketplaces, such as Amazon, can damage little ventures. However, it’s fair to say that Amazon didn’t achieve its monopoly position overnight. Appropriate pricing plays a huge role in their success. Amazon has a policy of putting the user first, which is what appeals to customers. An ecommerce shop that keeps its prices high or adds delivery costs to each transaction is unlikely to meet shoppers’ expectations. 

You stop selling too early

The simplest formula to calculate profit is to deduct your total expenses from your total revenue. However, many new business owners fail to take into account the break even point analysis, which refers to the moment when you’ve sold enough units to cover your costs. What does it mean? Ultimately, there is no miracle profit solution. You are not going to create a profitable venture after selling a small volume of products. This is because production and business costs are high for a small volume, but they decrease when you handle larger quantities. 

Your conversion costs are too high

Using PPC marketing is a quick and practical way of driving new leads to your site. However, PPC can get competitive and drive high costs. Unfortunately, when your click cost is high, it’s tricky to make a profitable conversion. How can you decrease your conversion costs effectively? There are a number of alternatives. Firstly, you can focus on reducing your ad costs by improving quality scores. As you pay less per click, you also pay less per conversion. Another approach is to diversify your advertising strategy. Perhaps PPC isn’t profitable, while Google Ads retargeting or Display ads may be more effective. 

You make payments too complex

Last but not least, your ecommerce site makes it hard for customers to pay. Offering limited payment options, for instance, could put some shoppers off. More and more online shoppers feel more confident about Paypal payments than typing their credit card details, for example. Being able to pay in a few clicks can speed up the process dramatically. 

We can expect ecommerce businesses to handle more of our purchases in the near future. But if you’re going to make the most of the forecast growth, you need to correct profit mishaps now. Online retail ventures have the potential not only to be profitable but also to reach out to billions of customers at the same time. Boost your presence today to become one of the ecommerce shops that’ll build tomorrow.