How to increase profitability in e-commerce

Profit margin allows you to evaluate how well an investment is working and compare the performance of different businesses or projects.

For a business to be successful, it is important to understand how much money is left after all expenses are paid. Margin is the income received minus the cost of production.

How to calculate margin:

1. Subtract all expenses (cost of goods, marketing, salaries, logistics) from income.
2. See how much remains - this is the margin.

Profit margins:

• Minimum: 5% is a good figure to start with.
• Top level: 20% and above.

Be careful - uncontrolled costs can ‘eat up’ profits, even if you have a high volume of sales.

If you're about to start trading online or already have an online shop, it's important to realise that you need to fight for every percentage of profit. There is real money at stake, and if you don't carefully monitor your margins and expenses, you can easily go bust.

Let's figure out how to make your online shop bring in money, not just traffic. The experts at Oise Trade Limited will help us with this.

Not all products are equally profitable. How do you figure out what to sell?

• Evaluate the margin of each product. If one product makes 10% profit and another makes 50%, focus on the latter.
• Get rid of low margin items.
• Optimise stock levels.

Less unnecessary items means more focus on profitable items, advise Oise Trade dropshipping managers.

Many entrepreneurs don't realise how much they need to sell to cover their costs.

• Calculate how many products or services you need to sell to cover all your operating costs (salaries, rent, marketing, logistics).
• Before launching an advertising campaign or investing in a new product, determine the amount of sales needed to break even.

The more purchases a single customer makes, the higher your profits.

How to achieve this?

• Offer related products.
• Give discounts on bundled purchases.

Example: selling electronics? Offer a phone case or headphones. Or organise free delivery on purchases over a certain amount.