For e-commerce businesses, every dollar saved on operations is a dollar that can be reinvested into growth, marketing, or product innovation. The good news? If you want to reduce operating costs, quality does not need to be the trade-off.
In this blog, we’ll recommend eight actionable strategies to help your business cut down on operating expenses, while maintaining the standards that keep customers loyal to your business.

1. Get your technology stack in shape

Have you ever looked at your list of subscriptions and wondered, “Do I really need all these tools?” You’re not alone. Many businesses accumulate software over time, leading to redundant systems and unnecessary costs.

How to fix it:

  • Audit your tools: Identify which software overlaps in functionality or goes unused.
  • Switch to integrated platforms: Platforms like Shopify Plus or BigCommerce centralize everything from inventory to sales analytics. Adobe Commerce (formerly Magento) is another option, offering a flexible, open-source platform ideal for extensive customization, though it may require significant development resources.
  • Consider open-source options: WooCommerce, for example, is budget-friendly and highly customizable if you have in-house tech expertise.

Pro Tip: Schedule regular tech reviews- once every six months works well. This ensures you’re only paying for what truly adds value.

2. Simplify your supply chain

The supply chain is often where costs quietly pile up. Freight fees, warehousing inefficiencies, and poor supplier terms can all take a toll on your bottom line.
According to the Top 10 Supply Chain Trends Report 2024 by ASCM, digitalization of the supply chain emerges as the most impactful and likely trend, offering businesses an unparalleled opportunity to streamline operations and reduce operating costs.

Steps to take:

  • Adopt supply chain digitalization: Begin by converting physical data into digital formats, enabling the integration of IoT, AI, and smart contracts. Begin with automation solutions for repetitive tasks to enhance efficiency and allow your workforce to focus on strategic initiatives. Implement digital tools such as:
      • Warehouse management systems (WMS): Automate inventory tracking and streamline order fulfillment processes.
      • Transport management systems (TMS): Optimize route planning and delivery schedules to reduce costs and improve delivery efficiency.
      • Blockchain technology: Enhance transparency and traceability across supply chain networks, building trust and ensuring better compliance.
  • Use demand forecasting tools: Leverage AI-powered predictive analytics to avoid overstocking, prevent stockouts, and align inventory with customer needs.
  • Negotiate with suppliers: Long-term contracts or bulk discounts can save significant money.
  • Consolidate shipments: Fewer, larger shipments reduce freight costs and simplify logistics.

By streamlining your supply chain, you not only save money but also improve delivery efficiency, which directly impacts customer satisfaction.

3. Sustainability: your unexpected ally

Sustainability isn’t just good for the planet—it can also reduce operating costs. Customers increasingly value eco-conscious brands, giving you a chance to align financial savings with customer expectations.

Ideas to experiment:

  • Eco-friendly packaging: Recyclable materials often cost less than complex, multi-material packaging.
  • Energy efficiency: Switching to LED lighting or energy-efficient appliances in your warehouse can significantly cut utility bills.
  • Digital documentation: Eliminate paper by using digital invoices, receipts, and contracts to cut costs on printing and mailing.
  • AR to reduce returns: Use augmented reality tools to help customers visualize products before purchasing. Fewer returns mean lower reverse logistics costs. Examples include Shopify AR, ARKit (by Apple), Google ARCore, 3D Cloud by Marxent, Augment

A McKinsey study found that sustainability efforts can reduce resource costs and improve operating profits by up to 60%.

4. Automate the mundane

Repetitive tasks like order processing and customer support don’t need to tie up your team. Automation tools can handle these efficiently, leaving your staff to focus on higher-value activities.

Where to automate:

  • Customer support: Automate responses to FAQs, order tracking, and basic inquiries to provide 24/7 support and free up your team for complex issues.
  • Order fulfillment: Streamline picking, packing, and shipping processes to improve efficiency and reduce errors.
  • Inventory management: Automate stock tracking and reordering to avoid overstocking or running out of key products.
  • Returns processing: Simplify the returns process by automating label generation, refunds, and customer notifications.
  • Accounting and invoicing: Automate invoicing, expense tracking, and tax management to save time and ensure accuracy.

Automation doesn’t just save money; it scales with your business. As your orders grow, your tools can handle the extra workload and reduce operating costs.

5. Outsource what is not core

Trying to do everything in-house can stretch your team thin and inflate costs. Focus your resources where you’re strongest and outsource the rest. Outsourcing doesn’t mean losing control. The right partners can often deliver better results at a lower cost.

What you can outsource:

  • Fulfillment and logistics: Third-party logistics (3PL) providers can handle storage and shipping more efficiently.
  • Seasonal customer support: Instead of hiring full-time staff for peak seasons, outsource to experienced teams.
  • Catalog management: Keeping product listings updated, enriched with accurate descriptions, and optimized for search visibility is time-intensive. Outsourcing catalog management ensures seamless organization and better discoverability. Examples include- Plytix, Akeneo PIM, Salsify, Jasper PIM, Catsy, InRiver, Feedonomics, IceCat, Sales Layer, ChannelAdvisor
  • Returns management: Managing e-commerce returns can be complex and resource-intensive. Outsourcing this function simplifies the process, improves customer satisfaction, and reduces costs associated with reverse logistics.
  • Seller onboarding and support: For businesses managing multi-seller marketplaces, outsourcing seller onboarding ensures smooth processes, compliance, and ongoing seller support without stretching internal resources.

Looking for expert support in managing your e-commerce operations? Explore Netscribes’ comprehensive e-commerce management services to see how we can help you streamline operations and focus on growing your business.

6. Invest in your team’s efficiency

Your employees are your most valuable asset- and fostering a culture of collaboration, trust, and support is your responsibility. When they have the tools, training, and guidance they need, they feel valued and empowered to do their best work—helping everyone thrive together.

Steps to boost productivity:

  • Comprehensive training programs: Equip employees with the skills and knowledge to use tools like inventory management software effectively. 
  • Cross-training for flexibility: Build a dynamic workforce by training employees in multiple roles. This not only boosts adaptability during peak periods but also fosters teamwork and collaboration.
  • Recognition and rewards: Regularly recognizing top performers boosts morale, motivates the team, and reinforces a culture of appreciation.

7. Data analytics is your best friend

Gut feelings are great for brainstorming, but decisions about cost-cutting need to be backed by data. Analytics tools can help you pinpoint where inefficiencies are hiding.

Practical applications:

  • Track KPIs with descriptive analytics: Monitor metrics like inventory turnover, return rates, and customer acquisition costs to identify inefficiencies. Eg: Google Analytics 4 (GA4), Tableau, Shopify Analytics, Adobe Analytics, Power BI (Microsoft)
  • Predict Trends with predictive analytics: Forecast demand, seasonal patterns, and operational impacts to prevent overstocking or stockouts. Eg: Salesforce Einstein Analytics, Google Cloud AI & BigQuery, SAS Advanced Analytics, Tableau with R or Python Integration, SAP Analytics Cloud
  • Optimize decisions with prescriptive Analytics: Use A/B testing to refine shipping methods, pricing strategies, and promotions for maximum ROI. Eg: Adobe Target, Google Optimize, Visual Website Optimizer, Optimizely, Split.io
  • Personalize with customer analytics: Understand customer behavior to create targeted offers and reduce acquisition costs.  Eg: Google Analytics 4 (GA4), Adobe Analytics, Mixpanel, Klaviyo

When used effectively, data analytics can be your most reliable guide to smarter spending.

8. Embrace flexibility

Rigid staffing structures can lead to unnecessary expenses, especially during slower seasons. Flexibility in how you staff your business can reduce operating costs significantly.

Flexible workforce solutions:

  • Hire freelancers: For temporary or specialized tasks, freelancers are a cost-effective solution.
  • Enable remote work: Reduce overhead expenses like office space and utilities by allowing employees to work remotely.
  • Use workforce management software: Tools like Deputy or TSheets can help you allocate resources efficiently.

Summary snapshot

Strategies to reduce operating costs- ecommerce

Conclusion

Cutting costs in e-commerce isn’t about sacrifice- it’s about working smarter. By optimizing operations, embracing automation, and prioritizing sustainability, you can reduce operating costs, drive growth, and elevate customer experiences.

Set the tone for 2025- adopt smarter strategies and see your business soar. Talk to an expert today – click here.