Where should I start cutting costs without damaging my brand?

We don't always want to cut costs in our ecommerce businesses, but when cashflow gets tight you need to act, fast. In this article, we’ll explore practical, strategic approaches to cost-cutting that help you stay lean without harming the brand reputation you’ve worked so hard to create.

1. Evaluate and Streamline Your Product Offerings

Focus on Top Performers

One immediate step is to review product performance data and identify which items consistently drive revenue and profit. By focusing on your core bestsellers, you can discontinue or reduce stock of underperforming items that tie up cash. This not only helps you cut storage and purchasing costs, but also clarifies your brand identity by spotlighting the products that truly reflect your value proposition. Don't forget to include returns in your analysis!

Negotiate with Suppliers

If you’re selling physical products, you likely have ongoing relationships with manufacturers and suppliers. Consider renegotiating terms and maybe trying to get bulk discounts or better payment terms over a longer period. Show your suppliers your strong track record of prompt payments and consistent order volume to convince them.

2. Optimise Fulfilment and Shipping

Use Multiple or Change Couriers

Relying on a single shipping provider can sometimes lock you into uncompetitive rates or less favourable terms. You may have used them for ages, but since then new entrants or offers may be available. Compare pricing from multiple carriers to ensure you’re getting the best deal, especially if you ship large volumes. Often just a call to your current provider can yield better rates. There's lots of competition now, use it!

Improve or Change Packaging

Packaging can be a significant expense, both in material costs and shipping fees. Now might be a time to change that fancy packaging to something cheaper and simpler. Simplifying your packaging without losing brand awareness (e.g. using a branded sticker instead of a full custom box) is a great way to cut costs while maintaining appeal. There are so many packaging suppliers around now you're bound to save here.

3. Review Marketing Spend

Double Down on High-Performing Channels

When budgets are tight, it’s crucial to track your return on ad spend (ROAS) and identify which marketing channels deliver the best value. But equally important is tracking the profit you're making. Rather than slashing your entire marketing budget just to save money, reallocate funds to the most profitable campaigns, whether that’s Google ads, Facebook/Instagram ads, email marketing, or influencers. This helps you maintain a strong brand presence where it matters most while spending your marketing budgeting effectively.

Embrace Organic and Owned Channels

This is more of a longer term saving, but it's essential for backing up paid advertising. Building brand awareness organically can be highly cost-effective if done right. Dive into content marketing, SEO and social media engagement (organic posting and interaction) to create ongoing traffic and brand loyalty without the continuous expense of paid ads. Similarly, check your email list - are you sending enough emails, and do you have automations in place? This is often far cheaper than acquiring new customers through paid methods and it can yield a higher conversion rate.

4. Improve Operational Efficiency

Automate Repetitive Tasks

Look for repetitive tasks that can be automated and find tools to replace them. Look at Zapier or Make to connect apps and automate repetitive tasks or replace expensive apps. This might include auto-responses for common customer service enquiries, inventory restocking alerts, or updating spreadsheets or accounting software. By reducing the hours spent on manual tasks, you lower labour costs and free up your team to focus on higher-value work, like improving the customer experience, organic content and on-site improvements.

Outsource Strategically

Sometimes, outsourcing non-core functions can be more cost-efficient than keeping them in-house. For instance, you might outsource bookkeeping, specialised design work, or certain customer service tasks to others who can do it more cheaply and effectively at scale. The key is to ensure that quality remains high, especially in areas that directly affect the customer experience.

5. Check Subscriptions

Review Plans and Downgrade

Go through every app and service you use on your website and in your business and review what plan you're currently on. In many cases you may find the plans have changed or you're on a higher plan that you need to be. Downgrading can save you a considerable amount over time. Look for example at how many users or seats you're paying for, as many apps charge for that. Is there an app you're already using that can also do what another app you're paying for does?

Reassess External Services

Audit any external and 3rd party services you're currently using. This may be advertising agencies, social media managers, bookkeepers, designers etc. Are they still required? Are they providing a good return? You need to be honest with yourself here, it's very easy to hang on to something because you've always had it, but if it's served its purpose you need to move on.

6. Monitor Cost-Cutting Impact and Adjust

Track Key Performance Indicators (KPIs)

After you've implemented cost-cutting measures, monitor metrics such as customer satisfaction, return rates, cart abandonment, and overall sales. If any of these start to trend negatively, you may need to reassess or scale back the changes.

Review costs regularly

Consider this initial cost-cutting as just the start. Review all your costs quarterly to start with so you stay on top of them, and once you're satisfied things are back on track, switch to 6-monthly reviews. Don't be lulled into thinking everything is always going to be ok now, stay in control and you shouldn't have to do this again.

Hopefully this helps you cut costs without diluting your brand. The most effective strategy involves optimising or reducing expenses in areas that don’t undermine the key elements of your business that could damage it. By analysing product performance, negotiating with suppliers, refining fulfilment processes, and adjusting marketing spend, you can reduce your overhead while safeguarding (and potentially strengthening) what makes your business unique. Over time, a leaner and more efficient operation will help you remain profitable and competitive, even in challenging market conditions.