Make your webshop profitable: 8 challenges & the solutions
Posted: Sat Jan 18, 2025 6:00 am
Web shops are popping up like weeds. The number of web shops in the Netherlands has increased sixfold in the period from 2007 to 2015. This trend will continue in the coming years. Large web shops only seem to be getting bigger and small shops are finding it increasingly difficult to come up with a successful online shopping concept with which they can grow. This checklist gives you insight into the opportunities and threats for your web shop.
Last week, the Logistics & E-commerce event took place. The latest trends, problems and opportunities were discussed with which web shops can make a difference. The e-commerce sector seems to be increasingly running into a number of stumbling blocks. Costs are rising and consumers are becoming increasingly demanding. One of these rising costs is the logistics costs. “25 to 40 percent of the total costs of a web shop consist of logistics costs,” according to Lecturer City Logistics Walther Ploos van Amstel.
1. Free shipping. Yes or no?
The answer depends on your strategy and your type of products. Some companies see 'free shipping' as a marketing expense and accept it if a product of €10,- has to be shipped for free, so that you do not make a profit on the product. These companies think that this leads to repeat purchases from the customer. For a armenia telegram number list scalable and profitable revenue model, this is not recommended for most product groups. Free shipping above an 'X' amount, on the other hand, is recommended. There has been a trend in recent years that consumers are less and less willing to pay for shipping.
2. Help! Returns are a huge expense
Logistics in e-commerce is a two-way street. Especially in fashion, returns are a major problem that reduces profitability. As many as 67 percent of consumers check the return policy before actually placing an order and nine out of ten online shoppers consider it a must to be able to easily return their purchases. Innovative startups are trying to respond to this by lowering the return threshold, "which means that people are more likely to order from your webshop," according to Rein Simonis, Manager Sales & Marketing of e-commerce return startup Local Express. This PostNL startup comes to your door to collect return packages. They call this 'Return-on-demand'. Great for the consumer, but the question is to what extent this is profitable for web retailers. In my opinion, not for the average webshop for the time being.
Not communicating your returns policy clearly, or simply not mentioning your return conditions, is killing your online store.
However, returns cannot be prevented. Not communicating your return policy clearly, or simply not mentioning your return conditions is killing your webshop. Giants like Zalando have a hard time coming up with a profitable strategy. 'Free returns & 100 days return policy' is a USP of Zalando, which is almost impossible for smaller webshops.
Returns at small online stores
Advice is to at least communicate transparently that returns can be made within 14 days, for example, without any problems. Information provision is key in this.
“Analyze products with the highest and lowest return probability” is the advice of Citylogistics professor Walther Ploos van Amstel. Use this data to then steer in your webshop towards products with a low return probability or adjust the pricing policy for the 'high return probability' products.
Packing package
3. Mainly 'low margin' products are purchased
The so-called 'A-brand problem'. These products are popular with consumers, but the margins on these products are wafer-thin. One of the largest online pet shops in the Netherlands, Agradi, recently decided to no longer sell A-brand products because of this margin problem. Smart move? Or are you actually missing out on a large number of customers?
As a 'normal' webshop you often cannot afford this. The advice is therefore to use the A-brands as bait on your website and then start steering margin-oriented. Products with a high margin (B-brands) can be prominently placed on the product page as a suitable alternative to the A-brand.
The price comparison websites provide extreme price competition
Kieskeurig, Beslist.nl, Google Shopping and so on. All price comparison sites that lead to a dilemma. On the one hand, these websites provide you with a lot more traffic and ultimately orders, but on the other hand, this is only the case with generic products if you are the cheapest. This in turn ensures that you have to reduce your margins even further. In addition, it is virtually impossible to be cheaper than giants such as Coolblue as a 'normal' webshop. How do you get out of this spiral? Below are a number of suggestions:Google Shopping
Make sure that in addition to your webshop you also have a 'real' website with a blog, where you write inspiring and relevant content for your target group. Try to develop a community where you distinguish yourself from the competitors. Make your webshop a part of this content-oriented website. This is excellent for fashion, lifestyle shops, but also for other product groups.
Sell more 'unique' products.
If you still choose to be the cheapest, try to sell as many 'high margin' products as possible in the check-out environment.
4. There are no loyal online customers
In a competitive market like e-commerce, loyalty is rare. Bol.com and Zalando aside, they see many consumers returning to their webshops, but this is not necessarily from 'loyalty' to the shop. This is usually because these are the most well-known webshops. People return from convenience, reliability, attractive prices and (delivery) conditions. How do you ensure that customers still return to your webshop? You will have to think creatively for this.
Using retargeting on the life cycle of your products
You probably know it. You looked at new sneakers on Zalando once and then you suddenly see these sneakers everywhere on banners on other websites. This is retargeting. Zalando example retargetingYou can use this direct way of retargeting, but I advise you to do it a little differently.
Analyse when there are peak moments in your shop, for example in fashion this will be related to the seasons, but also at the end of the month when consumers have received wages again.
You can activate retargeting on Facebook and the Google Display Network, among others, by means of email addresses. Since you have the email addresses of all your customers as a webshop, you can use this.
Make sure you activate a retargeting campaign with former customers just before the peak moments, in the phase that consumers are orienting. Link a nice action to this and you will reach your former customers again.
Discount coupon in the package for a next purchase
Simple, yet effective. Add a discount coupon in the package for a future purchase.
Surprise with personalization
Add a personal handwritten thank you card or send a WhatsApp message that the package has been wrapped.
5. Many visitors drop out in the check-out area
Why do so many visitors drop out at the checkout? You don't fill your shopping cart at Albert Heijn and then throw it away, do you? There hasn't been much research into the number of 'checkout abandoners'. The independent research agency Baymard calculated that in March 2014, the percentage of abandoned shopping carts at a hundred American web shops that were examined was no less than 68 percent! Leaving the checkout environment can have various causes, including:
No good delivery conditions
Unexpected costs
You are required to create an account
Unclear information provision
Unclear return policy
How can you solve this?
Communicate transparently and clearly.
A progress bar at every step of the checkout.
Increase reliability in checkout by adding, for example, reviews and trustmarks.
Activate a retargeting campaign on this target group. As soon as the shopping cart is abandoned, activate a short retargeting campaign with the message and action: “Complete your order now and pay no shipping costs” or “Complete your order and receive a 10% discount today only”.
Check-out area
6. Doing business internationally is difficult
Although doing business internationally is difficult, due to the language barrier, high shipping costs and the different legislation per country, it is a missed opportunity not to sell internationally. There are certainly many opportunities in our neighbouring countries Belgium and Germany. The shipping costs are not too high and for Belgium the language barrier is only partially present. I hear you thinking: but we can never deliver within 24 hours in Germany? That is not necessary. In Germany, services such as Same Day Delivery and 24-hour delivery are not nearly as common as they are in the Netherlands.
In Germany, services such as Same Day Delivery and 24-hour delivery are not nearly as common as they are in the Netherlands.
7. Consumers are becoming increasingly demanding
The customer decides where, when and how the orders are delivered. The average consumer no longer immediately accepts one simple shipping option, the 24-hour delivery, in the check-out. Customers want to choose. It is a must to give customers multiple shipping options, such as delivery to a collection point in addition to the regular 24-hour delivery. At least as important is to give a choice of time slot, so that they can choose whether the package is delivered in the afternoon or in the evening.
Last week, the Logistics & E-commerce event took place. The latest trends, problems and opportunities were discussed with which web shops can make a difference. The e-commerce sector seems to be increasingly running into a number of stumbling blocks. Costs are rising and consumers are becoming increasingly demanding. One of these rising costs is the logistics costs. “25 to 40 percent of the total costs of a web shop consist of logistics costs,” according to Lecturer City Logistics Walther Ploos van Amstel.
1. Free shipping. Yes or no?
The answer depends on your strategy and your type of products. Some companies see 'free shipping' as a marketing expense and accept it if a product of €10,- has to be shipped for free, so that you do not make a profit on the product. These companies think that this leads to repeat purchases from the customer. For a armenia telegram number list scalable and profitable revenue model, this is not recommended for most product groups. Free shipping above an 'X' amount, on the other hand, is recommended. There has been a trend in recent years that consumers are less and less willing to pay for shipping.
2. Help! Returns are a huge expense
Logistics in e-commerce is a two-way street. Especially in fashion, returns are a major problem that reduces profitability. As many as 67 percent of consumers check the return policy before actually placing an order and nine out of ten online shoppers consider it a must to be able to easily return their purchases. Innovative startups are trying to respond to this by lowering the return threshold, "which means that people are more likely to order from your webshop," according to Rein Simonis, Manager Sales & Marketing of e-commerce return startup Local Express. This PostNL startup comes to your door to collect return packages. They call this 'Return-on-demand'. Great for the consumer, but the question is to what extent this is profitable for web retailers. In my opinion, not for the average webshop for the time being.
Not communicating your returns policy clearly, or simply not mentioning your return conditions, is killing your online store.
However, returns cannot be prevented. Not communicating your return policy clearly, or simply not mentioning your return conditions is killing your webshop. Giants like Zalando have a hard time coming up with a profitable strategy. 'Free returns & 100 days return policy' is a USP of Zalando, which is almost impossible for smaller webshops.
Returns at small online stores
Advice is to at least communicate transparently that returns can be made within 14 days, for example, without any problems. Information provision is key in this.
“Analyze products with the highest and lowest return probability” is the advice of Citylogistics professor Walther Ploos van Amstel. Use this data to then steer in your webshop towards products with a low return probability or adjust the pricing policy for the 'high return probability' products.
Packing package
3. Mainly 'low margin' products are purchased
The so-called 'A-brand problem'. These products are popular with consumers, but the margins on these products are wafer-thin. One of the largest online pet shops in the Netherlands, Agradi, recently decided to no longer sell A-brand products because of this margin problem. Smart move? Or are you actually missing out on a large number of customers?
As a 'normal' webshop you often cannot afford this. The advice is therefore to use the A-brands as bait on your website and then start steering margin-oriented. Products with a high margin (B-brands) can be prominently placed on the product page as a suitable alternative to the A-brand.
The price comparison websites provide extreme price competition
Kieskeurig, Beslist.nl, Google Shopping and so on. All price comparison sites that lead to a dilemma. On the one hand, these websites provide you with a lot more traffic and ultimately orders, but on the other hand, this is only the case with generic products if you are the cheapest. This in turn ensures that you have to reduce your margins even further. In addition, it is virtually impossible to be cheaper than giants such as Coolblue as a 'normal' webshop. How do you get out of this spiral? Below are a number of suggestions:Google Shopping
Make sure that in addition to your webshop you also have a 'real' website with a blog, where you write inspiring and relevant content for your target group. Try to develop a community where you distinguish yourself from the competitors. Make your webshop a part of this content-oriented website. This is excellent for fashion, lifestyle shops, but also for other product groups.
Sell more 'unique' products.
If you still choose to be the cheapest, try to sell as many 'high margin' products as possible in the check-out environment.
4. There are no loyal online customers
In a competitive market like e-commerce, loyalty is rare. Bol.com and Zalando aside, they see many consumers returning to their webshops, but this is not necessarily from 'loyalty' to the shop. This is usually because these are the most well-known webshops. People return from convenience, reliability, attractive prices and (delivery) conditions. How do you ensure that customers still return to your webshop? You will have to think creatively for this.
Using retargeting on the life cycle of your products
You probably know it. You looked at new sneakers on Zalando once and then you suddenly see these sneakers everywhere on banners on other websites. This is retargeting. Zalando example retargetingYou can use this direct way of retargeting, but I advise you to do it a little differently.
Analyse when there are peak moments in your shop, for example in fashion this will be related to the seasons, but also at the end of the month when consumers have received wages again.
You can activate retargeting on Facebook and the Google Display Network, among others, by means of email addresses. Since you have the email addresses of all your customers as a webshop, you can use this.
Make sure you activate a retargeting campaign with former customers just before the peak moments, in the phase that consumers are orienting. Link a nice action to this and you will reach your former customers again.
Discount coupon in the package for a next purchase
Simple, yet effective. Add a discount coupon in the package for a future purchase.
Surprise with personalization
Add a personal handwritten thank you card or send a WhatsApp message that the package has been wrapped.
5. Many visitors drop out in the check-out area
Why do so many visitors drop out at the checkout? You don't fill your shopping cart at Albert Heijn and then throw it away, do you? There hasn't been much research into the number of 'checkout abandoners'. The independent research agency Baymard calculated that in March 2014, the percentage of abandoned shopping carts at a hundred American web shops that were examined was no less than 68 percent! Leaving the checkout environment can have various causes, including:
No good delivery conditions
Unexpected costs
You are required to create an account
Unclear information provision
Unclear return policy
How can you solve this?
Communicate transparently and clearly.
A progress bar at every step of the checkout.
Increase reliability in checkout by adding, for example, reviews and trustmarks.
Activate a retargeting campaign on this target group. As soon as the shopping cart is abandoned, activate a short retargeting campaign with the message and action: “Complete your order now and pay no shipping costs” or “Complete your order and receive a 10% discount today only”.
Check-out area
6. Doing business internationally is difficult
Although doing business internationally is difficult, due to the language barrier, high shipping costs and the different legislation per country, it is a missed opportunity not to sell internationally. There are certainly many opportunities in our neighbouring countries Belgium and Germany. The shipping costs are not too high and for Belgium the language barrier is only partially present. I hear you thinking: but we can never deliver within 24 hours in Germany? That is not necessary. In Germany, services such as Same Day Delivery and 24-hour delivery are not nearly as common as they are in the Netherlands.
In Germany, services such as Same Day Delivery and 24-hour delivery are not nearly as common as they are in the Netherlands.
7. Consumers are becoming increasingly demanding
The customer decides where, when and how the orders are delivered. The average consumer no longer immediately accepts one simple shipping option, the 24-hour delivery, in the check-out. Customers want to choose. It is a must to give customers multiple shipping options, such as delivery to a collection point in addition to the regular 24-hour delivery. At least as important is to give a choice of time slot, so that they can choose whether the package is delivered in the afternoon or in the evening.