Global ecommerce sales are set to reach 8.1 trillion US dollars by 2026 – a 56% projected growth from 2021 figures. Despite this immense opportunity that digital commerce offers ambitious brands, the challenges of operating a successful ecommerce business are being compounded by rising operational costs. 

Navigating the rising costs of ecommerce and adapting accordingly is key to securing the strategic scalability and long-term success of your brand. Read on to discover what could be causing your ecommerce costs to rise and how you can identify and reduce unnecessary costs.

Factors contributing to the rising cost of ecommerce

The exact distribution of costs for a brand’s ecommerce operations will vary. But with rising costs across all sectors, pinpointing the underlying causes is the first step to minimizing unsustainable spending. Three key factors contributing to the rising costs of ecommerce are:

Legacy ecommerce platforms

As businesses and their strategic ambitions grow, they need more sophisticated, flexible and ultimately scalable platforms to make these ambitions a reality. 

Whilst retaining the platform that supports your current requirements may appear the least costly option, the reality is that such platforms can block your ongoing and future growth. 

If, for example, your platform does not support the API integrations required to seamlessly scale growth across the full purchase cycle, it may be a sign it’s time to re-platform.

Fragmented solutions

A growing ecommerce business traditionally requires relationships with multiple vendors to provide technology, operations and digital solutions. 

This complex and fragmented multi-vendor ecosystem can bring inefficiencies that increase the cost of delivering an ecommerce brand to market.

Competitive pressures

Competition can be felt both from the threat of new entrants and the digital expansion of well-established brands. Several brands, such as US beauty giant Ulta beauty and household fashion brand Levi’s, have recently stated their intentions to invest in and focus on digital commerce.

As brands seek to reach and retain new customers with differentiated offerings, the costs associated with acquisition marketing channels, new product development and brand evolution quickly add up. 

Without efficient strategies and solutions in place, brands run the risk of creating unsustainable costs in their bid to stand out in a crowded online space.

Three approaches to reducing the costs of your ecommerce operations

So, how can brands best approach the rising costs of ecommerce? You should start by identifying areas of your business where you can build optimizations and efficiencies that won’t compromise your ability to meet your growth ambitions. Here are three such approaches you can take to reduce specific costs in your ecommerce operations:

Utilize first-party data

Data has the power to drive cost efficiencies by informing key decisions around product development, pricing strategies, promotional campaigns and more. 

Whether through analyzing customer behavior, sales trends or supply chain performance, leveraging first-party data can help you identify where unsustainable costs occur and empower you to address them.

Invest in automation

Automation can both reduce labor costs and boost efficiencies throughout the delivery life cycle across inventory management, order fulfilment and customer services. 

The efficiencies gained through automation can also enable brands to scale their ecommerce operations without incurring proportional cost increases.

Explore new platform providers

Re-platforming your ecommerce brand onto a new provider will require an initial investment. However, this will be offset by the medium- and long-term impact of switching to a platform that is designed to scale and adapt to your requirements. 

Such a move can bring revenue opportunities otherwise inaccessible on functionality-poor platforms, bringing scale aligned with your brand growth.

Navigating rising costs with a complete commerce solution

There are plenty of ways brands can seek to effectively reduce costs in specific areas of their ecommerce operations.

However, one of the most effective approaches to minimizing unsustainable costs is partnering with an expert complete commerce solution – one that brings all aspects of ecommerce delivery under one roof across technology, operations and digital services.

A complete commerce approach enables brands to reduce the complexities of multiple vendors, reducing overall expenditures and helping brands navigate the rising costs of ecommerce. 

After re-platforming to Ingenuity Commerce's complete commerce solution, beauty brand Perricone MD experienced just that. Whilst replacing their 44 technology providers with THG Ingenuity’s single solution, Perricone MD saw a 42% reduction in technology costs.  

A complete commerce solution can also increase a brand’s scalability and speed-to-market. Re-platforming in this way ultimately unlocks new revenue opportunities, helping brands to accelerate their growth journey and balance the rising costs of ecommerce with new revenue streams. ELEMIS, for example, were able to achieve a five-year plan in just 10 months after re-platforming with THG Ingenuity.

Facing an ecommerce landscape of rising costs and reduced budgets, Ingenuity offers a complete commerce solution for brands looking to scale effectively and efficiently. Alongside our proprietary ecommerce platform, we combine technology, operations and digital solutions under one roof to empower brands such as Homebase, Coca-Cola, Mondelez and more to achieve their growth ambitions at scale.

Discover how THG Ingenuity could do the same for your brand – get in touch today.