E-commerce companies need to evaluate each product when selecting products, clarify its advantages and disadvantages and compare it with similar products, so as to accurately select products with greater sales advantages.
The size and weight of the product will have a very large impact on the procurement cost. First, large products require higher packaging costs. Second, large and heavy products have higher requirements for transportation methods, and e-commerce companies may need to pay higher transportation costs. Third, for each product, e-commerce companies need to prepare a certain amount of inventory. The larger the product, the higher the storage cost.
The increase in procurement costs will undoubtedly reduce the profits of e-commerce companies. So, can e-commerce companies pass on the procurement costs to consumers? For example, let consumers pay the shipping fee when purchasing products. Although this can reduce procurement costs, it is not a long-term solution. Nowadays, free shipping has become the mainstream. If postage is charged, the conversion rate will inevitably be reduced. Therefore, e-commerce companies need to pay attention to the size and weight of products when evaluating products, and make free shipping the basis of operations.
However, free shipping will also compress the profit margins of e-commerce companies. In order to ensure the competitiveness of products while making profits, e-commerce companies need to control the size and weight of products to reduce the transportation costs of products.
At the same time, a product usually contains multiple SKUs (product minimum inventory unit, which refers to the color, size, etc. of a single product). Taking T-shirts as an example, there may be three sizes: large, medium, and small. Different sizes may also have different colors, which makes the SKU more complicated. The more SKUs a product has, the higher the cost for e-commerce companies in data tracking and inventory maintenance. In this case, e-commerce companies need to control the SKUs of products.
Tips
Generally speaking, the weight of a product is directly proportional to the transportation cost, but there are also some products that are not heavy but require higher transportation costs. For example, when e-commerce companies sell perishable products such as cakes, ice cream, and yogurt, they need to overcome the difficulties in warehousing and transportation of such products and pay higher costs. Therefore, e-commerce companies need to set reasonable logistics time when choosing such products and make good transportation cost plans.