5 Methods to Strategically Increase Profit Margins on Ecommerce

Pattern Data Science

November 11, 2019

ICYMI, eCommerce sales are booming (and they’re only expected to keep growing). If you’re going to take your fair share of the profit, you have to earn it. At Pattern, we’re experts at helping brands increase their margins and profits without sacrificing quality products and consumer trust in the process. In fact, our partners' revenue grows by an average of 40% in their first year with us.

Here are five things you can do to increase your margins for online sales without cutting corners or spending oodles of money:

1. Drive more traffic to your products

2. Utilize premium content

3. Optimize for Amazon SEO

4. Scale to international marketplaces

5. Control dynamic pricing

Driving more traffic to your products via advertising can help you increase your eCommerce profit margins.

1. Drive more traffic to your products

This first one may seem obvious. If you’re going to increase your sales, you need more people seeing your products. Using advertising and Amazon marketing services to your advantage can help you quickly see a rise in visitors and, ultimately, conversions.

Create an advertising strategy.

Without a solid advertising strategy, buying ads on Google, Facebook, or Amazon is basically just throwing cash to the wind and hoping for the best. 

Either on your own or with a partner like Pattern, identify what customer segments are important and what their behaviors are. 

Then create great targeted product pages that are persuasive, concise, and interesting to the consumer. The more information you have about your consumers' behavior in your arsenal, the better. If consumers feel like you know and understand them, they're more likely to stick around and end up purchasing your product.

Let data change and improve your strategy over time.

Next, use A/B testing to see which ads are working well and which aren’t. The key here is to never settle and realize there's always room to grow. Maybe your customer segment could be more dialed in. Maybe one image works better than another. Test, test, test and then let the data inform your strategy over time!

At Pattern, our advertising team uses our proprietary technology Predict to automatically adjust hundreds of thousands of keyword bids to ensure we’re putting money behind keywords that get our partners the highest returns. We’re able to test which words perform best and then optimize advertising strategies (and bids) from there.

Track your success.

Finally, make sure you have a measuring system in place to ensure you can track each advertising campaign. That way, you’ll be even more prepared as you head into the next one.

Learn more about Amazon Sponsored Products, Sponsored Brads, Display Ads, and more on this post about Amazon AMS.

Enhanced Brand Content on Amazon can help you increase your margins because consumers are more likely to spend more time on your product pages.

2. Utilize premium content

Customers are more likely to purchase products that look legitimate. After all, if one product costs 30 cents and another costs $3, but the images and product descriptions are terrible on the cheap one, consumers are much more likely to choose the latter. 

“Premium content is a big way to improve profits,” said Kevin Lamb, Pattern’s Marketplace Insights Specialist. “You have to look way better than the average listing or you’re not going to sell.”

Use on-site content optimization options.

Most eCommerce sites offer options to improve content offerings. 

For example, Walmart gives each page a content score that guides retailers to make their product pages more effective. They even offer content audits to help retailers sell and show up more on their site.

Amazon’s version is called Enhanced Brand Content (EBC). EBC helps brands create individualized product pages that increase conversion rates and raise profit margins. By using EBC, you can add extra content to your Amazon product page, make it more mobile friendly, and ultimately keep more customers on your page for longer.

Creating a solid Amazon SEO strategy can ensure that your products rank on the first page, helping increase your profit margins by increasing the number of customers looking at your product.

3. Optimize for Amazon SEO

If you’re going to increase your margins, you have to show up on page 1 of Amazon. (Very few customers look beyond the first product page.) 

Know that Amazon SEO is different than Google.

Not all search engines are created equal. Amazon uses the A9 ranking algorithm to decide who shows up first on their product pages, and it’s not at all the same as Google. 

We recommend putting someone on your team (or partnering with someone) who knows the A9 algorithm and all its nuances inside and out. Otherwise, your SEO optimization isn’t going to take you very far.

Get the basics down.

Pattern’s SEO experts recommend optimizing your product titles, backend search terms, and product descriptions first to include keywords related to your product. However, there’s so much more you can do with Amazon SEO. 

Learn more about how to get started with Amazon SEO here.

Expanding your eCommerce offering to include international marketplaces like Tmall and Alibaba can help increase your profit margins exponentially.

4. Scale to international marketplaces

Finally, a key part of increasing your margins on eCommerce is increasing your audience size. If you’re only selling on Amazon or eBay or Walmart, you’re missing out on huge international markets like China, Europe, and beyond.

Analyze whether or not you’re ready to go international.

It’s true, not everyone is ready to sell on marketplaces like Tmall or Alibaba yet. However, you might be more ready than you think. Pattern’s international eCommerce experts can tell you whether your product is ready to enter new markets. 

Creating and enforcing a MAP policy can help you make sure that unauthorized sellers aren't taking away your precious sales (thereby helping you increase your margins).

5. Control dynamic pricing

.Fighting for control over your product pricing may be the most important factor in creating (and maintaining) a high profit margin eCommerce strategy. 

Since sellers on Amazon and other marketplaces are constantly in competition, price erosion can often affect brands and cut deeply into their margins as each seller tries to win the Buy Box.

Create a MAP policy.

A Minimum Advertised Price (MAP) policy can help you create fixed price points for your products among your many sellers. By requiring your sellers to advertise at exactly how much your products are worth, you can save yourself many headaches (and shrinking margins) in the future. 

Our partner brands' legal counsel helps Pattern partners create MAP policies that are thorough and binding.

Enforce your MAP policy.

Sellers aren’t that great at maintaining price parity. However, if you have a MAP policy in place you won’t be left helpless when the inevitable price dropping war ensues. If unauthorized sellers are disrupting your MAP policy, you can work to get them removed, thereby saving your margin. 

We know these four strategies will be helpful for you as you try to improve your eCommerce margins. Learn more about how Pattern can grow your profit margins by reaching out below.

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Sept 27, 2022

Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)
Sept 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)
Sept 13, 2022

Global Ecommerce Weekly News: 13th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon scales back on US warehouse facilities Amazon is shutting down two facilities with 300 employees, discarding plans for 42 facilities, and delaying plans to open a further 21 buildings across the US. The ecommerce giant is scaling back on hiring as well as the expansion of its vast delivery network, as it was left with an excess of space following its rapid expansion during the pandemic. [Read more on Business Insider](https://www.businessinsider.com/amazon-closes-2-facilities-scraps-plans-42-new-buildings-report-2022-9?r=US&IR=T) --- Other Marketplace News --- JD.com is ‘betting’ on ecommerce grocery market Amidst a slowing economy and a decline in ecommerce, Chinese ecommerce giant JD.com has increased its urgency to seek new growth engines. The company is looking to boost its online grocery business through offline partnerships and expansion into lower-tier cities, where it may be able to unleash more consumption power. [Read more on The Star](https://www.thestar.com.my/tech/tech-news/2022/09/08/chinese-ecommerce-giant-jdcom-bets-big-on-online-grocery-lower-tier-markets-amid-slowing-economy) Shopee shuts operations in Argentina, Chile, Colombia, and Mexico Sea’s ecommerce arm, Shopee, has shut local operations in some LATAM countries but will continue to maintain cross-border operations in a few markets. Latin America is Sea’s most important region following South-east Asia, accounting for close to 19% of its revenue in 2021. The move away from these countries is largely due to increased levels of macro uncertainty and rising interest and inflation rates, and rather putting a focus on its core operations. [Read more on Straits Times](https://www.straitstimes.com/business/companies-markets/seas-shopee-shuts-operations-in-argentina-chile-colombia-mexico-sources) --- Other Ecommerce News --- Instagram scales back in-stream shopping elements Instagram is re-examining its approach as it hasn’t been able to make ‘fetch’ happen. ‘Fetch’ in this context being the online shopping trends which have become all-consuming in China, and what Western social platforms have been hoping to add into their apps to make them more addictive and revenue-generating. Consumers have not been swayed by the latest shopping tools on TikTok and Instagram, leading to Instagram scaling back its in-stream shopping program. [Read more on SocialMediaToday](https://www.socialmediatoday.com/news/instagram-scales-back-in-stream-shopping-elements-as-it-re-examines-its-app/631276/) FedEx Express supporting the growth of cross border ecommerce FedEx express has expanded its international commerce shipping service to four more markets across the Asia Pacific, Middle East and Africa (AMEA) region in an effort to support the strong development of ecommerce in this region. Three of the fastest growing markets, the Philippines, Indonesia and Vietnam are leading Southeast Asia’s ecommerce sales, which is set to reach $100 billion by 2023. [Read more on Post & Parcel](https://postandparcel.info/149889/news/e-commerce/fedex-express-supports-the-growth-of-cross-border-e-commerce-within-the-amea-region/) India ramps up hiring as companies prepare for shoppers Ecommerce companies are getting ready for the festive season by rapidly expanding their temporary workforce. As ecommerce in India grows, the country is predicted to have 372 million online shoppers by the end of 2022. The festive season this year, running from October to December, is expected to see a two-fold increase in logistics and delivery alone. During this period, companies are predicted to add 20% more to their existing workforce base, with a 8-10% higher pay scale compared to last year. [Read more on Business Insider India](https://www.businessinsider.in/business/ecommerce/news/the-great-indian-festival-of-hiring-e-commerce-companies-gear-up-for-indias-shoppers/articleshow/94000346.cms)