Start an online store without the systems eating the margin

The markup on a product tells you almost nothing about whether you make money. What decides it is what is left once the order has been packed, shipped, paid for and perhaps returned. Shipping, packaging, payment fees, returns, marketing and every system you pay for belong to each order, and together they are often larger than the purchase price.

In the example, SEK 25 is left out of 400. That is not unusual, and it means every krona you save on shipping or systems goes straight to the bottom line. Shipping that is five kronor cheaper raises the profit by 20 percent.

Most shops grow the same way: a store platform, a few apps, a shipping tool, a spreadsheet for stock and an accounting program. On their own they are reasonably priced. Together they become a cost that grows before the order volume does, and work that nobody puts a number on.

• Fixed monthly fees hit hardest while you are small. SEK 3,000 a month is SEK 30 per order at 100 orders, and SEK 3 at 1,000.
• Every link between two systems can break. When stock stops syncing you sell goods you do not have, and you find out when the customer complains.
• Entering data twice is a hidden wage cost. Moving orders across, copying tracking numbers or booking entries by hand takes hours every week.
• Lock-in periods and start fees tie you to a choice you made before you knew what you needed.

Fewer systems that cover more are almost always cheaper than many specialist tools, in fees and in time. And while you are small, a fee per order beats a fixed monthly fee, because the cost then follows the revenue.

Shipping is often the single largest cost after the goods themselves, and you can influence it more than most people think.

• Delivery to a service point is usually cheaper than home delivery. Offer both, but make the service point the default.
• Volumetric weight sets the price of light but bulky parcels. A box a few centimetres too large can move the parcel up a whole price band.
• Compare the price per shipment for your most common parcels, not the list price. An agreement of your own pays off only from a certain volume, and until then a shared agreement through a service often gives a better price.
• Set the free-shipping threshold from your calculation. It belongs where the average order carries the shipping cost, not where a competitor has theirs.
• Allow for fees on top of the freight: fuel surcharges, fees per label and surcharges for wrong dimensions or weight.

Goods on the shelf are money that is not working. Too much stock ties up capital, too little loses sales, and a wrong stock figure gives you both at once.

• Overselling costs more than the order: a cancellation, a disappointed customer and often a worse review.
• Reorder based on sales rate and lead time, not gut feeling. Track which items are not moving and stop buying them.
• A spreadsheet works while one person does everything. Once two people pick, or you sell in more than one channel, it stops adding up.
• Give every item a fixed location. It cuts the searching and lets someone other than you do the picking.

A mispick means return shipping, a second shipment, packing time again, a customer who waits and sometimes goods that cannot be sold again. A single mispick can wipe out the profit on ten orders.

• Pick from a list sorted by location, not by order. It saves steps.
• Scan the goods while packing. A barcode that does not match stops the mistake before the parcel leaves the building.
• Keep a few standard boxes that fit your most common orders. The right size saves both material and volumetric weight.

Consumers in the EU have a 14-day right of withdrawal on distance purchases, so returns will come regardless. What you can control is what they cost.

• Decide who pays for return shipping and state it clearly in your terms.
• Receive the return against the order, check the goods and put them back into stock the same day. A return lying in a pile is goods you cannot sell.
• Refund and credit the same way every time, so the accounts add up without rework.
• Track the reasons for returns. A wrong size or a photo that promises too much can be fixed in the shop.

• VAT: if you sell to consumers in other EU countries for more than EUR 10,000 a year, the buyer's country's VAT applies. The OSS scheme lets you report it in a single return at home.
• Payment providers often deduct their fees before the money reaches your account. Book the gross amount and the fee separately, or the payouts will never match the sales.
• Let orders, returns and payouts flow into the accounts automatically. Booking each order by hand does not scale and goes wrong when things are busy.
• Value your stock continuously. You need to know what the goods sold cost, not just what they sold for, to see the real margin.

Handing storage and shipping to a third-party warehouse (3PL) frees up time, but it is rarely the cheapest option for a small shop. The price list often has many parts: a start fee, storage per pallet or shelf, handling per order and per line, packaging, returns handling and a monthly minimum.

Work out what an order costs with them, every part included, and compare it with what it costs you, your own time included. For many the middle way works best: run the stock yourself, but with a system that makes the work as structured as a warehouse would. Then you can still outsource later without starting over.

• Automate what is done every day first: order import, shipping, stock and accounting. That saves more than any single clever tool.
• Track the cost per order every month, split into goods, shipping, packaging, payment, systems and returns. That is the figure that shows whether growth is profitable.
• Choose systems you can leave. Check that you can export your data, that there is an open API and that there is no lock-in.
• Switch before it hurts. Moving 500 items is a day's work, moving 5,000 in peak season is a project.