Revenue is rising, but profit keeps lagging behind. It’s a pattern many e-commerce entrepreneurs recognise. Costs are increasing on all fronts: logistics are getting more expensive, advertising costs more and the competition is breathing down your neck. Protecting your margin therefore requires a broader perspective than just the selling price.
Below are six concrete measures that help webshops improve their margin, both operationally and on the fiscal side.
1. Actively negotiate your purchase price
The most direct way to protect your margin is on the purchasing side. Yet many entrepreneurs leave money on the table here. They accept a supplier’s standard price, while there is often room for better terms.
Think about volume discounts, longer payment terms or exclusivity agreements in exchange for loyalty. Even a few percent lower purchase price has a significant effect at scale. A euro saved on purchasing comes back almost entirely into your margin, unlike a higher selling price where platform costs and VAT partly increase alongside it.
Also periodically compare alternative suppliers. Not to always switch, but to negotiate from a stronger position.
2. Avoid VAT mistakes when selling abroad
Do you sell in multiple EU countries? Then you are required to apply the local VAT rate once you exceed the threshold of €10,000. And those rates differ more than many entrepreneurs realise.
In Germany, the standard VAT rate for most products is 19%, but for books or certain food products only 7%. In the Netherlands, the standard rate is 21%, but reduced rates apply here too. If you calculate the wrong rate, you pay too much or too little. In both cases it costs you: either in the form of a tax assessment, or by making your product unnecessarily expensive for the customer.
If you forget your VAT registration in a country where you do sell, this can add up to fines and corrections over multiple years. That is a direct hit to your margin that is entirely avoidable.
3. Include EPR costs as a fixed cost item
EPR stands for Extended Producer Responsibility, the producer responsibility for packaging, electronics and batteries. In countries like Germany, France and Spain, webshops are required to be registered and pay contributions for the collection and recycling of packaging materials.
Many entrepreneurs know this, but do not structurally include EPR costs in their margin calculation. The result: you think a product has a 40% margin, but after deducting EPR contributions it turns out to be a few percentage points lower.
Treat EPR costs as a fixed direct cost per product, just like shipping costs or platform fees. That way you won’t be caught off guard. Questions about your EPR obligations? Juul is happy to help you further.
4. Manage shipping costs and delivery mix
Logistics is one of the largest cost items in e-commerce, and also one of the most controllable. Some concrete starting points:
- Periodically compare your shipping contracts, even if you are satisfied with your current carrier
- Consider out-of-home delivery (collection point or parcel locker) as a cheaper alternative to home delivery
- Adjust packaging to the product to avoid volumetric weight surcharges
- Set a minimum order value for free shipping
Small adjustments in the delivery mix can quickly save a few euros per shipment, and that adds up fast.
5. Structurally reduce returns
Returns are expensive: not just the return shipping, but also the processing, quality control and any depreciation of the product. In sectors like fashion, return rates can reach 40%, but outside that sector too, returns are a creeping margin killer.
Invest in product pages that manage expectations well: clear sizing information, realistic product photos and honest descriptions. The better a customer knows what they are buying, the less chance of disappointment and a return.
A small contribution for returns, for example €0.50 to €1, can also help reduce unnecessary return behaviour without significantly affecting conversion.
6. Keep a close eye on platform costs
Do you sell via Amazon, Bol or other marketplaces? Then you pay fees on every sale, sometimes 10 to 20% of the selling price. That is a large portion of your potential margin.
Regularly assess which products are most profitable on which platform. Sometimes it is more attractive to sell a product through your own webshop, where you pay no platform fee but need more marketing effort. Advertising costs on platforms like Amazon should also be included in your margin calculation per product. A high ROAS says little if the underlying margin is tight.
Protecting your margin starts with insight
Protecting your margin is not a one-off action, but an ongoing process. The entrepreneurs who do this best are those who have structural insight into their costs, from purchasing to VAT costs in e-commerce and from logistics costs to EPR costs.
Many of those costs can be influenced, but only if you first have a clear picture of them. Do you have questions about the fiscal side of your margin, such as OSS registration, VAT registrations or EPR? Feel free to contact the Staxxer team.
Want to read more about margin in e-commerce? Also check out our article Margin in e-commerce: why it matters more than ever.
