Automation of Business Processes to Improve Profit Margin

This is the first post in our blog series exploring how automation, reporting, and customising systems to align with your business processes can improve net profit margin and positively impact bottom-line profitability.

Net profit margin is a significant indicator of overall business health. Maintaining a strong margin is fundamental in sustaining profitability, particularly at a time when external market pressures serve as a considerable threat. This is especially true in 2023, as companies ride out the storm and make sure they’re in shape to capitalise in 2024.

The Relationship Between Automation and Net Profit Margin

In this post, we discuss how simplifying business processes through automation can help protect and grow profit margin.

The combined effect of unpredictable supply chains, unreliable delivery services, and increased costs of goods, utilities and transport, have had a drastic impact on margin. We can all agree acquiring sales is vital, however, as enthralling as high-volume sales might be – when your margin is unprotected or unknown, sales are reduced to a vanity metric. In short, there’s no point growing sales if you’re also growing costs. Automation can simplify business processes and help you drive down costs to improve overall net margin in three fundamental ways:

Streamlining Inventory Management

A strong breadth in inventory improves your product offering and effectively grows your revenue. However, the broader your inventory, the more complex and laborious your inventory management processes.

Introducing software that automates your management systems simplifies your inventory processes. This reduces the increased labour costs associated with larger inventories and therefore improves overall net profit margin.

Simplifying a Multi-Channel Sales Strategy

Selling your product across multiple sales channels increases product visibility and sales, whilst diluting the risks associated with a single revenue stream. Sales channels can be unreliable. Marketplace algorithms can stop favouring your products and webstores can spontaneously combust. Strategically spreading revenue across multiple channels alleviates these threats to sales. Alas, with every silver lining, there is unfortunately a grey cloud.

Alongside marketplace costs, each channel requires its own time-draining business processes that have a hugely negative impact on margin. When retailers decide to sell their products across multiple channels, they often quickly realise that manual processes are no longer efficient. Software that automates your business processes, such as Volo, allows you to control business processes for multiple channels from one system, rather than having to duplicate manual effort on each channel. This results in a streamlined multi-channel management system that drives down the costs associated with multiple sales channels, and consequently protects profit margin.

Improving Customer Experience

Positive customer experience is one of the most effective ways to positively impact ecommerce profitability. Manual intervention within fulfilment and dispatch processes increases the likelihood of error, delay, and loss – your customer’s three least favourite things. Automating a great deal of this process gives you a competitive advantage by improving the buying experience for your customers. Improving your customer experience positively impacts your margin in two ways:

1. It reduces customer dissatisfaction, resulting in fewer returns and less need for costly customer service protocols.
2. It increases customer retention rates resulting in more cost-effective customer acquisition and higher customer lifetime values.
   
   

To summarise, automation improves ecommerce margin by streamlining inventory management, simplifying multichannel sales strategy, and improving customer experience.

Interested in improving your net profit margin through automation? Talk to us via our contact page for more information.