7 real tips shared by M’sian e-commerce sellers on how to reduce monthly operational costs

[This is a sponsored article with Grab.]

Many entrepreneurs would tell you that managing monthly expenditures and cost wisely is one of the main factors of their survivability throughout the pandemic. 

Regardless of the pandemic, balancing monthly overheads while maintaining a healthy revenue will always be key to a business being self sustainable. These costs could include manpower, utilities, marketing, and more. And as a business grows and scales, so too do these costs.

We interviewed a few local businesses like BITTER/SWEET, The Asli Co., Sugirl, and Tracey to get some practical advice on how they reduce their own monthly operating costs to maximise profits.

1. Differentiate between “what you need” and “what you want”

Carmen, the co-founder of Sugirl Desserts, a brand for modern, healthy desserts inspired by local recipes, had some painful lessons in this vein to share, learnt from their previous business decisions.

For example, they wanted to create different types of packaging for the same product, which became an unnecessary cost down the road. “Do not invest a substantial amount of money in packaging before the product is proven to be accepted by the market,” she warned. 

Spending on renovations for their retail store to create a retractable awning for outdoor dining was another unnecessary expense, because they soon realised that no Malaysian was willing to dine outdoors in our eternal summer.

2. Expand only when it’s beneficial to your business

Renting an office is one of the largest factors when it comes to monthly operational costs. While having a dedicated space makes it easier to collaborate and there are fewer distractions, a small team might not be able to fully utilise the entire facility.

BITTER/SWEET, a business that produces artisanal cakes and cupcakes, operates in a home studio to reduce rent and leasing costs. In addition to that, they don’t have to pay for additional water, electricity, and internet bills, further decreasing their overall expenditure.

While this strategy means that they don’t have a storefront or brick and mortar store for now, it also equals to not footing any unnecessary costs until they are absolutely ready for (or want) expansion.

3. It’s ok to be “kiamsiap” for the right things

Being stingy is usually seen as a negative trait, but when it comes to business, it pays to be penny-pinching in the right ways. 

Carmen told us that rental is a cost that they are unable to reduce at this moment, but when it comes to utilities like electricity, they are purposely “kiamsiap” about it. 

During rainy seasons and when it already feels cold, there would be no need to leave the air-conditioning running the whole day, especially if there are no customers. That’s when they will choose to turn it off and save every cent.

4. Plan and strategise carefully to reduce wastage

In the first few months of operations, Carmen shared that food wastage was a huge problem.

“If a food operator doesn’t know how to estimate their sales and simply purchases ingredients, there will be a lot of wastage and that easily eats into profits,” she admitted.

Everything is planned strategically to reduce costs and wastes, such as proper food storage, portion control, and restocking amount. Every dessert at Sugirl Desserts is based on a clear recipe and standard operating procedure so that the portion is fixed. No estimation is required because even 10ml of water is specified. 

There is also a schedule that determines what to buy and how much to buy, which the team at Sugirl Desserts follows diligently. 

5. Outsourcing is your friend

U-Mae Tan, founder and baker of BITTER/SWEET said that by utilising third-party services to send her cakes to customers, she is able to focus more on production and growing the business instead of going through the hassle of looking for a parking when delivering products to their customers.

She utilises delivery services to collect stocks and ingredients from suppliers, which saves her more time and she can focus more on her business orders.

The Asli Co. depends on third-party delivery services as well to send raw materials to Orang Asli mothers who will then turn them into various products including eye pillows, foldable tote bags, and cute pet bandana collars.

By outsourcing this aspect of the business from the start, The Asli Co. founder Jason Wee shared that he’s saved about 336 hours on the road and a lot of money on petrol.

Relying on on-demand delivery service providers, such as GrabExpress, is therefore a common strategy for convenience and speed, but a factor to consider in this is cost. 

Thus GrabExpress currently offers a subscription plan called Super Sender that provides businesses with discount vouchers that can help them to save more than RM150 a month on deliveries.

It costs RM3 per month for the Super Sender Plus, which gives a discount of 5% on 200 deliveries a month, while the Super Sender Lite provides a 3% discount on 100 deliveries.

Example: If a seller has 200 deliveries a month that costs from RM15 onwards per delivery, with the 5% discount for each delivery they can save a minimum of RM150. Find out about how GrabExpress Super Sender works here.

Aside from the delivery aspect, to save even more time to focus on business development, Jason began outsourcing talents for bookkeeping, accounting, and social media marketing too.

Carmen too shared that by outsourcing content creators and designers, you have the flexibility to pick and choose the right freelancer for your company.

6. Choose your service providers wisely

Choosing the right delivery service is a tricky decision. Not only do you have to take into consideration whether you are within range of the delivery service’s coverage area, but after-sale services are equally as important.

Without after-sales services, issues that crop up after deliveries cannot be easily resolved. This could then be seen as bad customer service, even though these issues may have been caused by external factors.

U-Mae herself has benefitted from the live chat feature that’s available on Grab as they are able to address her issues immediately.

And while you may think that part of saving operational costs means opting for a cheaper delivery service, it could end up costing you a lot more in the long run if it is unreliable.

An instance of this happening was when Tracey, a local handbag designer and distributor, received high numbers of returns because their bags were constantly damaged during delivery.

By picking the right service provider, the number of damaged goods are vastly reduced. 

“Choosing an affordable delivery service provider is important, but getting them to hand the items to the customers well and taking care of them throughout the journey is even more important,” the founder noted.

Johnson understands that the era of instant gratification is here whereby people expect to get their online purchases as soon as possible. Now on-demand delivery services, it is possible to have products delivered in a day. 

“Before GrabExpress, our customers had to wait for 2-5 days to get their bag. It takes a while, and their satisfactory level might be affected.”

7. Cultivate close relationships with your suppliers and vendors

Having a good relationship with suppliers and vendors gives businesses the opportunity to create win-win situations. By spacing out the payments to your suppliers, monthly costs can be further controlled.

Carmen has made it a point to always discuss with her vendors on payment terms that can benefit both parties and ensure a healthy cash flow.

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With all that money saved up, it is a wise choice to reinvest those savings. For instance, BITTER/SWEET reinvested their savings towards further developing the business.

Tracey, on the other hand, used the extra cash saved up to purchase useful supplies that will be beneficial to the company. Investing even a small amount could be beneficial in the long run.

Since all businesses operate differently, you need to take a closer look at your operating cost and determine what can be optimised and reduced.

If you own a business and are looking to outsource your deliveries, GrabExpress Super Sender is an alternative method to possibly lower your monthly operational cost and save time.

Here’s how you can subscribe in 3 steps and then use your vouchers on your deliveries:

Featured Image Credit: Sugirl, BITTER/SWEET, The Asli Co., Tracey