Who reported better than expected earnings this morning.
1.) Their e-commerce jumped by 74%, meaning online sales are very important, even though this has a lower profit margin there is also many benefits of having a strong online presence. As online sales jumped, their foot traffic fell by 16.5% but their customers were buying more items per visit (ie…hoarding).
2.) They reduced their operating costs by closing lower profit areas in their business like the optical & auto departments, along with reduced travel expenses. Cutting operating costs of nonessential business is a must in this new economy.
3.) Their employee costs rose along with additional costs due to Covid-19, these are aspects of business that everyone is facing.
A small business can use analytics to help understand what product items are less profitable or what forms of marketing are producing the least amount of customers and thereby reducing those less profitable areas within their business. Also a small business can use analytics to understand what products are in high demand by their customers and on which days of the week. These are just a few of the cost reducing techniques that can be used to offset the increased costs in today’s business environment.
Walmart has one of the worlds best distributions systems and a small business can learn from this to develop their own micro distribution system to help reduce their operating costs. Granted a small business will never have the leverage that a gigantic business like Walmart has but if they think on a micro version of it, they can leverage their own business aspects within their own local area. Case in Point; the small restaurant business owner can reduce some of their costs by buying direct from the producer of their food products instead of buying from the local grocery store.
The small business owner needs to think of what their customer’s needs are and how to produce that need at a reduced cost. Sometimes there are good ideas developed by the big businesses that if scaled down to a small business size, can used by the small business owner.