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Spending money to make money is a practice as old as time. To keep a business afloat and profitable, energy costs must be reduced. And so do operating expenses, of which there can be many.
Generally, there is a need to make up for costs through profits and revenue. Selling enough products, solutions, and maintaining commercial partnerships in exchange for monetary gain which later serves as the business owner’s salary, employee payroll, marketing costs, and practical expenses.
If the influx of money can keep up with these costs, things might end well for everyone involved. But if the bills that come with maintaining your business exceed the profits gained from it, something needs to change.
Out-of-control management and maintenance costs are a key reason why many businesses eschew brick-and-mortar facilities in favor of online businesses. But we are not talking about renovation, rebranding, and other short-term expenses.
Power bills are one of the most persistent income-draining factors in big and small commercial sectors. But fuel and electricity are important for running businesses and supply chains, making them necessary expenses for many businesses.
But even though it is not realistic to purge the need for energy-based utilities in e-commerce, there are ways to maintain the viability of a small business or corporate venture by lessening demands.
Options like sustainable, low-cost energy solutions are always in high demand. For businesses, however, an opportunity lies in moving to e-commerce to ditch the reliance on a mostly electricity or fuel-powered front.
Saving money on heating, light, or petrol charges is not necessarily the biggest driver of companies opting for a digital interface. However, the facts are very much in favor of this approach, which translate into incentives for choosing what should be a less energy-consuming platform.
For some companies, staying offline seems like a viable option even if you disregard the competitive disadvantage. However, if you pay any attention to trends in global economy, you will no doubt know that energy prices are among the most volatile, inflation-prone aspects of the market.
The European market is no stranger to energy price hikes and the impact they have on commercial and residential sectors. However, given recent geopolitical tensions and ongoing health crises, the situation has gotten significantly worse.
Reports show that, during the first quarter of 2022, overall gas imports rose by 10%. Meanwhile, a staggering 500% year-over-year rise was detected in prices of available fuel units at commercial stations.
Not only did this impact transport, domestic heating, and a wide range of industrial needs, but also had an impact on the power sector. During the same time period, France, Greece, Italy, and the Iberian Peninsula reported record highs in wholesale electricity rates, ranging variously between three- to four-fold from a year ago.
These findings also showed faint but noticeable decreases in net gas and electricity consumption by 8% and 1%, respectively across the EU. This indicates an interest in energy saving measures fueled by the volatile nature of current energy consumption trajectories.
Fuel and gas costs in the states experienced widespread highs compared to last year nationwide. This was most prominent in June 2022, as year-over-year analysis showed an increase of more than 41% in energy costs, believed to be the highest in over four decades. Meanwhile, electricity prices surged to a twelve-year high of over 15%.
Historically, such increases in the affordability of energy have had a massive effect on household spending across the country. But more importantly, it has also been associated with significant overhauls and sizable tectonic shifts in various commercial sectors and business practices. And according to most experts, history is on course to repeat itself.
With the wave of widespread energy inflation, it is important to opt for cost-effective alternatives to our most wasteful practices. In light of reports and projections, it seems that running a brick-and-mortar business is going to become increasingly costly, especially for small businesses.
One important way to get around this is to move your business online, as it has a few important benefits.
It is virtually impossible for businesses to get rid of all their energy dependent processes, like manufacture, delivery, and processing. However, in order to operate with less energy, e-commerce offers businesses the ability to free themselves of other inefficient practices.
Without having to operate in an office or commute long distances for work, online businesses and telecommuting enables business owners to adopt more energy-efficient ways to get the job done.
Given recent events, the rise of online businesses and working from home has led to significant gains in economical work practices and a decline in losses due to inefficient commercial infrastructure.
Usually, with any kind of gains, there are some noticeable drawbacks. But e-commerce seems to be the gift that keeps on giving. Digital enterprises benefit from internet connectivity and speedy communication to accomplish significant tasks while cutting consumption expenses.
This means that online businesses are not limited to importing or selling products through the confines of local market circles. Instead, can now branch out to international audiences from the comfort of their area code.
Brick-and-mortar facilities often must provide massive, existing inventories of products in order to run a convincing front. That requires producing industrial goods by the hundreds of thousands, and then having them shipped to the place of business. But if these manufactured goods fail to sell out, they might prove to be a waste of energy and resources.
With online businesses, that does not have to be a problem. All you need to provide is an online catalog, product descriptions, a way for buyers to pay and order, and a disclaimer underlining how long they must wait for their order to arrive.
This way, rather than waste fuel and electricity on cautionary supplies, products can be made or retrieved as ordered. This not only limits the manufacturing process, but also the number of trips and horsepower to deliver them across vast distances. Small businesses are in an especially great position here. But also big players are using this strategy.
Ever wonder why the basic version of the MacBook is available within days, but you have to wait weeks for other configurations? It’s because Apple only starts producing these “non-standard” configurations (with higher RAM or Drive capacity, for example) when enough orders are placed. Think about whether this practice could be applied to your business. If you control complete production, perhaps this could be a way to reduce overall costs and not produce “to stock”.
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Projections and reports supporting the positive effects of e-commerce on energy consumption did not appear out of thin air. There are practical, real world examples of this phenomenon that are rooted in logic and promising business prospects. We can elaborate this point by going through potential scenarios where having an online business saves on energy.
The food industry has been one of the most prominent players in the arena of e-commerce and has gone through multiple changes over time. Traditionally, restaurant owners stay in business by supplying meals, a space to have them, and someone to serve them.
Of course, running a local eatery might bring in the cash, but expenses are very much part and parcel of this deal. Energy bills and gas prices for food joints are no jokes. But as you have likely guessed, if you are cooking food, one of these is a necessary expense. So what do you do?
Many restaurants now serve their food entirely or largely to remote customers, where orders are booked through the website and picked up or delivered accordingly. As for the fuel costs for deliveries, that is a much more manageable expense than the power needed to create an entire ambiance.
Even for in-person dining establishments, profits multiply by branching out to at-home buyers as you do not have to spend your own money to accommodate them through space, lighting, heating, air conditioning, or Wi-Fi.
Furthermore, online reservations offer a far more efficient, error free mechanism for accepting reservations, booking orders, and accepting payments. This reduces miscalculation, overbooking, and miscommunication, and the potential losses that come with all of them.
If even Covid hasn’t got you delivering, try to think about whether today is a good time to introduce online ordering and delivery of food from your restaurant.
Vast supermarkets are high in demand, but not everyone has access to them. That is because superstores come with exorbitant running expenses resulting from the energy and fuel needed to operate huge outlets properly.
But while they have the option to lower their energy-dependence, people are not enthusiastic about heading to poorly lit or unkempt facilities. And that is ignoring the fact that they still need power to keep refrigerated items in selling condition.
E-commerce websites offer all the benefits of a physical mega mart (and then some!) without depending on the costs of running a costly, location-based service.
Here, you do not have to ship items from warehouses unless an order actually takes place. All your inventory is readily available on a visually stunning, user-friendly catalogue with clear and concise product details which offer more insight to buyers than they might get while perusing through aisles.
And you even make up for delivery expenses by being able to sell products to customers from distant locations.
The fact that customers are more likely to get discounts from online stores than from physical retailers is as clear an indication as any of the economic advantages of running an online store.
Today it is no problem to ship frozen products within 24 hours in special deliveries (of course, most delivery companies have been offering this for years), and the same goes for fragile goods, food, not to mention electronics and clothing. If you run even a small local business, combined with online sales and a good strategy for promoting your store on social media, you can dramatically reduce costs and increase sales many times over.
Running an online business does not just benefit customers and business owners, but employees as well. For instance, financing and accounting assistance is an important sector that serves both commercial and non-profit causes. But accounting and taxation firms are increasingly flocking towards the online business model.
The reason for that is pretty straightforward: regardless of whether you are part of a small agency or major corporate firm, operating through office buildings has no shortage of frustrating expenses.
To deal with this, management might have to find a way to meet rising bills properly. If no other solution provides itself, their only remaining option might be to slash the salaries of skilled employees or deprive them of much deserved promotions. And if expenses continue get out of hand, someone might end up being out of a job just so that the firm can survive.
Obviously, no one wants to be on the deciding end of such a predicament. Therefore, digital services work to offer efficient and impactful services to clients who need them without relying on energy-draining places of businesses that might be too much for a business to work with.
In the age of covid, many companies have experienced what it is like to work with their teams remotely. Some companies, like WeLoveWeb, have never even returned to their offices.
This allows these companies to actually cut costs significantly, or recruit experts from all over the place (since employees don’t have to move to the city where the company is based or has an office). As a result, the service company can use this cost reduction as a competitive advantage and offer better and more qualified professional services at lower prices to clients.
Retail energy expenses are a severe headache that no one wants to deal with if their means do not satisfy demands. And as we have already discussed, the future of fuel and power bills does not look good, even in the world’s most stable markets.
Therefore, people and businesses are increasingly working to avoid the ironies of letting air conditioning bills suffocate them and petrol rates stop them dead in their tracks. And e-commerce offers as clear a path as any to limiting the corporate dependence on expensive energy.
However, while there is immense promise here, businesses need to be cautious in how they approach this. Because, to reiterate, the idea that retailers and service providers can entirely run a business without energy is absurd, impractical, and misleading.
Also, there is valid concern that the supposed cost-saving effects of e-commerce might be negated by your reliance on electricity powered online interfaces fuel-hungry shipping and delivery mechanisms.
These are valid criticisms. However, it is important to stress that the aim is not to ditch fuel and electricity entirely. The goal is to limit costly energy needs in favor of revenue-boosting ecommerce tactics that raise profit margins and lower energy dependence.
It’s hard to imagine that energy prices will relax anytime soon. While we can certainly adjust our lifestyle and spending habits to cope with volatile price hikes, what is clear is that, in such uncertain times, global markets have to find a way to lower the unfortunate impacts of elevated energy prices.
Both business owners and customers are now striving to opt for economical commercial practices to meet their respective requirements without being crushed under the weight of near-extortionate bills. But even though there is no scenario where we cannot retain some of our use of energy, e-commerce offers a workaround.
Clever business practices, telecommuting, and online operation has allowed enterprises to reach new audiences and remain thriving in the market. On that note, energy expenses can be significantly lowered if business owners are able to plan their transition from brick-and-mortar to digital properly. As a result, we can emerge from this crisis stronger than when we entered it.