How Much Does it Really Cost to Start an Ecommerce Business?

  • The Ecommerce Customer Lifecycle

One of the main attractions with those looking to start an ecommerce business is that a lot of the normal overheads associated with running a retail business are removed: there’s no office space to maintain, no electricity bills to pay, no monthly rent or mortgage, and no office supplies to fill that non-existent office. But wait—running an ecommerce business from your own webstore, isn’t free, and RepricerExpress takes a look at some of the surprising costs.

Site Design

Unless you’re using a free WordPress and Woocommerce site—in which case you should really not be running an ecommerce business from that—running a site costs money. Even the major platforms that tout low monthly fees require serious investment to create a professional presence.

If you’re creating a site entirely on your own, like the one here at RepricerExpress, you’ll still have to pay for domain registration, design and programming fees, hosting fees, imagery, content creation etc. But say you’re tech savvy and prefer to code yourself: how will you balance building and maintaining a site with all the other demands of running your ecommerce business? It’s much easier a specialist company because your site is the first point of contact with potential customers, but again, that’s another hand in your pocket.

Shipping

There are probably only two people in the world who don’t have to pay to send anything, and they’re the Pope and the President of the United States. For everyone else, we’re going to need couriers and postal services. But that’s okay because shipping costs are usually built into the product price (if you’re shipping free) or shown separately.

What’s not included, however, is when packages get lost, and you’re on the hook for that. As good as some companies are, it’s an inevitability that packages will be damaged or lost, and Murphy’s Law dictates it’ll happen at the worst times, like holidays. So, not only do you have to figure out how to fix that problem, you’ve also got deal positively with irritated customers.

Paying to Pay

One of the disadvantages of running a business online is that money is processed digitally. If only cash exchanged hands, that’d be great; it doesn’t, and online merchant processors charge fees for their services.

PayPal and Checkout By Amazon are both easy to setup and don’t charge a lot, but you’re really limiting how people can pay. One of the most common ways of paying for something online is with a credit card, which is a double-edged sword for you: on one hand, you’ll be catering to a wider portion of customers, but on the other, you’ll have to fill out an application and pay monthly and processing fees (about 1.8 to 3 percent) every time a buyer uses their card.

Paying Customers

It’s really not a case of, ‘Build it and they will come!’. Unfortunately the Internet is a crowded space and users’ attention and surfing habits are greatly influenced by search engine results—often it’s their first port of call when hunting out the product they want to buy. So to get in front of those potential customers, you’ve got to rank highly in search results through Google Adwords, amazing content, optimised listings and every other SEO weapon you can throw at trying to get customers to see your site and buy from it. Many leading web design companies will say that for every pound you spend on developing your site, have another three for marketing, SEO and generally driving traffic and potential customers to it. That’s a big budget right there!

Miscellaneous

Other things—and this is just a brief list—that crop up include:

  • SSL certificates
  • Shopping cart software
  • CRM and live chat tools
  • Email list software

A Viable Alternative

Before you go investing in your own webstore, it would be wise to think of selling on one of the major marketplaces first, like Amazon. It is much less risky, much cheaper to try, and eliminates many of the problems we’ve highlighted above. With Amazon, you can address the major pain points of selling online:

  • Getting customers—with Amazon you have over 170 million customers ready to part with their money right now.
  • Shipping—joining the Amazon Fulfilment by Amazon (FBA) programme will take all the pain away from shipping, both locally and internationally. With FBA you access Amazon’s world-class fulfilment resources—they take care of delivery and customer service for all your products under FBA.
  • Trust and Convenience—Customers are still cautious about inputting their credit card details into unknown webstores, and they don’t like the inconvenience of having to do that every time they find a site they like. With Amazon, users trust the site and already have their payment details entered, so purchasing on any of the Amazon sites is a breeze. One less barrier to a sale for you!

Of course, if you choose to sell on Amazon, you enter an extremely competitive marketplace with many other sellers. You’ll need to grasp the need to competitively reprice your inventory regularly and become eligible to win the Buy Box, which will further drive sales. Many experts believe this is the correct route for many new ecommerce sellers and existing bricks-and-mortar sellers alike and even if you’re unsure at present, exercise some due diligence and research all the costs that you’re going to incur to make selling online a major success.

Want Pro Tips for Selling on Amazon?

2018-12-12T10:00:01+00:00

About the Author:

Designer, marketer and all things ecommerce related.