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    eCommerce | 4 min read

    What is the True Cost of an eCommerce Startup?

    Starting an e-commerce business is a pipe dream for many but for others, it is a chance to do something different and make money at the same time. While it is all about finding the right niche and products to sell, it is also about understanding all eCommerce startup costs.

    Every business comes with costs. Some are one-off costs that are associated with getting the business up and off the ground while others are ongoing costs. Often, people will ask “ how much money to start an eCommerce website?” or “ how much will I need for stock”, both of which are questions that need to be answered before moving forward with their eCommerce plans and ideas.

    Many people are under the impression that you don’t need a lot of eCommerce investment to get things going and in some ways that is true, especially if you choose drop shipping. However, if you want a self funded eCommerce website, your own premises and your own stock then you are going to need to put your hard-earned cash forward to fund your new venture.

     

    Owning Your Own Stock

    If you are choosing to go it alone and start everything from scratch then you are going to have to foot the bill for purchasing your own stock. This is a great way to take control from the very beginning but you are going to have to spend time sourcing products, speaking to suppliers and then determining how much physical stock you need to hold.

    When you have all of these products ready to go, you can hit the ground running but of course, as they sit there waiting to be sold, they are costing you money. While every product will have a profit margin you will need to identify the cost of buying in bulk and the savings you can make along with this. There is a concept known as ‘ Sourcing, branding and landing’ and this involves the total amount that you spend being divided by the number of products, finally giving your a cost per item. This is one way of identifying and understanding the costs associated with owning your own stock.

     

    Building Your Own Website

    This is where many people believe that they can cut corners because of the many do-it yourself website builders that are out there. While this is true, it is a difficult task to create your own eCommerce website and that is where you could hit your first barrier.

    If you want to give your website the best chance of succeeding while ensuring that your online presence works, then you need to consider using the services of a professional Web Developer. They will come with experience, knowledge and the ability to build a website that is catered to your businesses needs and ideas. They will tailor a site around your requirements and save you time, enabling you to focus on other areas of your business.

    If you choose to use the services of a professional then you should expect to pay around £1,000 - £5,000 but this will give you fully-functioning website that has been specifically designed to sell your products, the range in this case being given as much up web development depends on how fancy you want to get with your concept. This will mean that your visitors will be able to navigate their way around your site and find exactly what they want, making it easy for them to add products to your cart before making a purchase.

    Of course, with a website comes a URL and that means that you are going to need a URL that aligns itself with your business and brand. Your web developer will offer this as part of their service but you might choose to do this yourself. You can expect to pay anything from £40 a year ranging right up to the thousands of pounds, depending on what you are looking for, and whether are not the domain purchase is direct from a registrar or being resold.

     

    Hosting

    Your website is going to need to be hosted somewhere and you are going to need a host that you can rely on. Downtime is no good for any business because it ultimately means that your website is unreachable, which means no sales. So, you want a host that offers excellent speeds, up-time and support. WordPress hosting is a popular choice for many and this can cost around £10 per month but there are other options with the most prominent being Shopify. As the name suggests, this is aimed at online shops and so, they are a very popular choice. They are used by many of the major online retailers but for this kind of service you can expect to pay more at around £25. These are ongoing costs, so you will need to include them as part of your monthly expenditures.

     

    Marketing and Advertising

    You are going to need to spend money on marketing and advertising, there is no doubt about that. You need to promote your business and brand while showing potential customers what you are selling and why they should choose you over your competitors. The idea is to drive traffic to your site because without traffic, you will not receive sales. So, the more you spend on marketing, the more strategies and tools you can make use of.

    Content marketing is a vital tool and when this is utilised along with social media. It makes it possible for you to drive organic traffic to your website while boosting your SEO performance at the same time. Great looking content that is easily digested and engaging will inform and educate and that can help to improve and increase sales. While you might be able to create your own content, you need to consider the time it takes. Content has to be carefully planned and created so that it resonates with your audience and guides them through the purchasing process.

    Digital advertising is an absolute must and this will take money. Google shopping ads are essential when it comes to driving targeted traffic to your site. This will make all of you product pages visible and it will ensure that potential customers know exactly what you offer. The amount you spend here is entirely up to you but an important factor is having (or hiring) the skillset needed to optimise your cost for each conversion (so you make money rather than lose it).

    Therefore, outsourcing all of your marketing and content needs as well as your digital advertising to a full service eCommerce agency such as Xune is a strategy that is certainly worth considering.

    We use a concept called Growth Marketing which seeks to align all marketing efforts behind prefined revenue targets. To get a clear idea of what is possible for you, make sure to set your SMART Growth goals here.

     

    You can do it for less

    We have already touched upon the possibility of drop shipping. This is an ideal way for those who want to own an online store without the increased costs of doing so. It is more of a hands-off approach to owning an online store although the results you see will be completely different.

    There are many strategies available that can be used for creating drop shipping websites, and we accept enquiries from people who would like initial help getting started. However, it's worth noting that starting small means you stay small for longer. Tending to under-perform because of low traffic, if you do opt to go down this route then you should expect to put in a lot of time and effort while making use of targeted digital marketing.

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    eCommerce

    Misha Cunningham

    I believe in creating time. Time for myself in the form of a business I can run from anywhere. Time for our clients and potential customers who seek to avoid decision fatigue and know that they have a team of enthusiastic marketers who are in their corner, fighting just as hard to make their business as successful as they are. Simply, I take complex marketing techniques, simplify and then automate them.

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