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9 E-Commerce Business Costs You Need to Consider

9 E-Commerce Business Costs You Need to Consider

April 19
19:46 2016

While starting an e-commerce business is, in many ways, cheaper than it was a few years ago, it would be a mistake to assume that it’s inexpensive. There are a lot of costs you have to be willing to take if you want to start this sort of business!

Many hold the misassumption that building a successful e-commerce business doesn’t cost that much. While that may be true when you compare the costs of this sort of business to those of a regular, physical store, to say that it’s cheap to run an e-commerce business is simply false.

We’re going to take a quick look at the sorts of costs the average e-commerce business will accumulate, as well as the smart ways of going about them.

Web development

Making a website that can actually support an e-commerce platform is much more complex than building websites for, say, blogging. So it’s best that you look into professional web development. You could go for a low-cost drag-and-drop solution, but that may make your website slow and frustrating to use. It also doesn’t give you as much control as you’ll need. To ensure you’re paying for the right expertise, make sure you’re doing business with a web development agency or professional that has experience building online stores. Otherwise, you may end up with a website that isn’t really fit for purpose, meaning you’ll have to spend more getting another one built!

Hosting

Choosing a host for your website is never as easy as it seems, especially when you start thinking about costs. A lot of e-commerce startups make the mistake of going with the cheapest option out there. While that may save you money in the (very) short-term, it’s not exactly a great business plan. Really cheap hosts are often unreliable, with a lot of downtime and lacklustre customer service. You need your website to be speedy and reliable, otherwise you’re going to end up putting off a lot of potential customers. Remember: with web hosting, you get what you pay for.

Consulting

Many startups don’t feel the need to get consulting in any kind of business matter. This may seem prudent when it comes to costs – and, indeed, many businesses do fine without it. Of course, it really depends what kind of consulting we’re talking about here. Many people would consider an outsourced accountant to be a sort of consultant. And if you’re planning on starting a business without someone who can keep the books, then you’re not making a very smart move. Think carefully before dismissing consultants outright. Outside of accountants, there are other types that can help your business tremendously.

Delivery

Delivery is cheaper than it used to be in some areas, but continues to be quite expensive in most places. A lot of e-commerce business owners think that delivery will end up being a pretty negligible cost when they’re making their business plans. But delivery solutions – or, as many people in the business call it, fulfillment – often turn out to be much more expensive than originally estimated. Of course, going with the cheapest options available tends to result in poor service – damaged goods, slow delivery, etc. It’s best to go with established names such as UPS and FedEx to ensure your customers are satisfied. Be sure to use something like a FedEx shipping calculator to work out the costs of shipping particular goods.

Security

Dodgy online security is not an option here. You may think you can only afford this if you cut corners, but the fact is that you can’t afford to cut corners. You should boost your local cybersecurity measures. After all, you’re going to be dealing with a lot of sensitive information. Cybercriminals target businesses of any size – in fact, they’re often more like to go for startup e-commerce businesses than they are any other type of small business – and they’re more likely to aim for small businesses than big ones. They expect you to have lack security. Don’t fall into their lap like this. Make sure the cybersecurity of your IT infrastructure is as good as you can get it. Otherwise, you may end up losing sensitive information to criminals – and customers are probably going to want compensation for it.

SSL Certificates

Of course, customers aren’t even going to give you any payment information if your website doesn’t look very trustworthy in the first place! Once your cybersecurity measures are in place, you need a way to ensure people that your website is a safe place in which to make monetary transactions. The way to do this is to get SSL certified – which isn’t free. Buying an SSL certificate isn’t too expensive, and there are a lot of services that provide certification. They’re called certificate authorities – and you need to make sure you’re working with a trustworthy one! Check customer reviews of certificate authorities to ensure you don’t end up wasting your money.

Transactions

The process of actually receiving money costs money. Thankfully, the costs of that transaction are covered by the transaction itself, as it’s charged as a small percentage of the transaction. Don’t make the mistake of trying to use a payment gateway or business merchant that claims to circumvent the need to charge businesses for accepting money. Payment gateways such as Shopify and PayPal will charge you for their use – and, sometimes, the costs can be fairly big – but they’re also among the most user-friendly and trusted gateways on the Internet.

Marketing

Is it impossible for an e-commerce business to hit it big with a $0 marketing budget? Well, yes, actually. But these success stories are tremendously rare. While you may want to try going at it without dipping into a budget for a while, the truth is that the vast majority of businesses will need to think about marketing eventually. Social media and content marketing are no doubt something you’ve heard about in regards to other businesses, and the same applies here. Affiliate marketing is one of the most popular marketing techniques of modern e-commerce businesses; print marketing is still useful to some, but many prefer to keep it digital. Make sure you work with a good agency.

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Sam

Sam

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