The Hidden Costs of Starting an E-Commerce Business
In 2017, retail e-commerce sales reached $2.304 trillion worldwide, and the number is growing. This is a staggering sum, and more people are wanting to get into the marketing, with hundreds of thousands of e-commerce sites already present on the internet.
There is a lot of competition, but if you find the right niche and do the best work possible on your site, then you can find success as well. Yet it will require some investment to start up, even if you’re starting out of your garage. You might have already done the calculations for inventory, but there’s more to it than that. There might be additional costs you haven’t yet considered, and that’s what we are here for: to help you make sure everything is in order before you hit the launch button.
Here are the most common hidden and understated costs to consider when starting an e-commerce business:
Website Hosting, Security, and Theme Costs
You might have already factored in the costs of running a website already. But have you factored in the associated and recurring costs beyond the website itself? Take a moment to review the following:
Website Hosting: This is something you very likely have already factored into the budget, likely costing $10 a month and up depending on how much hosting you need. You will want to consider that you might need to get a better plan should your site grow in popularity.
Security Costs and SSL Certification: You will want to incorporate security programs and software into your site. Security programs can range wildly depending on what you need. But we can advise you to not get a free plugin or problem. As they are nearly always inferior to the dedicated options. Make sure you do everything you can to avoid a cyber attack.
You will also want to get an SSL certificate to get HTTPS protection for your site. Without it, many visitors will simply click away from your site, and some browsers might not even allow people to easily go to your e-commerce website. A two-year plan for it usually costs around $185.
Site Themes: You can use a free theme or have a custom one made for your site. The cost can vary greatly, but don’t dismiss the cost of a premium theme. When selected well, they can bring in more customers, easily making your investment back.
Credit Card Processing
As part of your e-commerce setup process, you’re going to need to figure out payments. Whether you are using a merchant account with a payment gateway, some form of PayPal integration, or another method. You will need to make sure that your choice is secure. As many customers will abandon their purchase if they aren’t confident in the security of the site.
Regardless of your choice, you will likely wind up paying transaction fees, usually a small percentage (about 2.5 percent) of the purchase. A lot of e-commerce site owners don’t necessarily factor in this cost. Which equates to a small tax on all of their revenue, considering how all or nearly all online purchases are made with a credit card. Onsite credit card processing fees are usually greater than in-person transaction fees where the card is presented.
Content Costs and Marketing
An otherwise blank storefront with minimal product descriptions isn’t going to attract many customers. You need a fantastic landing page, some content and great product descriptions to really sell your products to customers, and ideally a blog or other content in order to give some context to your brand and help develop a following.
You will also need to do some marketing in order to drive customers to your site. As your products won’t sell themselves if no one knows they exist. Whether this means content marketing, paid ads, or another method, you will need to build this cost into your budget as well.
Product Storage
As your business grows, so will your storage needs in most circumstances, so you will want to build in the cost of such storage into your budget. Even if you’re handling the matter at home or in a small office. That is still a cost to consider for both your own planning and for tax purposes.
If you use shipping fulfillment with another service. You’ll want to plan for that, depending on the terms of the agreement. Have plans for both rapid growth and a slow start, and be careful of long-term contracts when you’re just starting out. You don’t want to limit yourself if you need to make changes to your online business.
Mobile Compatibility and Development
People are spending more time shopping on their mobile devices, and a 2016 study from BI Intelligence states that 60 percent of customers’ e-commerce shopping time was done on mobile, although the final purchase was usually done on another device. This trend is poised to grow considering the increasing capabilities of smartphones.
This means that in order to stay competitive, e-commerce businesses can’t ignore the mobile space, requiring changes made to accommodate those browsers and devices. While there are tools to help with that, this type of development does have a cost to it, whether in money or time and will need to be reviewed and updated regularly.
Take time to determine the costs of doing so for your particular business. Either integrating it from the ground up or adding it to your already existing platform.
Additional Considerations and Conclusion
Starting an e-commerce business can be an extremely rewarding and profitable enterprise for the right entrepreneur. What we want to warn you about is that there are a number of expenses that people unfamiliar with space might not recognize. A good business will recoup these necessary costs easily. But they need to be placed into your budget and require consideration.
Additionally, there might be additional costs associated with your niche or product type. Some products are more fragile or required specialized delivery, for example, and that might mean increased shipping and storage costs. We urge you to do more research when deciding what products to sell on your e-commerce platform.
We are confident that you will be able to make the right decisions for your business and move forward with the next step in your working life. Do you know of any other hidden costs that you would like to share? What has been your experience with the above items? We would love to hear your thoughts, so please leave a comment below.
- How to Send Ctrl+Alt+Delete to Remote Desktop (RDP) - January 5, 2025
- The Hidden Costs of Starting an E-Commerce Business - December 15, 2018
Where Should We Send
Your WordPress Deals & Discounts?
Subscribe to Our Newsletter and Get Your First Deal Delivered Instant to Your Email Inbox.
