Most people assume that the big costs that are associated with an e-commerce website come from paying webmasters to set up a website and that once the site is fully set-up, the running costs are minimal and you can sit back, relax and watch the money roll in.
While you don’t have to pay the rent that is typically associated with a brick-and-mortar store, there are still many hidden costs that come from running a (successful) e-commerce store. Successful stores don’t sit on their business and start counting the cash, they are constantly buzzing and looking to grow. If you need help understand the financial side of e-commerce websites, let this article help you by breaking down the costs that are associated with running a successful online store.
E-commerce Website Development
If you want to ensure that you are running as successfully as possible, you will need to review and update your website regularly and frequently. The easiest way to do this is by regularly running website audits. These are checks that allow you to identify as well as understand risks that can damage both your brand reputation and your finances. By understanding them, you help yourself to prevent future damages, for example security risks that can become attractive bullseye targets for hackers.
Your audit will also help you to identify which areas of your site might need development and future investment. The amount that you spend developing your website will depend upon the type of site you have, as well as the platform that you choose. For example, the Magento platform is more configurable and customizable than, for example, Shopify, and therefore can be developed more easily; however, if you pick a standard template on other platforms, they often update themselves for you. The easiest way to get an audit is to use a web design company: magecloud.agency is currently offering audits for free.
Shipping and Handling
Whether you do it off-site or on-site, shipping and handling costs are a constant cost for any successful e-commerce store. They include:
Shipping carriers – you need to balance cost-effective carriers with trustworthiness and reliability.
Packaging – often a non-negotiable cost. Boxes can cost a dollar each or more if they are unique in structure.
Shipping insurance – this is needed for safety but you can offset some of these costs by increasing the shipping fee
Inventory management – whether you are housing your goods in your own warehouse or doing everything third-party with a drop-shipping model, you will have inventory management costs.
To keep a constant flow of traffic heading towards your site, you need a digital marketing strategy. Your marketing strategy is likely to include specific practices, many of which will require a staff member to work on over time. These practices include:
Search Engine Optimization – this requires updating your site regularly for search engine crawlers. A key component of SEO is creating content and back-linking, which can be quite labor-intensive.
Paid Advertisements – your digital marketing budget is also likely to include the costs associated with paid advertising. These might be pay per click adds or even paying influencers.
You won’t need anywhere near the same amount of equipment as brick-and-mortar stores do, but you will still need some. These include:
A good computer – the heart of your business
A great internet connection
Laser and label printers
Scales (you need to weigh packages to calculate fees)