How much to start an eCommerce business

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Opening an online business store nowadays provides opportunities for financial success and it is claimed to be a wise choice to widen your brand identity. However, in order to get a profitable online store running, you need to consider carefully in choosing the right product, how to manufacture and store it, customize website design, raise brand awareness, and so on. You may be confused when there are so many decisions to make as different information sources are available, and sometimes your website can be lacking a few elements. As a result, this can lead to additional fees out of your control.  

If you are planning to start an Ecommerce business and don’t know the total cost for building up a website, this article might help you in calculating the cost precisely for each component due to your need. Let’s start with the bare necessities cost that you can’t avoid when starting a business online: 

1. Hosting: 

Hosting is the fee you pay for hosting provider’s server to host your website. Without hosting, your website won’t be connected to the internet and can’t be visited. 

There are two kinds of hosting: Shared hosting and Private hosting 

Share hosting is considered cheaper than private hosting because the starting price is just around $40/month when you are sharing your server with other people. However, this hosting is just suitable for a new store with a customer amount around 100,00 per month. When your business grows potentially to a large number of customers, you will want to upgrade your hosting into a private version, which costs more (usually starting at $200/ month) for better optimization. To begin with eCommerce hosting, you can choose these common platforms available in order to have detailed information for each of them. Here is the pricing: 

  • Shopify: from $29/month
  • BigCommerce: from $29.25/month
  • WooCommerce (a Wordpress extension) is free, but you have to pay for additional feature, and you have to purchase separate hosting 

2. Domain

Your domain name is the name of your website/URl. If you want to start an eCommerce business on your own site, you will need to have a domain name.

Domain name image

The domain you choose matters a lot to your brand. In order to make customers remember immediately when they visit your website, make sure the domain you are using is popular and related to your online store. Domain names are usually cheap, you can purchase it directly from your hosting provider like Shopify or buy through GoDaddy or Namecheap will cost $0 - $15/year.

3. Payment Processing: 2 - 3% of revenue

This can be understood as a supplementary fee that customers will be charged for Payment Processor in each transaction and take 2 -3% revenue monthly. Remember to consider carefully about other aspects such as: marketing costs, product costs,... to make your business still profitable. Analyzing revenue details will have you manage and set the price for your product. Another option is using open source software like: WordPress, Magento...customers won’t have to pay a transaction fee but they have to set up everything by themselves and have knowledge about that open source software. With Shopify, the cost will start from 0.5% but customers will get security and technical support guarantee.

4. Branding: cost from $2 - $20,000

Whenever reminded about any business, instead of remembering a specific product, people tend to speak the brand name, and others will come up with that product in their mind. Yet brand is the first thing that buyers think about as it represents the company image and raises awareness about brand identity. 

You totally can simplify your branding and create it by yourself such as designing logo, guildline, campaign, template,...but that can have a risky effect on your business because you are not a professional in those fields.

In case you have background knowledge about logo design, you can use a free simple design tool like Canva and the paid Pro Version is $13 per month for five people to share.

Canva image

Another option is to choose templates from some software companies to create branding with low prices. You can try out Tailor Brands - easy and simple use creating. Just answer the questions that they ask about your company information and the system will automatically create a logo based on your requirements. 

Tailor Brands

However, free or low paid templates will be used by a lot of companies and it may lead to similar templates as other companies use the same templates. If your company needs a completely unique design, you should hire a professional designer. Branding investment is worthy for long - term benefit because it will suit your company reputation.

5. Store Design 

When customers visit your store, the Website Page creates a first impression that can attract visitors to stay or leave your site. That’s the reason why store design is so important as it presents store style and raises awareness about brand identity. All we need to do is have a gorgeous template and manage tab display in the most proper way. This can depend on the layout or theme that you choose. While choosing themes for store design is popular because Shopify provides available themes on their website, a lot of people, including beginner or professional website builders choose Layout apps to create and customize specific pages. You can try out LayoutHub - a tremendous app for page builder.

LayoutHub Gif

LayoutHub is considered one of the most famous apps for customizing by drag and drop action in order to customize each section in layout. Customers can create landing, product and blog pages due to LayoutHub available templates. Besides, this app provides different templates, even special event templates such as: Christmas, New Year,...

Event layout

In the beginning, the shop's owner can use a free trial for 14 days in THIS LINK to see if the template is suitable for your business or not, then they can decide on a purchase plan.

LayoutHub price: from $14.99 to $59.99 

6. Inventory & Logistics: $0-$1000

Inventory management has become quite easy thanks to the great default management feature all large ecommerce companies offer. Instead of managing these two apps separately, customers can use a third party logistics company. These companies provide professional management inventory and logistic services that allow you to control everything in relation to your logistics, beginning with warehousing to distribution.

Ship Bob and White Box are the two companies that you might want to consider. However, they are not public flat prices like most software companies, so you need to contact them and get an estimate.

ShipBob image


White Box

7. Software Tools (Apps and plugins): 

The cost depends on the number of tools used and each individual tool. Normally, besides using fundamental tools to build a website, customers also need to install plugins in order to get more store config options. For example, for those of people who are using Shopify to build a website, they want to have more options in theme and layout. Instead of using the default theme on Shopify, which is limited in theme configuration, customers can only customise available themes, they will install LayoutHub to customize their own website page. There are so many problems occurring while building a website, that’s why customers should install plugins to support their work. 

There are variable options for you to choose to help your business grow potentially. Just check out the number of apps available in Shopify’s App Platform and consider which app suits your business.

Among those listed costs, there are several things that are not required but useful to your business, and might be necessary depending on your specific business feature. Let’s check out:

  • Warehouse storage costs
  • High quality product photo or video
  • Website designer or premium theme 
  • Software Tools: Accounting, List Building, Email Marketing, Customer Support

In case there are too much options that make you confuse, here is the recommend about what you must have to your business: 

By reading this article, you can clearly understand the apps available and what to do before investing in an eCommerce business and bringing your store to a high conversion rate. So the total cost to start an eCommerce store can start from $100 which is spent on Website Layout Design and Subscription (Hosting, Domain, Payment, Branding). This cost can rise up if customers want to buy plugins or additional apps. In the first year, business owners might have to pay business costs up to $40,000 but it can be paid back through profit margins.

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