The popularity of online retailers is growing. It brings considerable profits to entrepreneurs and demonstrates great potential.
Now, in 2020, more than 1.8 billion customers are visiting online shops, which is more than 25 percent of humanity! It is estimated that by 2021 the number of people who prefer to buy things online will reach over 2.1 billion. Many business owners around the world are willing to invest their money in the e-commerce market.
Seems like now is the perfect time to invest in eCommerce especially with the pandemic that drew all the sales online. However, to predict the success of investments you need more information.
Unfortunately, not all of the starting out entrepreneurs are in a position to estimate their investments accurately since it is quite hard. Below, there is some information that may ease the pain of this challenging task.
The Cost Of Starting an Online Business
To predict the success of a business, the first thing you should consider is, probably, the actual amount of money that you need. And when it comes to building an eCommerce business from scratch there are many things that need to be considered.
You will need to choose the most suitable product, discover the best way to produce it, and then where it will be stored and so on. The problem is not how much each decision is going to cost but rather the uncertainty of each decision. Let’s look closer at what makes the cost of an eCommerce website.
One of the most essential aspects of any successful online business is branding. It is very easy to overlook branding because it is not always easy to sense the need for it until it’s too late. You then realize that your customers are not at ease buying from you.
There are companies that give you the opportunity to create your own branding at a very reduced price. Probably one of the best ideas is to ask a freelancer to create one for you. Take a look at Upwork, which has designers averaging $10 – $11 per hour or at 99Designs where you can get a logo and corporate identity packaging for about $600.
After all, deciding on branding all depends on the type of product you have, its uniqueness, as well as who your competitors are.
You need to choose the domain that is most suitable for your business’ brand. If you choose the wrong domain your visitors can be misled and get the wrong idea. It is always advisable to match your business’s name to your brand.
The domain can be purchased from GoDaddy on Namecheap, or directly from major e-commerce platforms such as Shopify. On average a new domain may cost you around $10-12.
All major online platforms charge for hosting. There are lots of different plans depending upon your needs. but you can always start small and scale up when and if necessary. The benefit is that you will have a store open 24 hours a day and seven days a week.
Your business’ brand and store design need to be kept consistent. It is advisable to get a store design template, customize it according to your brand and you will drastically reduce your expenses.
To start with, there are templates that are available for free, but it will cost you some of the unique identity of your brand. You can also use a freelancer to do this work for you at a relatively good price.
The more complicated the project is, the more it will cost. If you want to create a simple online store then it will be cheap.
Having a product created for you by an industrial enterprise can cost quite a lot of money.
First, you have to take into account how complicated your product is. The more complicated it is, it will have more parts which will be difficult to piece together. If expert labor is needed, it will significantly increase your costs. The economy of scale requires that the more experience a manufacturer has producing your product, the cheaper it will cost per unit.
Still, it could be a $5 or a million-dollar product. So if a product needs to be developed from scratch, you will have to communicate directly with the manufacturer in order to get an estimate that is accurate.
Lack of trust is one of the biggest problems that online stores face. The only way customers learn about your product is the images they see. So those need to be really nice to build trust and bring sales.
Photographing a commercial product, even an art. To make a good photo it takes professional lighting, a background that is white as well as a model that depicts what the model actually looks like in real life.
Using a smartphone is the most cost-effective option as the camera is the only expense you have. You can purchase a lighting kit for about $50. There are also very reasonable photo studio kits that you can purchase below $160.
As long as you stay creative, there is always a way to find cost-effective solutions. However, when it comes to photography it is probably better to think twice before cutting budgets if it means getting worse images of your products.
What You Need to Keep In Mind Today
The pandemic has changed the world and the way people buy and sell goods. During the last months, everybody had to learn how to use eCommerce websites. And online sales have experienced unprecedented growth.
We cannot be sure to what extent the new “online-buying-habit” will remain in the post-pandemic world. But there is hardly anybody who would doubt that eCommerce is a promising industry.
And those who sell all of the items listed above understand that the interest in online business is growing considerably. That is why prices for goods in services related to opening an eCommerce business may change unpredictably. So, when making an estimation of investment, make sure to update prices regularly.
A Viable Alternative or How to Escape Calculations
Estimating costs is just the first step in predicting the success of the investments you make. And there are things that will remain unclear: the cost of website maintenance, revenue, the off-line building blocks of your business model, and so on.
Creating an accurately calculated business plan requires a great amount of time and true professionalism.
There is one way to make the process of obtaining an eCommerce business easier. You can buy an existing website. This will give you a chance to escape the struggle of bringing all the pieces together from scratch and calculating the total amount of money you need to do so. In most cases, you will also have a chance to get some guidance from the former business owner.
However, you need to be knowledgeable and skillful to pick up an existing business and manage it in such a way that it continues to bring in money. That is why buying an eCommerce website may seem like an easy choice, but the simplicity is only worth it when you know what to do with the business once you obtain it.
The Take Away
In 2020 starting an eCommerce business could be a great investment.
But it could have been great in 2019 too and, probably, will be great in 2021. It is not only the timing that matters when predicting the success of the investments – a lot of factors should be considered. In such a turbulent time, even better preparation and deeper research might be needed.