How Much Will It Cost to Launch an E-Commerce Site?
I am starting a group buying e-commerce website. While writing a business plan I struggle with coming up with realistic numbers as far as operation expenses. Also, how can I project how many unique visitors to expect? Are there any benchmarks?
Posted: Tuesday, July 12, 2011 | Found in Starting Up
Answer by John Arnold
E-commerce website pricing varies widely depending on the level of sophistication you want to have, and e-commerce success often depends on many technology solutions are working together. So, your price will depend on your specific needs and budget. Here are the five things you should consider when conducting your search for a solution and the related expenses:
1. The Cost of Financial Transactions
E-commerce happens through payment gateways that connect your bank account and your customers' credit card accounts. You'll need a shopping cart solution and a merchant bank account that can accept your processed payments. Shopping carts and payment gateways are typically low-cost in terms of an upfront investment, but ongoing transactional fees can range between 1 percent and 5 percent based on volume.
2. The Cost of Hosting and Security
An e-commerce site needs to protect privacy and personal information, and needs to stay online when traffic levels fluctuate. Hosting companies are not all the same. Make sure you compare Service Level Agreements (SLAs) as well as prices when choosing a hosting company.
3. The Cost of Your User Interface and Architecture
Your site should be easy to use -- for your customers as well as your administrators, customer service reps, manufacturers and designers. Simple template-based e-commerce sites can cost as little as $250 per month. Enterprise-level all-in-one solutions and customized programming can cost $500,000 per year or more.
4. The Cost of Marketing
Projecting unique visitors to your website is a matter of marketing analysis. You'll need to determine an average Cost Per Visitor (CPV) based on the CPV of other similar e-commerce sites. A good way to guess the CPV of your competition is to see which are running ads when you conduct a Google search for your products. Then, use Google AdWords to estimate the CPV for the key phrases you used in your Google searches to pull up the competition. Visitors won't come to your site unless you spend money or time on marketing your site, so don't expect to see heavy traffic without running lots of promotions until you have established your brand and a loyal customer base of repeat visitors.
5. The Cost of Customer Relationship Management
In addition to advertising, you should consider the cost of servicing customers by phone, email and online chat. You also need to consider the cost of servicing your suppliers, managing inventory, collecting taxes and analyzing your website traffic to determine any issues with converting visitors into customers.
Related: How to Choose the Right Web Server
Related: A Guide to Online Shopping Carts
Related: Focus on 'User Experience Optimization'
John Arnold is the president of Aveta Marketing, a marketing agency in Boulder, Colo., specializing in marketing training and outsourced marketing solutions for small businesses, franchise organizations, and associations. He also helps big brands learn how to help their small-business customers become more successful marketers1. The Cost of Financial Transactions
E-commerce happens through payment gateways that connect your bank account and your customers' credit card accounts. You'll need a shopping cart solution and a merchant bank account that can accept your processed payments. Shopping carts and payment gateways are typically low-cost in terms of an upfront investment, but ongoing transactional fees can range between 1 percent and 5 percent based on volume.
2. The Cost of Hosting and Security
An e-commerce site needs to protect privacy and personal information, and needs to stay online when traffic levels fluctuate. Hosting companies are not all the same. Make sure you compare Service Level Agreements (SLAs) as well as prices when choosing a hosting company.
3. The Cost of Your User Interface and Architecture
Your site should be easy to use -- for your customers as well as your administrators, customer service reps, manufacturers and designers. Simple template-based e-commerce sites can cost as little as $250 per month. Enterprise-level all-in-one solutions and customized programming can cost $500,000 per year or more.
4. The Cost of Marketing
Projecting unique visitors to your website is a matter of marketing analysis. You'll need to determine an average Cost Per Visitor (CPV) based on the CPV of other similar e-commerce sites. A good way to guess the CPV of your competition is to see which are running ads when you conduct a Google search for your products. Then, use Google AdWords to estimate the CPV for the key phrases you used in your Google searches to pull up the competition. Visitors won't come to your site unless you spend money or time on marketing your site, so don't expect to see heavy traffic without running lots of promotions until you have established your brand and a loyal customer base of repeat visitors.
5. The Cost of Customer Relationship Management
In addition to advertising, you should consider the cost of servicing customers by phone, email and online chat. You also need to consider the cost of servicing your suppliers, managing inventory, collecting taxes and analyzing your website traffic to determine any issues with converting visitors into customers.
Related: How to Choose the Right Web Server
Related: A Guide to Online Shopping Carts
Related: Focus on 'User Experience Optimization'
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