How Much Does it Cost to Start an E-commerce Business?

E-Commerce is a very hot sector right now, largely thanks to platforms like Shopify and Amazon that allow virtually anyone with a viable product to start selling online. Another thing that attracts a lot of people to e-commerce business is the fact that you can start on a very modest budget.

While it’s true that you can start a business online with little to no money, you have to be ready to spend some money if you want to start a serious business.

There are also pieces of equipment that you may need to invest in if you don’t have them already. Also, factors such as branded tracking are worth looking into before creating your business, so that you know the kind of thing that keeps customers interested! If you get all of this prepped, you can be sure to have customers that stay. 

Let’s take a look at some of the expenses you can expect when starting in this field.

1. Electronics

The first thing you’ll need is a decent tech setup. We suggest that you get both a great mobile phone and a great laptop. A good tablet can work too but is not essential.

Having both a good laptop and a powerful phone will allow you to get more work done.

You probably can’t afford, or don’t want, to be glued to your laptop 24/7 and might have to answer emails or answer people who may be using your live chat on your website.

These are all things you’ll be able to do on a good mobile with a wide surface that allows you to process information and type fast and easily from anywhere you are.

As far as your laptop goes, you need to get one with a powerful processor and good RAM, especially if you’re going to be doing things like graphic or web design yourself.

If you’re looking for a quality machine, check out the Lenovo small business laptops. Lenovo laptops are a staple in offices around the country and most of their machines are optimized for business, so give them a look.

2. Hosting and Domain

You will also probably need to invest in hosting and a domain. The good news is that both of these are pretty cheap.

You can find VPS hosting packages for under $30 per month and a domain shouldn’t cost you more than $10 per year.

3. E-commerce Platform

Next, you’ll need to look at e-commerce platforms. You could go completely free here and build a WordPress site, but this only works if you have extensive knowledge of web design.

If you know absolutely nothing about web design, then a platform like Shopify might be a better option.

Their standard plan starts at $79 per month, but you have to be aware that you will probably have to pay for plug-ins and they can get very expensive very fast, so your monthly costs should be a bit over $100.

You should also know that Shopify charges 30¢ per transaction on top of a 2.9% fee, so be prepared for that.

4. Marketing

You also should set money aside for marketing. This will mainly vary based on what method you want to use, however.

If you want to do some SEO, for instance, then you can expect to pay at least $500 monthly for service. It’s hard to put a number on other techniques such as PPC since it will largely depend on your niche, but you can also expect to pay around that monthly for a standard PPC campaign.

Email marketing service will be cheaper, and you can find a good autoresponder service for around $30, but you may have to hire people to create messages and manage campaigns for you.

5. Business and Legal Costs 

The most basic is the legal and regulatory side of your e-commerce business. At these early stages, the cost of capital raised varies with location, business structure, and the regulation over the industry. 

6. Business Registration: These run between $50 and $500 or more depending on where you are and your legal structure as either LLC, sole proprietorship, or a corporation. 

7. Licenses and permits: Depending on the state or country, there might be some licenses or permits required to operate an e-commerce business. This may range from $50 to $500 or more. 

8. Cost of Products 

Probably one of the biggest first-time costs you will experience when running an e-commerce business is your very first inventory purchase. The same regarding the costs holds true as far as how dramatically different in nature the types of products you are going to sell, along with how much of that inventory you’re going to buy upfront. 

9. Cost of Manufacture

If you are getting things manufactured custom or even a manufacturer, you have to account for the cost of manufacture of raw materials and labor. Shipping. You’ll likely want inventory tracking software since most of the solutions that fulfill this need fit in this category and typically run between $10 to $100 a month. 

10. Shipping cost: If you offer free shipping, then you must absorb the cost of the shipment, which can run from $5 to $30 per order, depending on how large and heavy the items are as well as what shipping you are using. 

Conclusion

Starting and running an e-commerce business successfully does not require that much money, but you can’t expect your business to be a huge success overnight if you’re not ready to invest in it. So, be realistic and have at least a good amount of capital saved up before you make the jump.

Additional Resources

Digital Marketing: How Does It Help Grow Your Business?
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