Starting your own online store is a dream come true for every entrepreneur. However, cash flow is the lifeline of every business and unless you have enough money to run your business, your dream can quickly turn into a nightmare. Most first-time ecommerce business owners make the mistake of focusing too much on growth, while neglecting the cost of running their business. As a result, many hidden costs crop up and snowball into large expenses, eat into your profits, and eventually slow down your company.
Here are 5 hidden costs that can hurt your Ecommerce business if you don’t monitor them regularly.
This is, perhaps, the most important factor that drives the cost of running an Ecommerce site. Although there are plenty of ways to set up your online store, if you don’t make the right choice, your website infrastructure can prove to be a very costly expense that keeps turning up every month. Here are the different ways you can set up an ecommerce website
- Build a website from scratch – In this case, you’ll need to hire professional web developers and designers to build your ecommerce site, which can set you back by thousands of dollars. Also, building a site can take weeks, if not months, which will only delay your launch. Furthermore, a custom-built website is difficult to maintain and things can get tricky if your original developers decide to leave. That’s why, it’s not advisable to build an ecommerce website from ground up, unless your site has very specific requirements.
- Use a Content Management System – There are plenty of free, ecommerce -specific content management system like Magento, Opencart that provide tons of out-of-the-box tools to quickly build an ecommerce website and customize it to your requirements. However, you’ll need to hire part-time professionals to setup, customize and manage your website. This can cost you $500-1000 every year, including developer fees and hosting costs
- Use a website builder – You can also use one of the many fully automated online store builders like Shopify, BigCommerce and Prestashop, that allow you to open an ecommerce store in minutes. In this case, the whole website is hosted on their infrastructure, so you don’t need to hire developers to build and maintain your site. With this option, you can get your online store up & running for as little as $30/month. You can simply go to YouTube and spend a couple of hours learning how to use one of these platforms and you’re all set to go. Undoubtedly, this is the most recommended and hassle-free option.
If you want people to visit your site regularly and make tons of purchases, then it needs to be well-designed and easy to use.
Here are 4 design-related costs you need to keep an eye on, while running your Ecommerce site.
- Logos & graphics – You’ll need to have a memorable logo so that people can recall your brand easily. Also, you’ll frequently need custom graphics to embellish your site as well as include in your marketing material such as banners and ads. If you’re not an experienced designer, you can use services like UpWork and Fiverr to get your logos & graphics done for as little as $5. If you like designing stuff, then you can use free tools like Canva or LogoMakr.
- Images – Stunning images go a long way in converting website visitors into paying customers, especially on an Ecommerce website. They allow you to showcase your products and enable people to imagine using them. Low-quality, unattractive images will only drive away potential customers.
In most cases, product images will be available directly from the supplier. These will be good quality images but, unfortunately, every other online store will also be using them. So hire a photographer to take professional-looking, personalized photos of your catalog items. This will make your ecommerce site stand apart.
- Website template – No matter how you build your online store, you need a good-looking template to attract customers. You can get paid website templates for your Ecommerce store on sites like ThemeForest, that you can install with just a couple of clicks. If you want to customize it further, you can hire a designer ($200-$300). However, if you’re building your store from scratch, then designing it will cost you at least $5,000.On the other hand, all ecommerce website builders like Shopify & Magento provide a huge library of free, well-designed templates. Even if you hire a designer to customize the style of your site, it will cost you less than $100, since they’ll be using the graphical interface, instead of coding it on their own.
It’s not enough to launch your Ecommerce site. It needs to have the right content to make people buy your products. This includes product description, specifications and more.
Whether you’re developing a new site or redeveloping an existing site, find out what will be included in the development costs. If you have a lot of products to add, then you may need to do it yourself, or your web development agency will charge you extra for it. Also, remember that as your catalog grows, you’ll need to regularly add new products to your site. So this will be a recurring expense. Make sure to take this cost into consideration while choosing an agency.
Automation tools & plugins
Although there are plenty of automation tools and plugins to manage your Ecommerce site, they’re so seamless that you may not be aware of how they’re adding to your business expenses.
Make a list of all the paid tools & platforms that you use for your business – starting from your hosting provider, to email marketing platform like MailChimp, to collaboration tools like Slack, to social media tools like HootSuite. Each of these tools adds a recurring cost to your Ecommerce business. Find out if there are any good open source alternatives for them.
We were able to reduce our technology costs by 32% when we replaced most of the paid tools with their open-source alternatives.
Website Maintenance & Updates
Once you’ve launched your online store, you’ll have to run periodic maintenance and updates on it, whether it’s in the form of software patches, security updates or even a new site design. You’ll also need professional assistance whenever your site breaks down. If you don’t consider their cost, it can quickly eat into your revenues.
Here, if you’ve built an ecommerce site from scratch, then you can get into a lot of trouble. If your original developer leaves, the new guy will have a hard time fixing your website, and might charge you extra for it.
If you’re using self-hosted platforms like Magento, then you’ll need to hire a good developer to update your site, as well as fix it. They may charge you $80 to $180 per hour.
Cloud-hosted platforms like Shopify allow you to install updates with just one-click and have a 24×7 support team dedicated to help you. They’re the best option for people who don’t want have much technical knowledge, or lack the resources build and manage websites.
Wrapping it up
The key is to monitor these costs regularly, especially the recurring ones. When you’ve newly launched, ensure that you review them at least once a month. As your business grows, you’ll need to track them every week. Also, keep aside a few days every 3-4 months, to proactively update yourself with new technologies and look for cheaper alternatives. The good news is that each of the above costs can be streamlined to drive your business into profits, and invest the saved funds on important areas such as marketing and recruiting.
Author Bio: For more than 8 years, Sreeram Sreenivasan has worked with various Fortune 500 Companies in areas of Business Intelligence, Sales & Marketing Strategy. He regularly writes at Fedingo about a wide range of business growth & marketing topics. He’s also the Founder & CEO of Ubiq Business Intelligence, a cloud-based BI Platform for SMBs & Enterprises.