If lately, you’ve been thinking more and more about starting up an e-commerce business, you’re certainly not alone. Although Business Standard recently published an article citing the fact that the amount e-commerce firms that exist will shrink significantly over the next couple of years, that doesn’t change the fact that there are literally thousands and thousands of them in cyberspace. E-commerce means big business and big money to a lot of people. (Reportedly, $190 billion in sales in 2011 alone.)
So, when it comes to starting up your own e-commerce company, what do you need to know? A few things. You need to know what kind of business you want to provide and then carve out a niche that will make your company unique. You need to build a creative and extremely user-friendly website. You need to cultivate a marketing plan that will drive traffic to your site. If you are selling a particular kind of product, you need enough of it so that you can fulfill all of the orders that you receive. You need to have impeccable customer service via email (or video chat) as well as by snail mail and phone. And, all of these things require one main resource: money.
If you’re wondering just how much money you’ll need to make your “e-commerce dream” a reality, we’ve done some researching and provided you with a few things to make sure to incorporate within your budget below:
You will need a state-of-the-art website. A lot of people in e-commerce lose sales, not because they don’t provide a good service or have a good product, but because they have a really dated-looking (and acting) kind of website; one that customers are not drawn to. Although you could build your own website thanks to companies like WordPress, the two main things to keep in mind is one, first impressions are extremely important and two, you get what you pay for. Many business experts believe that in order to come to a “bottom line figure” of how much you’ll need to have a great and distinctive web design, you should be willing to spend about one percent of your projected next year’s revenue on your website. So, if you’re aiming to make $500,000, spend $5,000 creating your site.
You will need to set up payment transactions. Most payment transactions will transpire between your bank and your customer’s credit or debit card. This means that you’ll need some kind of shopping cart solution as well as a merchant bank account. It’s not that expensive to set these kinds of things up but ongoing transaction fees can run you as much as one to five percent of your base volume.
You will need a good website host. No one wants to come to a website that runs slowly or crashes all of the time. So, definitely make sure that you have a good web host. Some of the best web hosting sites include Just Host, Fat Cow and Blue Host. You can set up an account with all of these companies for under $10 per month.
You will need good software. From online shopping carts and security needs to sales reports and accounting, you definitely need some reliable software for your e-commerce company. A lot of software will run you around $50 per product. You can get a list of some of the most recommended e-commerce software by going to eCommerce-Software-Review.TopTenReviews.com.
You will need a good marketing plan. Thanks to the power of social media, things like a Facebook fan page, Twitter account and even setting up a YouTube video page where people can subscribe and watch your videos will cost you absolutely nothing. However, if you want to stand out in a crowd of e-commerce sites, you want people to be able to go to those places or even on your own website and “click here” on a giveaway or contest link from time to time so they can get access to discounts, T-shirts and maybe even free tickets to an event that you’re hosting. You also might want to get the word out on television or radio and that oftentimes requires having an advertising budget. The main thing here is to make sure that you have some money for marketing; the more people who know about you, the more money you can make.
So now that we’ve addressed all of what you’ll need to start an e-commerce business, what’s the ballpark figure of what you’ll be required to spend? As you can see, it depends on your initial vision, but taking these five things into account, be prepared to have at least $10,000 that you can put into your company. It may seem like a lot at first, but keep in mind that with the right planning, your profits will surpass your investment in no time.