Costs related to running an e-shop

Online shops are experiencing a dynamic boom. It is the fastest-growing e-commerce market in Europe. Every month even several hundred new online shops are opened. According to the Bisnode report, their total number exceeds 40 thousand.  Some of them are businesses of debuting entrepreneurs, and some of them have been operating in the traditional channel of the company so far. Apart from the cost of launching e-business, it is worth remembering the current expenditure on Internet activity. What kind of payment? You will read about it in the article!

 

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Basic costs of running an e-shop

An online shop is a chance to quickly, effectively and almost limitlessly reach customers, regardless of where they live. Starting a business online is, in most cases, cheaper and more straightforward than a stationary shop. A professional online shop, with basic functionalities, can be set up for a relatively small amount. A more extensive shop with many functionalities is, of course, more expensive and a dedicated solution may burden our budget even by several tens of thousands of pounds. Apart from the initial costs connected with setting up a business and starting sales, owners of e-businesses will also pay for running a shop.

E-commerce platform

The critical element of sales on the Internet is the e-commerce platform, i.e. software for managing the shop. The cost of such a platform, depending on the chosen solution, may be one-time or periodical. E-shop owners can choose between one-time licences and subscription solutions. An interesting alternative is open source solutions which do not require an initial contribution – only additional plugins and extensions to expand the shop are paid.

Customer service

Many, especially beginner e-shop owners, decide to spend their time on handling orders and completing the range. As sales increase, the time needed to pack and send shipments increases. This is accompanied by increased communication with customers, changes in stock levels and handling of complaints and returns. Therefore, to sell even more, and thus earn more, it is worthwhile to decide to hire one or more people to help. An attractive alternative is online shops in the dropshipping model, where a wholesaler handles sales and shipping.

Cost of packaging

The sale of products and their shipment to the customer is accompanied by the need to pack the order – in a cardboard box or envelope, filler and tape protection. It is also necessary to print a label with shipment information. Although the cost of packaging, depending on the size and nature of the shipment, ranges from a few pounds to several dozen pounds, it should be included in the e-shop's financial settlement.

Delivery of products

Cooperation with a courier company is also an inherent cost of online sales. Online customers are eager to buy in shops which offer them a wide range of choice in terms of delivery of goods. So, it is good to cooperate with some of the most popular suppliers. The shipping price is also important. More and more e-shops provide free delivery without restrictions or reduce the delivery limit to gain an advantage over the competition. Equally important are the costs of sending the product back – it has to be determined whether the customers or we will bear them. 

Payment systems

Another cost of running an e-shop is the popular payment systems that allow customers to pay for their orders. The settlement of the service is usually based on a commission of a few percent.

Pictures and product descriptions

The customer of the online shop does not have the opportunity to touch the products they are interested in – they rely only on pictures. These are therefore of great importance for the success of the online business. It is worth making sure that they are unique, of high quality and reflect the actual condition of the products. Depending on the nature of the assortment being sold, the session may include not only the shots of the product itself but also the employment of models or interior rental.

Advertising and marketing

The budget of an online shop should also include the cost of acquiring customers. Various promotional activities serve this purpose – social media campaigns, e-mail marketing, SEO positioning, Google Ads, viral marketing, content marketing and more. Most of these tasks can be carried out independently or can be commissioned to a specialist. 

The fixed costs of the e-shop should also include the costs of running a business, maintaining the domain, server and accounting services. 

How much does running an online shop cost?

There is no clear answer to the question about the expenses incurred by the online shop. Depending on the nature of the online business, the final cost of running the shop will vary. As a result, the monthly costs of maintaining an e-shop can range from a few to even several thousand pounds. Fortunately, most of the expenses of online shop owners can be counted as a cost, which allows them to reduce their taxes.

The launch and operation of an online shop also require its development. It is primarily about adding new products and functionalities that will meet the expectations of e-shop customers. For this reason, e-business requires incurring not only fixed costs but also those intended for development, which may increase its competitiveness and translate into greater profits.