Walk-Through of The Ecommerce Startup Cost, Procedure, And Time Frame
You cannot ignore the power of e-commerce in today’s digital world. Get ready to get a thorough understanding of where your business stands.
Last Updated On : 13 June, 2024
5 min read
Table of Contents
- Let’s Launch Your E-commerce Business Together
- How Much Startup Cost Do You Need to Kickstart Your Ecommerce Business?
- The Prime Component – eCommerce Platform
- The Requisites – Domain Name, Hosting, Inventory, Payment Processing
- The Backbone – eCommerce Website or App Designer
- The Act of Driving Awareness – Marketing
- A Brief Overall eCommerce Startup Guide
- A Year-by-Year Pattern of Success
The eCommerce industry is a force that no investor can afford to ignore!
-Cushla Sherlock
Having said that, easy access to technology (talk about smartphones) and the comfort of shopping anywhere, at any time are evidence of the booming eCommerce industry.
The prevalent eCommerce marketplaces like Amazon are unlocking millions of opportunities for entrepreneurs to connect with their customers. This has become a ladder for online businesses to leverage profits in a cross-border setting, and above all, become a great opportunity for entrepreneurs.
Planning to become a successful internet entrepreneur? Let's consider a few crucial instructions for a successful and profit driven eCommerce business.
Take a look at the most interesting stats around eCommerce:
Impressed? So are we!
We are sure that you definitely don’t want to miss the chance of leading this highly lucrative market. Let’s start your eCommerce venture today with the 101 industry guide below:
Let’s Launch Your E-commerce Business Together
But first things first … we only take calculated business risks here.
Back in time, setting up a new business was only meant for people having six or seven-figure money secured in their banks or for those whose family name was enough. But today, it is no longer a dilemma. Sigh!
Anyone today can start their own eCommerce business and get it running in no time. But still, you need to have comprehensive knowledge about your product, your target market, the estimated cost, and the right procedure to become a part of the ever-growing market.
Keeping in mind what Bill Gates said “If your business is not on the Internet, then your business will be out of business”, it’s never too late to climb up the ladder.
But guess what?
All of this gets easier if you plan to launch an online business because you are already on the Internet!
You require an eCommerce website or app to access your target market. Therefore, while building your eCommerce app or website, keep in mind that your goal is to sell your products to everyone, regardless of the place they live, and build accordingly.
Looking for the most trending eCommerce trends before developing or starting your eCommerce project?
eCommerce will account for 22% of global retail sales by the year 2023, which makes sense because online shopping is our all-time favorite pastime these days ;)
With this increased profoundness and competition in the eCommerce market, you need to consider one of the most important risk factors for starting an online business, which is cost.
Whether you want to develop an eCommerce store or need well-researched insights on the eCommerce industry, For this, check out our informative articles on eCommerce
How Much Startup Cost Do You Need to Kickstart Your E-commerce Business?
Let’s talk about Financial Forecasting!
It is important to have a better understanding of how much money you need to start your business.
Before getting started, we assure you that you will be saving a great deal of money as compared to building brick-and-mortar stores that involve a large chunk of your dollars.
So, the good news is that you don’t need to spend big money on non-essentials like store fixtures, rent, utilities, and other necessary arrangements. Instead, that money would be utilized for other expenses. In a nutshell, “you will be saving copious of money for sure.”
There come other important factors that require your attention for building your eCommerce setup:
- The eCommerce app platform
- Location of the developers
- eCommerce app development features and functionalities
Worry no more! We have narrowed down the eCommerce startup costs for you. The guide is based on thorough market research to help you build an eCommerce store without breaking the bank.
Beyond the immediate startup costs, it's crucial to consider innovative approaches to attract and retain talent. EMIs provide an avenue to offer tax-efficient share options to key employees, aligning their success with the growth of your business EMI valuation plays a crucial role in the Enterprise Management Incentive (EMI) program, as it allows businesses to determine the value of shares offered to employees, aligning their interests with company growth and fostering a motivated workforce. You can not only launch your online store efficiently but also nurture a motivated and engaged team that contributes to your business's long-term success.
The Prime Component – eCommerce Platform
Just like you need a good location for a brick-and-mortar storefront, likewise, you need a good platform for an intriguing online storefront.
Yes, it’s time to choose the right eCommerce platform.
There is a diverse range of platforms to choose from if you require to build an eCommerce application or website. Let's break down the monthly subscription of popular eCommerce platforms:
(Please note that the eCommerce app cost will vary depending on how optimal you want to build your app)
The Requisites – Domain Name, Hosting, Inventory, Payment Processing
Domain Name:
Whether you are selling your product or service through an app or website, your eCommerce business requires a domain name. Without which, your recognition is obsolete.
- Domain name: $2 - $20/year
Hosting:
Similarly, you need to host your eCommerce business on a hosting provider server to make it accessible on the internet. Without hosting, all your dreams of running a successful business will go in vain.
- Hosting: $3.50-$250/Month ($29/Month average)
You can get your website hosted in two different ways: shared hosting and private hosting.
Take notes: For your information, shared hosting is a relatively cheaper option as compared to private hosting which will cost you at least $200/month.
Inventory:
Depending on what type of product you are selling, inventory cost varies accordingly. Your initial inventory to jump-start your eCommerce business will cost you a great sum of money.
So,
- Inventory code= variable (depending on the number of products and variants)
Payment Processing
After the inventory cost, we have payment processing. Having an eCommerce business with a secure and fast payment system is imperative to retaining your customers.
- Different payment processing methods will charge you almost 2-3% plus the transaction cost.
Varying payment processing platforms including PayPal, Shopify, Square, and Stripe charge 2.9% plus $0.30 per transaction.
The Legal Criteria to Follow – Business License and Permits
Your eCommerce business requires an authentic business license and permits for its operation in a particular country. For eCommerce-specific licenses and permits, the cost entirely depends on where you live and what type of business you operate.
To officially run your eCommerce business, it is crucial to follow specific legal procedures. If you are operating in Illinois, this means setting up an LLC properly. Detailed and precise step-by-step instructions on how to start an LLC in Illinois can make the process much more straightforward, helping ensure that you are compliant with state regulations and set up for success from day one.
The average cost ranges from $50 to $400.
In some states, it is nearly $0. If we talk about starting an LLC in California, it’s free until 1st July 2023.
The Backbone – eCommerce Website or App Designer
Thinking of ditching the designers for saving costs? Don’t even think about it because you would be making a huge mistake! We don’t doubt your creativity but developing an eCommerce website requires extensive knowledge and expertise. With your self-built website versus a professionally-built website, you will be able to see a crystal clear difference!
Now that you can spot the difference, we are pretty much sure that we have convinced you.
Although hiring a professional designer for interactive UI/UX service can cost you at least $300 to $3,000 TRUST US, it is worth the money.
The Act of Driving Awareness – Marketing
It's quite self-explanatory! Marketing is indispensable to boost awareness and drive traffic to your online marketplace.
Of course, we don’t want to surprise you with sky-high marketing costs but you can align your budget to your business needs.
According to the U.S Small Business Administration, you should spend 7-8% of your revenue on marketing and advertising for your eCommerce business. This means an average of 10-12% net revenue.
You can expect to spend an average of $500-$20,000 on your eCommerce marketing.
But that's not standard. You can surely break up the marketing cost based on your long-term goals.
A Brief Overall eCommerce Startup Guide
After you have successfully launched your eCommerce website or application, another important thing that awaits your attention is its SUCCESS.
That being said, the ultimate goal of every business is to hit the benchmark target.
A Year-by-Year Pattern of Success
You cannot measure the success of your eCommerce business with the amount of money you invested or the coding pattern you followed for its development.
Now you must be wondering what else it takes.
Well, it takes time —sometimes little and sometimes more than you ever expected.
How much time do you expect your business needs to fly? A year or two? Or maybe more?
Forbes says:
Brownie Point:
For those who are hoping that their eCommerce business will take flight soon, they need to acknowledge the fact that success depends on the type of business. And, the business model too.
Here is a year-by-year breakdown of how you can expect your eCommerce business to perform every year.
Year One
The first year is the year of hope for your eCommerce startup to get off the ground. Attracting the attention of the target audience and growing the client base gives way to anticipation for upcoming years. So, you can say that the first year of your launch is going to be a good year.
Year Two
You survived! What’s better than this?
It is time for you to celebrate the first year of your existence in the marketplace. Although you thrived the first year, you cannot sit back and relax. No! There will be time for that later!
You need to double your effort this year and focus on expanding your client pool. Without emphasizing this, your cash flow will take the wrong direction.
After almost one and a half years of struggling, you need to reinvest back into your eCommerce business to achieve certain milestones. However, in year two, you will mostly see an increased customer circle.
Year Three
Till now, you have almost achieved your client growth benchmark and are making enough profits. But this doesn’t mean you have come far enough to stop worrying about the future.
Anything unexpected can happen at any time.
Be prepared to a standstill through whatever comes your way.
Unless you are tackling it well, we are sure that you can overcome any inevitable rough times.
Monitoring the overall eCommerce business strategy and avoiding the cash drain is what can protect your business from sinking.
Year 4 and above
After your business has matured enough by surviving different market circumstances, your chances of becoming a business giant are bright.
Now when your business has pulled through financially, you can expect the most important success markers in your business including:
- Customer satisfaction
- Successful brand positioning
- Effective engagement
- Increased profit margin
Putting It All Together
Stay encouraged! All it takes is a proper budgeting plan and the right business model to succeed.
If you feel like your eCommerce business is climbing up the mountain, what would be a better feeling than this? After all, this is what you aimed for!
If you need any technical assistance regarding launching your eCommerce business, InvoZone is here to help you.
You can choose from the versatile range of services that we cater, particularly to the eCommerce industry including:
- Custom eCommerce design
- eCommerce website solutions
- Custom eCommerce platforms
- UI/UX design
Regardless of your needs, we are here to serve you the best we can and to help you excel in the eCommerce marketplace.
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Table of Contents
- Let’s Launch Your E-commerce Business Together
- How Much Startup Cost Do You Need to Kickstart Your Ecommerce Business?
- The Prime Component – eCommerce Platform
- The Requisites – Domain Name, Hosting, Inventory, Payment Processing
- The Backbone – eCommerce Website or App Designer
- The Act of Driving Awareness – Marketing
- A Brief Overall eCommerce Startup Guide
- A Year-by-Year Pattern of Success
The eCommerce industry is a force that no investor can afford to ignore!
-Cushla Sherlock
Having said that, easy access to technology (talk about smartphones) and the comfort of shopping anywhere, at any time are evidence of the booming eCommerce industry.
The prevalent eCommerce marketplaces like Amazon are unlocking millions of opportunities for entrepreneurs to connect with their customers. This has become a ladder for online businesses to leverage profits in a cross-border setting, and above all, become a great opportunity for entrepreneurs.
Planning to become a successful internet entrepreneur? Let's consider a few crucial instructions for a successful and profit driven eCommerce business.
Take a look at the most interesting stats around eCommerce:
Impressed? So are we!
We are sure that you definitely don’t want to miss the chance of leading this highly lucrative market. Let’s start your eCommerce venture today with the 101 industry guide below:
Let’s Launch Your E-commerce Business Together
But first things first … we only take calculated business risks here.
Back in time, setting up a new business was only meant for people having six or seven-figure money secured in their banks or for those whose family name was enough. But today, it is no longer a dilemma. Sigh!
Anyone today can start their own eCommerce business and get it running in no time. But still, you need to have comprehensive knowledge about your product, your target market, the estimated cost, and the right procedure to become a part of the ever-growing market.
Keeping in mind what Bill Gates said “If your business is not on the Internet, then your business will be out of business”, it’s never too late to climb up the ladder.
But guess what?
All of this gets easier if you plan to launch an online business because you are already on the Internet!
You require an eCommerce website or app to access your target market. Therefore, while building your eCommerce app or website, keep in mind that your goal is to sell your products to everyone, regardless of the place they live, and build accordingly.
Looking for the most trending eCommerce trends before developing or starting your eCommerce project?
eCommerce will account for 22% of global retail sales by the year 2023, which makes sense because online shopping is our all-time favorite pastime these days ;)
With this increased profoundness and competition in the eCommerce market, you need to consider one of the most important risk factors for starting an online business, which is cost.
Whether you want to develop an eCommerce store or need well-researched insights on the eCommerce industry, For this, check out our informative articles on eCommerce
How Much Startup Cost Do You Need to Kickstart Your E-commerce Business?
Let’s talk about Financial Forecasting!
It is important to have a better understanding of how much money you need to start your business.
Before getting started, we assure you that you will be saving a great deal of money as compared to building brick-and-mortar stores that involve a large chunk of your dollars.
So, the good news is that you don’t need to spend big money on non-essentials like store fixtures, rent, utilities, and other necessary arrangements. Instead, that money would be utilized for other expenses. In a nutshell, “you will be saving copious of money for sure.”
There come other important factors that require your attention for building your eCommerce setup:
- The eCommerce app platform
- Location of the developers
- eCommerce app development features and functionalities
Worry no more! We have narrowed down the eCommerce startup costs for you. The guide is based on thorough market research to help you build an eCommerce store without breaking the bank.
Beyond the immediate startup costs, it's crucial to consider innovative approaches to attract and retain talent. EMIs provide an avenue to offer tax-efficient share options to key employees, aligning their success with the growth of your business EMI valuation plays a crucial role in the Enterprise Management Incentive (EMI) program, as it allows businesses to determine the value of shares offered to employees, aligning their interests with company growth and fostering a motivated workforce. You can not only launch your online store efficiently but also nurture a motivated and engaged team that contributes to your business's long-term success.
The Prime Component – eCommerce Platform
Just like you need a good location for a brick-and-mortar storefront, likewise, you need a good platform for an intriguing online storefront.
Yes, it’s time to choose the right eCommerce platform.
There is a diverse range of platforms to choose from if you require to build an eCommerce application or website. Let's break down the monthly subscription of popular eCommerce platforms:
(Please note that the eCommerce app cost will vary depending on how optimal you want to build your app)
The Requisites – Domain Name, Hosting, Inventory, Payment Processing
Domain Name:
Whether you are selling your product or service through an app or website, your eCommerce business requires a domain name. Without which, your recognition is obsolete.
- Domain name: $2 - $20/year
Hosting:
Similarly, you need to host your eCommerce business on a hosting provider server to make it accessible on the internet. Without hosting, all your dreams of running a successful business will go in vain.
- Hosting: $3.50-$250/Month ($29/Month average)
You can get your website hosted in two different ways: shared hosting and private hosting.
Take notes: For your information, shared hosting is a relatively cheaper option as compared to private hosting which will cost you at least $200/month.
Inventory:
Depending on what type of product you are selling, inventory cost varies accordingly. Your initial inventory to jump-start your eCommerce business will cost you a great sum of money.
So,
- Inventory code= variable (depending on the number of products and variants)
Payment Processing
After the inventory cost, we have payment processing. Having an eCommerce business with a secure and fast payment system is imperative to retaining your customers.
- Different payment processing methods will charge you almost 2-3% plus the transaction cost.
Varying payment processing platforms including PayPal, Shopify, Square, and Stripe charge 2.9% plus $0.30 per transaction.
The Legal Criteria to Follow – Business License and Permits
Your eCommerce business requires an authentic business license and permits for its operation in a particular country. For eCommerce-specific licenses and permits, the cost entirely depends on where you live and what type of business you operate.
To officially run your eCommerce business, it is crucial to follow specific legal procedures. If you are operating in Illinois, this means setting up an LLC properly. Detailed and precise step-by-step instructions on how to start an LLC in Illinois can make the process much more straightforward, helping ensure that you are compliant with state regulations and set up for success from day one.
The average cost ranges from $50 to $400.
In some states, it is nearly $0. If we talk about starting an LLC in California, it’s free until 1st July 2023.
The Backbone – eCommerce Website or App Designer
Thinking of ditching the designers for saving costs? Don’t even think about it because you would be making a huge mistake! We don’t doubt your creativity but developing an eCommerce website requires extensive knowledge and expertise. With your self-built website versus a professionally-built website, you will be able to see a crystal clear difference!
Now that you can spot the difference, we are pretty much sure that we have convinced you.
Although hiring a professional designer for interactive UI/UX service can cost you at least $300 to $3,000 TRUST US, it is worth the money.
The Act of Driving Awareness – Marketing
It's quite self-explanatory! Marketing is indispensable to boost awareness and drive traffic to your online marketplace.
Of course, we don’t want to surprise you with sky-high marketing costs but you can align your budget to your business needs.
According to the U.S Small Business Administration, you should spend 7-8% of your revenue on marketing and advertising for your eCommerce business. This means an average of 10-12% net revenue.
You can expect to spend an average of $500-$20,000 on your eCommerce marketing.
But that's not standard. You can surely break up the marketing cost based on your long-term goals.
A Brief Overall eCommerce Startup Guide
After you have successfully launched your eCommerce website or application, another important thing that awaits your attention is its SUCCESS.
That being said, the ultimate goal of every business is to hit the benchmark target.
A Year-by-Year Pattern of Success
You cannot measure the success of your eCommerce business with the amount of money you invested or the coding pattern you followed for its development.
Now you must be wondering what else it takes.
Well, it takes time —sometimes little and sometimes more than you ever expected.
How much time do you expect your business needs to fly? A year or two? Or maybe more?
Forbes says:
Brownie Point:
For those who are hoping that their eCommerce business will take flight soon, they need to acknowledge the fact that success depends on the type of business. And, the business model too.
Here is a year-by-year breakdown of how you can expect your eCommerce business to perform every year.
Year One
The first year is the year of hope for your eCommerce startup to get off the ground. Attracting the attention of the target audience and growing the client base gives way to anticipation for upcoming years. So, you can say that the first year of your launch is going to be a good year.
Year Two
You survived! What’s better than this?
It is time for you to celebrate the first year of your existence in the marketplace. Although you thrived the first year, you cannot sit back and relax. No! There will be time for that later!
You need to double your effort this year and focus on expanding your client pool. Without emphasizing this, your cash flow will take the wrong direction.
After almost one and a half years of struggling, you need to reinvest back into your eCommerce business to achieve certain milestones. However, in year two, you will mostly see an increased customer circle.
Year Three
Till now, you have almost achieved your client growth benchmark and are making enough profits. But this doesn’t mean you have come far enough to stop worrying about the future.
Anything unexpected can happen at any time.
Be prepared to a standstill through whatever comes your way.
Unless you are tackling it well, we are sure that you can overcome any inevitable rough times.
Monitoring the overall eCommerce business strategy and avoiding the cash drain is what can protect your business from sinking.
Year 4 and above
After your business has matured enough by surviving different market circumstances, your chances of becoming a business giant are bright.
Now when your business has pulled through financially, you can expect the most important success markers in your business including:
- Customer satisfaction
- Successful brand positioning
- Effective engagement
- Increased profit margin
Putting It All Together
Stay encouraged! All it takes is a proper budgeting plan and the right business model to succeed.
If you feel like your eCommerce business is climbing up the mountain, what would be a better feeling than this? After all, this is what you aimed for!
If you need any technical assistance regarding launching your eCommerce business, InvoZone is here to help you.
You can choose from the versatile range of services that we cater, particularly to the eCommerce industry including:
- Custom eCommerce design
- eCommerce website solutions
- Custom eCommerce platforms
- UI/UX design
Regardless of your needs, we are here to serve you the best we can and to help you excel in the eCommerce marketplace.
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Naveed ul AzizHis industrial experience translates into his current position, Naveed ul Aziz now uses hi... Know more
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