What Costs Do Ecommerce Startups Need to Consider?

ecommerce startup costs

The eCommerce industry is booming in the UK with over 40,000 new ecommerce businesses registered in 2021 alone.

While this is certainly an exciting industry to get involved with, new business owners should be wary of the costs involved with starting an eCommerce business.

Here is a rundown of the costs that you may need to consider.

How Much does it cost to Start an eCommerce Store?

Everyone has a different opinion on how much it costs to start an eCommerce store.

This is because every store will have different needs depending on the industry that it is targeting.

In some cases, you may be able to start a store with under £500 whilst others will cost thousands.

Here are some common startup costs that you may run into:

Platform Fees

If you choose to use a self-hosted website software to build your eCommerce store, you will need to pay for a domain.

This is usually around £20 per year but can be more or less depending on the type of domain that you choose. You will need to consider hosting costs, which are usually around £10-£20/month for a low-traffic website.

Platforms such as WordPress also charge a fee to access their premium features, which are often useful when building an eCommerce business.

Popular eCommerce platform Shopify also charges a monthly fee of $29 depending on usage, with further % fees for every transaction.

Advertising

Once you have set up your eCommerce store, you will need to invest in business growth.

This involves understanding how to grow your online business and then using best practices to produce growth.

The internet is a crowded place. Unfortunately, this means that it costs to get your business noticed by customers.

There are many different types of advertising to choose from and all of them come at different prices.

Methods such as social media advertising and Google ads can be expensive whereas Facebook ads are cheaper options to consider.

It is a good idea to research different types of eCommerce advertising before you make a decision on the best channel for your startup.

Marketing

Advertising is not the only marketing cost that needs to be accounted for.

You may need to pay graphic designers to create logos, graphics and promotional content.

Effective digital marketing will allow you to stand out from competitors and improve your brand reputation.

This will enable you to accumulate a loyal customer base and expand your global reach. All of this goes towards better profits!

You may also want to consider hiring a professional to improve your website/store so that it ranks well in the search engines, which can take a long time for a new website.

The costs of this can vary depending on who you choose to hire. It is definitely worth shopping around for the best deal!

Staff Costs

Expansion usually comes with hiring a staff member of two. Hiring staff comes with big costs- the practicalities of which should be considered carefully before you make your business plan.

It may be cheaper to hire freelancers to complete ad-hoc tasks before bringing in any contracted employees.

Warehouse and Production

Moving away from website costs, e-commerce startups need to factor in the costs of developing, storing and shipping their products.

This can be one of the biggest costs involved with running an eCommerce startup.

The exact cost of all of this varies depending on the type of product that you sell.

For example, bigger products such as bikes are typically more expensive to make and cost more to store and ship. On the other hand, smaller products such as jewellery or clothing are often cheaper to create and cost less to store and ship.

It is worth having a consultation with different warehouses and production companies before starting the process of product development.

Another great option is to use the dropshipping method – where items are shipped directly to the customer from the manufacturer.

This cuts down on any storage costs and means you don’t have to spend lots of time packaging and shipping items.

Insurance and Accountancy Fees

You will need to consider insurance costs to cover you in the event of damage, legal expenses, business interruption and employers’ liabilitu.

Accounting is another cost you will need to consider, with costs involved to set up a limited company, submitting a tax return and monthly bookkeeping. As well as a cloud accounting software package, it’s worth looking into a specialist fixed monthly fee accountant to help you crunch the numbers!

Get in Touch for Help Understanding Ecommerce Startup Costs

Starting an eCommerce store often costs more than entrepreneurs expect! It is important to make yourself aware of the costs involved before starting so that you can budget for the costs involved.

This way, you can be prepared for future expenses and start your business off on a strong foot.

If you need any advice on the startup costs for your ecommerce business, Your Ecommerce Accountant can help. Book a FREE 30-minute meeting on your ecommerce accounting today.

Ben Sztejka ACA

Ben Sztejka ACA

I am an ICAEW Chartered Accountant with one core belief, make accounting as pain free as possible and focus on adding value to businesses.

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