How much does it cost to have your business online? How to decide how much to invest in an e-commerce store

The obvious answer is simple… “It depends!”, because beyond the cost, the most important thing is to know what the return on investment is. Nowadays, if you know the basics about the Internet you can make a website for 10 euros per month. But if you want, you can also buy a car for 500 euros. The question is the same, what is your goal and how far do you want to go?

Let’s give an idea of values. To start selling online, for a small volume, you can start with auction sites at almost no cost. If you want to develop your own site, something basic but with some robustness and competent professionals, it may cost you between 2 thousand and 15 thousand Euros. An average company can already count on an initial investment starting at 30 thousand Euros, and from there there’s no limit. We are talking about transactional sites where you can sell and buy. To get an idea, Amazon, in 2012, spent $4.6 billion on technology, equivalent to 7.5% of its revenues.

E-commerce is a channel with growing relevance, which must be given adequate importance compared to other channels. Recently, the director of a company that invoices 100 million Euros, was telling me that he has a budget of 30 thousand Euros for the e-commerce site (including advertising). However, it has 50 stores and each one costs at least 600 thousand Euros to launch. (To launch what). When I asked him what percentage of the sales were generated by the internet, he answered that it was less than 1%. But when we went to recalculate, it turned out to be 3% of sales (and in my opinion could be 10% in 2 years), which makes the internet one of the main stores of the group. However, being one of the main stores that covers a whole country, it only has 5% of the investment allocated to a store in a shopping center that has a much more limited audience. We then analyzed the return on advertising and concluded that each euro invested in online advertising brought a return of 5 euros margin. Considering that they have no investment limitations there was no reason to invest more. (It is not the other way around), “Considering that they have no investment, a higher investment is justified”.

  1. So, before you decide how much to spend on your site ask yourself the following questions: 1. What is the purpose of the site?
  2. How much do you expect to sell and with what margin?

From there, define your strategy and business plan. Be realistic, for an e-commerce of do not count, currently, with a breakeven in less than 18- 24 months. From here define the strategy and relevant figures. Some of the main costs to consider are: personnel, platform and programming, design, content generation, content generation and logistics costs. Don’t forget the marketing costs as well. How will you make your customers find your site? There is no point in creating the best site in the world if nobody goes there.

To end in a cliché way, “If you pay peanuts, you will hire monkeys”, and saving at the beginning can be quite expensive in the future, as you will create a website with dubious professionals who cannot grow your business.

David Bernardo
David Bernardo
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