Do you want to start selling online, but first want to know the cost of creating your own online store to enable customers to buy online? Are there minimum expenses to create your online store ? Is there a maximum limit? Why is there a large discrepancy in the costs of establishing online stores? Does this variation in prices mean a variation in quality? How do I choose the perfect template for my online store’s needs?
Many of the questions that come to your mind about the cost of establishing an online store will be answered in this article, God willing, by exploring the administrative, programming, and then marketing costs.
The administrative cost of establishing an online store
First, before starting to create your online store, make sure that you have sufficient administrative equipment to create your own store and own the integrated system that qualifies you to sell on the Internet, which includes owning products, shipping services, customer service, and inventory management, and do not just focus on the part that is visible to the customer only and ignore matters. Others running in the background.
Let’s talk about the administrative costs of creating an online store as follows:
Shipping costs
Shipping costs are divided into 3 basic costs:
1- Shipping costs from the supplier
First, you need to calculate the shipping costs from the supplier you will rely on, especially if it is outside your country (China, for example), especially since shipping costs depend on the number and type of imported products, as well as the costs of taxes and customs in your country.
These costs vary based on countries’ policies in controlling imports from abroad and according to the country’s laws. You will find that customs are exorbitant on some products, moderate on some items, and exempt on others.
Determine first the type of products you intend to import and the expected quantities, and then through agents or official newspapers find out the tax and customs prices. As for international shipping costs, they are almost fixed through shipping companies, and there are some suppliers who bear the shipping costs to your country.
2- Shipping costs to the customer
Here we mean internal shipping costs whether you rely on an internal shipping agent such as: DHL, Aramex, Fedex, UPS…or other companies. Or you will rely on an internal charging system that you build with your team, you will need to calculate these costs in an estimated manner.
For example, how much does it cost to ship 100 products per day? 200 products? 500 products?
The shipping cost will decrease as the amount of shipping through your distribution centers increases, and depending on your agreement with the supplier on the distribution policy.
3- Return costs
Here is one of the negative parts that will not be liked by the online store owner, but it cannot be ignored, which is the costs of returns due to not reaching the customer, or returns after purchasing the product, whether this is a result of the customer’s behavior, the shipping service, or the product itself.
Let’s further break down returns into two parts:
Returns before product delivery
You will face the problem of returns before the product is actually delivered to the customer. The shipping representative will not deliver the product to the customer in many cases for several reasons: which is the traffic congestion that exists in cities, especially in the capitals, so the shipping vehicle arrives with the product to the customer at a late time that is not appropriate for receipt, or because of the shipping representative’s poor coordination. With the customer, it arrives to him at an inconvenient time for him, and thus he does not receive the product.
This return may be the result of behavior by the customer, such that he refuses to receive the product if he finds it inappropriate for him after placing the purchase order, or he hesitates to acquire the product and is not serious about purchasing, and thus refuses to receive it from the shipping representative in the first place. This problem appears more when the payment method is (cash on receipt).
Returns after product delivery
After the customer acquires the product and pays its financial value and then starts using it, he will either be happy with it and buy it from you, or he will find it different from what he expected and therefore request to return the product and receive his financial dues.
The return in this case may be due to a problem with the product itself, whether in its design, quality, performance, price, material, etc., or it may be due to the product details not being well explained on the sales page, and thus the product was inconsistent with the customer’s expectations.
This problem clearly appears in clothes, accessories, or products that need to be tried in general.
This return may also be due to behavior on the part of the customer when he saw that he did not need the product after purchasing it.
Whether the returns are before the product is delivered or after it is delivered, these costs must be calculated within the costs of establishing an online store according to the expected sales volume, by setting a clear policy for dealing with returns for each of:
- store owner
- Client
- Shipping company
Who bears the costs in each case?
Storage costs
One of the most important costs that you take into consideration while calculating administrative costs is the cost of storage, especially since some products need to be stored in special conditions, such as food commodities, meat, and freezers that need to be kept at a certain degree of refrigeration.
The cost of storage may also be high for products that require large areas of storage, such as furniture, electrical appliances, vehicle parts, etc.
You may rely on an external storage service such as ( Amazon FBA ), and you may rent the property, manage the inventory, and supervise its quality assurance yourself through your work team.
If you are going to build your own online store, it is best to manage the inventory internally and not rely on external parties for this service to ensure quality standards in storing products and supplying them to the customer.
You will find that storage costs often include: renting the property, hiring employees, the cost of packaging, and the cost of tools used in inventory management such as coolers, etc., depending on the type of products.
The cost of creating an online store programmatically
After you calculated the cost of creating your store from the administrative side, in the following lines we are talking about the cost of creating the store from the software side, which includes several aspects that relate to each other to launch a professional store that provides a better experience for customers in the shopping process.
Hosting and domain cost
When we talk about bearing the software costs, what comes into consideration is the cost of hosting . Based on the hosting resources, the size of the data and software functions required on your site and their suitability for your own store will be determined.
In the case of electronic stores, the number of visitors increases and decreases according to the advertising campaigns that you launch, as well as the most popular selling seasons, and therefore it is better for you to rely on cloud hosting that charges you for consumption , such as: Digital Ocean and Amazon servers , as these types of hosting are more likely to stabilize the infrastructure of Hosting that provides you with fixed resources.
The cost of these hosting starts from $5 per month and the cost increases depending on your use of hosting resources.
You will also calculate the cost of the domain name that expresses your brand and facilitates users’ access to your online store through their browser. Assuming your store is called www.onlineStoreExample.com, you will pay a flat annual fee of approximately $13.
Read also: How to choose the right hosting for your WooCommerce store
Cost of content management system
After you select the hosting, you will have the option of programming from scratch or relying on a content management system , such as WordPress , which is considered a free open source system that you install on the hosting with one click.
There are other free open source content management systems such as: Drupal, Magento. There are other closed source content management systems that pay the platform administration monthly or annually in exchange for maintaining and managing the system periodically, such as: Shopify.
In order to choose a scalable system, it is better for you to rely on an open source system instead of closed source systems that do not give you the authority to access the site code and modify its files.
If you build your online store based on WordPress and its WooCommerce plugin , the system and tool are 100% free under the GPL license.
Cost of tools and add-ons
When we talk about the WordPress system being free and open source, this means that the system itself is free, except for the attached add-ons, some of which are free and some of which are paid. In general, WordPress plugins are divided in terms of cost into 3 sections:
- 100% free add-ons
- Add-ons have a free version and a paid version
- Add-ons included exclusively in the paid version
Depending on the type of accessory tools that you want in your own store, you will determine the cost of the add-ons. For example, if you are satisfied with the free versions of the basic add-ons , you will not need to pay additional costs. However, if you rely on paid versions of the WooCommerce store , the cost will be according to the costs of the add-ons that you will rely on and some of them. It is a monthly/annual/one-time subscription.
We do not advise you to browse through all the add-ons to choose what you want to buy, but determine the functions required in your store first and then search for the add-ons that perform this function. You may find a free alternative in some cases.
We advise you to browse our WooCommerce explanations section , and learn about the functions that you want in your store to find the solutions that best suit you.
The marketing cost of creating an online store
Have you stored the goods, agreed with the shipping supplier, displayed the products in your online store, and are now waiting for customers to complete their purchase?
Surely the first thing that comes to your mind is to create sponsored ads to target potential customers and convert them into current customers to buy from you. However, we advise you to start by determining a marketing budget that is consistent with the size of your online store, so do not spend a small amount that does not help you increase sales, and do not pump a large amount that is not compatible with your business operating system.
Marketing costs are basically divided into: marketing campaign costs and work team costs.
Cost of marketing campaigns
Marketing campaigns vary depending on the target market and the marketing platform relied upon. For example, you will find that advertising costs in the real estate market are high due to the intensity of competition between real estate company owners, compared to advertising costs in the clothing and accessories market. You will also find that the cost of advertisements with influencers is significantly higher in value than Facebook advertisements, for example.
You can calculate the cost of marketing campaigns, by knowing the average prices of marketing campaigns in total, which will specify one or more platforms at first, and you will not start with all of them:
- Search Engine Optimization : You invest in improving the performance of your site pages in search results naturally (organically) when users type targeted keywords. The cost of search engine campaigns often starts from $300 per month.
- Marketing through paid advertising (Pay per click advertising) : whereby you distribute advertisements for your store’s products through advertising platforms that charge you for every click, such as Facebook/Google/Instagram/Twitter/Pinterest/LinkedIn ads. The cost of paying per click varies depending on the target audience, but it usually starts at $0.10 to $2 per click.
- Social media marketing: where you enhance your brand’s visibility on social media platforms by publishing interactive content, promoting your products through attractive visual designs, responding to followers, and building effective communication channels. You will find that the total cost of managing social platforms starts at $500 and increases depending on the size of your investment in social platforms.
- Content Marketing : whereby you write valuable cognitive and informational content that benefits the target audience and thus indirectly promote your products. This content could be a series of articles, books, PDF digital reports, a collection of educational videos, etc. You’ll hire some writers for an article writing service, for example, and they average about $10 per 1,000 words.
- Video Marketing: You will need to create promotional videos that talk about your products by having someone stand in front of the camera to talk about the product, or using motion graphics, or any of the video creation methods. The cost of producing one video starts at approximately $200.
- Email Marketing: One of the effective methods that you will rely on recently is sending emails to your customers with new products that you have received, or with some recommended products for the targeted segments. You will initially find that you need a mailing tool, which starts at $15 per month.
- Influence Marketing: Another effective method that you will need at times is marketing through influencers on social media platforms who have a large number of followers from your target audience to talk about your product experience. You will find that the cost of promotion through influencers starts at $100 and reaches $2,000 or more per video, depending on the type of followers the influencer has.
As we said, these marketing costs are not considered fixed costs within the cost of establishing your own online store, but rather decrease and increase according to the size of your trade, but we advise you to start with humble beginnings and then expand at the appropriate time.
Staff cost
When we talk about creating an online store that contains products, marketing campaigns are managed, periodic site maintenance, shipping and distribution services, and responding to customers, do not think that you will perform all the roles alone, even if your store is small in size and has only 10 products, the cost of distribution must be calculated. Team roles within the cost of setting up your online store.
You will find that you depend on completing tasks through outsourcing or recruitment.
Outsourcing
So you rely on individuals or a company outside your work system that assigns tasks to them so that they can fully supervise the planning, implementation, and delivery of the work.
For example, you may contract with a shipping company to handle the entire shipping system, or you may contract with a developer to create your online store and deliver it to him, and other forms of outsourcing.
In the beginning, resorting to outsourcing is the best solution for you to reduce expenses, and the money is paid only for the services you need. You can obtain services related to managing your online store through freelancing platforms, as we talked about before: how to hire a professional freelancer to help you develop your WordPress site, in which you can find several people in different fields at an affordable cost.
The outsourcing process often starts from $5-$10 for microservices, $100-$200 for small projects, and $500 for medium projects, and the cost increases from that depending on the size of the project required. This is in the case of projects that are completed once.
As for recurring projects that require continuous, permanent work, they are usually paid for a monthly subscription that is agreed upon according to the amount of recurring work required.
You may also need to know: The most important services that WordPress website owners need to launch a successful project .
Recruitment
In contrast to outsourcing, you find employment in which you supervise the entire operating system within your commercial organization, from hiring the individuals assigned to them until receiving work from them and evaluating their performance, and they are often paid monthly salaries.
Hiring will be a burden on you, but it may be necessary for projects that need to be completed internally, such as customer service, inventory management, product design, etc.
You will find that the cost of employment varies depending on the country in which you live. You will find that wages in the Gulf (for example, in the UAE) are higher than wages in some other Arab countries.
You will find that the average salary in some Arab countries is $300 per month, and sometimes you will find that the average salary is $700 for the same job role in other countries.
You will certainly find that this is reflected in the volume of your sales and the return on investment expected to be obtained based on the amount of purchasing power. However, you will not neglect the aspect of recruitment internally or even remotely while calculating the cost of establishing your online store.
Conclusion
With this, we have learned about the basic costs and sub-costs of creating your online store, some of which you will find will be fixed and others will be variable. Some of them will be low costs and others will be high costs depending on the size of your e-commerce and the level you expect to reach.
Do not rush to calculate these costs and estimate them arbitrarily. If you set a modest number that does not reflect reality and then start building your store based on this inaccurate perception, you will be shocked during the stages of your work when you discover that you need higher costs. On the other hand, if you set a huge number that is neither real nor You will necessarily need it because you will delay the right moment to build your online store.
In the end, try to estimate these costs in an estimated manner, and make sure that these numbers are estimated numbers, while the realistic numbers you will learn about when you move from the theoretical study stage to the implementation stage and touch these costs in practical reality according to market variables and influences.
