marketing driven ecommerce

The True Cost of eCommerce

Recent conversations with retailers has highlighted the issues that businesses are facing when choosing their ecommerce supplier. Seduced by the client list of some of the leading agencies, retailers believe this is the best route to an ecommerce channel without realising the true cost of a website.

When going out to tender for a new ecommerce website it is critical as a business owner that the choices you make now aren't going to haunt you in the future. The initial cost of buying a website is only half the story and it is what comes after that impacts profitability.

The cost of owning an ecommerce website goes beyond the initial cost and there are some key costs that can impact how much profit you make in the future. The two costs highlighted below are possibly the most critical to the profitability of your ecommerce channel.

• Hosting or monthly service costs - The cost of owning your website is likely to have a monthly charge associated with it, this could be fixed, variable or semi fixed. The variable element of the cost is most probably linked to a usage level. The greater the level of traffic on your site, the greater the cost of hosting. Typically usage will rise with sales and in the ideal world your increase in sales more than covers your usage charges. However it is still worth checking how much per extra Gb you will be paying. Chances are your supplier is making money on this and it can feel like a "tax" on sales.
• Hourly labour charge - Once the site is up and running, you will want to start growing the channel. It is unlikely that your new site will cater to your every need and there will almost certainly be some new features that with hindsight you will wish you had asked for at the start. If your suppliers hourly rate is close to £100 an hour the costs will soon eat into any profit you had hoped to make. If you plan on growing your online channel you will want work done to the site.