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Is It Expensive to Run An Online Store? A 2024 Guide

Is It Expensive to Run An Online Store? A 2024 Guide

What are the costs of running an e-commerce business, including website setup, promotion across SEO, across social media, photographer and model rates? Take a look

E-commerce has been a staple of modern retail, allowing consumers to shop from their homes, gardens, or even coffee shops. Thanks to the convenience of online shopping, millions worldwide can browse stores, look for new favorites and add items to their virtual carts with just a few clicks. Some finish the purchasing process, and some abandon their carts midway through.

A lost sale is a missed opportunity for businesses to generate revenue, so one might wonder: are online stores still profitable? The answer is a resounding yes! How much do store owners actually earn? The potential earnings from an online store can be substantial. What are the costs of running an e-commerce business including website setup, promotion in search engines and across social media, photographer and model rates? With in-depth knowledge of the topic, we have prepared this article to answer these—and more—questions. Let's investigate the profitability of e-commerce in 2024.

Online Stores: Just for Experts?

30 years ago, online stores were just starting to emerge and were mostly run by tech-savvy individuals and passionate entrepreneurs with a strong understanding of the digital marketplace. Today's situation is completely different—anyone, including you, can open an online store in seconds without the need for extensive technical knowledge or experience in e-commerce. 

Lots of platforms like Squarespace, Bubble, Webflow and others allow you to create the look and feel of your store just with a drag-and-drop function. Of course, the store can be made much more customized and sophisticated (in a good way) with the help of experienced designers and coders. But still, it is not required right away, no-code platforms work just fine in the beginning.

Today's online store-building tools and platforms are much more user-friendly than those available in the past. While increased accessibility is a great thing, and everyone appreciates it, it has certainly caused the market to oversaturate. It might seem that there is no point in starting yet another online store when there are so many of them already.

Do not feel this way – the chances of your success depend on much more than the competition, and with the right strategy, unique selling proposition, some knowledge, and proper preparations, you can start with confidence. However, it's crucial to remember that the e-commerce landscape is constantly evolving. To stay ahead, you need to be dedicated, adaptable, and always up-to-date with industry trends. Wondering how much money you need to have to open a store? We are here to tell you about it.

How Much Does it Cost to Start an Online Store?

You need to be corrected if you think you would have to be well-off to start an online store. Of course, as with any business, e-commerce requires some initial investments, but it is possible to begin with a limited budget and gradually expand your business. There is no need to rush—if you take your time to research and plan properly, you can find cost-effective solutions for all the necessities.

Starting an online store involves several key components, each with its own cost. These include a domain, web hosting, an e-commerce platform, and a payment gateway. The choice of these components will depend on your budget and needs. Remember, you can always upgrade to more expensive options as your business grows. However, keep in mind that any changes will incur additional costs, so it's important to plan and budget accordingly.

Domain is usually the same as the name of your business. Web hosting can cost up to $100 per month tops. When choosing your web hosting, the price shouldn’t be the only factor; it will influence your website’s security and capacity to serve many potential clients simultaneously. Look into what web hosting offers regarding bandwidth and storage, backups, security and customer support speed. Web hosting is something that you can also change as your business grows. 

If you’re working with a tech company or have someone in mind for future updates, you can ask them for a small consultation. The basic answer, “Everything depends on your particular business case,” is usually irritating, but it is true. Everything depends on your industry, how many customers you already have, and how fast your business is growing. Factoring everything in, you can cut maintenance costs significantly – and we all strive for this, right?

As for the website’s “engine," a content management system, the differences in pricing can be vast – most e-commerce platforms come with an extensive range of features and price points. Some, like Magento, offer a free, open-source version that you can try in addition to the regular, paid one. Why not give the first one a try before committing to monthly payments? You might find it good enough for your store or get an idea of what it lacks that you need.

Web hosting can get expensive if your store receives a lot of traffic or stores large amounts of information, so calculate your expected traffic and data storage needs before selecting a hosting plan. 

Services like website domains and payment gateways also add to the overall cost of running an e-commerce platform, so be sure to factor those into your budget. There are a lot of different providers, and most of the time, after doing some research, you will find ones that are less expensive than the widely advertised ones.

If you need to become more familiar with the technical aspects of running an online store or website, you may need help from a professional. Consider contacting an e-commerce software development company for assistance in setting up and maintaining your online store if you are worried you won't be able to handle it on your own. Such services also vary in costs, as they will depend on the level of support and maintenance your store will require. However, these expenses are unavoidable if you want your online store to function correctly, but you must know how to set it up.

According to Forbes, the average cost of a website alone starts at $3,200. It seems like a lot, but remember that your website will be at the core of your online business, so investing in professional design and maintenance can ultimately lead to tremendous success and profitability. Low-quality design, poor responsiveness and coding errors can ruin your store.

Let's look at the different variables affecting the cost of owning an online store.

What Affects the Costs of Online Retail?

Paying for access to the e-commerce platform, the website, hosting, and payment gateways is only part of it. It barely scratches the surface. The abovementioned costs are just the basics, as running a store requires much more than setting up an online presence. What are some of the other expenses that you may need to factor in?

  • Different types of digital marketing: from social media advertising to search engine optimization, Pay-per-click and hosting events. Usually, suppose you’re working with a full-cycle marketing agency. In that case, they also organize timely photoshoots of your new items and cooperate with you or your tech partner to update the website. But if you’re just starting your business, your photos will do just fine, especially if you watch a few tutorials on mobile photography on YouTube and find a neutral background.

When you scale, it’ll be easier to manage the website. You can integrate Product Information Management (PIM) systems that help you update item information (like price, colors, sizes, descriptions, etc.) across all channels simultaneously. Isn’t it great?

  • Updates and continuous maintenance of your website to make sure it is working correctly at all times. It doesn’t only encompass fixing the bugs or recovering the website in case of unexpected downtime. It’s also about constant compliance with the best UX/UI guidelines and legislation, such as ADA and WCAG guidelines.
  • Inventory management and fulfillment costs include packaging, shipping, and storage fees. 
  • Processing fees from any third-platform vendors, like payment gateways or online marketplaces/content management systems, that you may choose to use.
  • Possible e-commerce site migration. The most common reasons for this are business scaling and looking for a better quality/cost/speed fit; looking for platforms that support modern features like AI personalizations for customers; business growth stagnation, which can be caused by a CMS that is no longer performing well in terms of technical SEO and user experience.
  • Returns and refunds, if the law requires you to handle these.
  • Accounting and bookkeeping for the financial transactions related to your e-commerce business.
  • Customer service costs only if you handle this aspect of your business independently.
  • Mobile app or progressive web app development if you create a mobile app for your store. Making a website mobile-friendly from the start works fine as a long-term solution. Nowadays, all the platforms have this feature built because most of the sales come from mobile users. So, usually, this is something you can handle. You can double-check whether this feature is included with your tech vendor or website builder’s customer support.

These are just a few examples of additional costs to consider when planning to launch an e-commerce business. Though the list can be overwhelming, you will likely not need all of these services right away and at the same time. However, it is essential to be aware of potential expenses that may arise as your business grows. 

We recommend that you estimate your budget and plan accordingly before making any purchases or adding any new functionality to your online store. If you’re already running a store but the total cost of ownership is kind of frustrating, you can talk to a tech company focusing on the e-commerce domain and ask for a website audit. 

Usually, there’s always something to optimize: maybe changing web hosting could be beneficial, maybe you’re overpaying for a website theme, maybe you spend too much on SEO while you should improve website speed instead, or maybe your entire customer support can be replaced with a custom chatbot. There are many ways to find areas for improvement, but yes, once again, everything depends on your situation.

How Much Do Online Store Owners Earn?

This question is difficult to answer, as an online store's revenue can vary greatly depending on the niche, target market, country of operation, and marketing strategies. Top earners in the e-commerce industry earn up to $400,000 a year. However, this is just an average; you can be on both sides of the spectrum depending on your industry, products and how effectively you work on promotion. Besides, some e-commerce business owners combine it with different full- or part-time jobs while starting as entrepreneurs.

Remember that how much you can earn also depends on how much you are willing to invest in your business, not only in terms of money but also time and resources. Managing an online store can be a full-time job or a side hustle, and its income can change accordingly. It's essential to have realistic expectations and prepare a business plan before venturing into the world of e-commerce.

Should I Open an Online Store?

If you have products or services to offer and an idea of how to market them effectively, opening an online store could be a life-changing opportunity. Those selling something niche or providing customers with great product quality and adequate customer service are usually more successful, but this is not always the case. 

We can't tell you if your store will be a hit or a miss—that will depend on various factors such as product quality, marketing strategies, and target audience. Always be prepared to adapt and evolve, as the e-commerce industry is dynamic. 

Stay persistent, research everything before making big decisions, and stay up-to-date with the latest trends to ensure your online business thrives. If you put enough dedication and effort into your business, you can do well.

Sam Makad is a business consultant. He helps small & medium enterprises to grow their businesses and overall ROI. You can follow Sam on Twitter, Facebook, and Linkedin.

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