As the number of consumers purchasing goods and services from the comfort of their own homes continues to increase it is not surprising that the process of setting up an online shop directly on your website is now easier than ever before - and also far less expensive than it used to be.
So would it make good business sense for you to start selling online? Well, let’s look at the maths.
Start-up costs for an ecommerce website can be broken down as follows:
If you don't already have a website then you will need your own domain name (i.e. website address such as www.greenwidgets.co.uk). This is a minor cost of just £5 to £10 a year.
Building your website.
You can do this yourself if you have the time and expertise. Alternatively you can commission a website to be built for you, which, thanks to modern website building tools, is far less expensive than it used to be. For example, assuming a modest number of products, our charges for building and publishing your ecommerce website could be just £400.
Website hosting and online editing facilities.
To accept payments online you will require secure ecommerce website hosting linked to a payment gateway service. Expect to pay about £25 a month for the secure ecommerce website hosting, which also includes online website editing facilities for updating the website and products.
For processing online payments then one of the easiest and most popular payment gateways to use is PayPal. It costs nothing to set up a PayPal account, and you only get charged as you sell, with PayPal currently deducting 20p plus a percentage of each transaction value, ranging from 3.4% to 1.9% depending upon turnover.
So working out whether it makes financial sense to have an ecommerce website is quite simple really. Assume a one-off website build cost of £400 and an annual ecommerce hosting cost of about £25 per month (£300 per year) then you’ve only got to sell goods or services yielding a nett profit of over £700 in year one to cover your costs. From year 2 onwards you’ve just got the hosting and PayPal costs to cover, so any sales that generate roughly more than £25 profit a month mean that you should be quids in!
And don't forget that you also end up with all the benefits of having your own website, which most consumers expect any respectable business to have in place these days to provide credibility to potential customers.