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The Costs Of Setting Up An Online T-Shirt Store

2020-02-19 by Anand Srinivasan

There are anywhere between 12 million to 24 million eCommerce stores globally. A big reason for this is the sheer ease of setting up a store online as compared to launching a brick and mortar store. You do not have to spend hundreds of dollars each month simply to lease the space or keep the lights on.

However, running an online store costs money too. In this article, we will take a look at all the costs that go with running an online eCommerce store.

Self-hosted vs. Third party stores

When it comes to eCommerce, there are tons of options to choose from. There are pure-play eCommerce platforms like Shopify and BigCommerce that are leaders in this space. Alternatively, there are broader website builders like PageCloud that integrate 

with hundreds of third party apps including the top payment gateways and eCommerce platforms.

The average cost of using a third party eCommerce platform starts at between $10-$20 per month and can go up to hundreds of dollars depending on your website traffic and SKU count.

There is also another option - building your own custom store from scratch. If you don't have the technical skills to do it yourself, you can hire a freelancer. The cost will vary with the scope of your project and the freelancer you decide to work with. Although a custom store can help you avoid recurring costs, paying thousands of dollars up front isn't advisable for businesses or startups with limited budgets.

Also, with a self-hosted option, you are now required to find a reliable web host to serve your website from. This is a recurring fee that you may now have to contend with, and is not much cheaper than using one of the third party website builder platforms.

Payment Gateways

Payment gateways can be another major expense to contend with. There are two kinds of PGs that you may have to pick from. Popular options like Stripe and Paypal are free to use and charge a commission on every transaction. There are also alternatives that have lower transaction fee but have a monthly subscription. The option you choose must depend on several factors like PG success rate, your monthly transaction value and compatibility with the buyers’ market.

Logistical Integration

Processing online orders incurs a number of costs that a brick and mortar store doesn’t have to process. Some of these expenses include packaging fee, shipping fee, returns (costs associated with reverse shipping), etc. Some store owners mitigate these expenses by dropshipping their products. However, it is still important to bake the costs associated with stocking and shipping into the price of the product and so may not necessarily improve margins.

SSL Certificates

Establishing trust is one of the key elements of an online transaction. It is thus important to assuage the security concerns of a prospective buyer. An SSL certificate is also important from a marketing perspective since Google now requires all websites to encrypt data transmitted through them. SSL certificates can be expensive to buy. However, it is available for free with several web hosts. You can also make use of CloudFlare to make your website HTTPS for free.

Email server costs

Email communication is an integral component of any online store. You will need to integrate your site with an email server to notify users who try to sign up and also to verify their emails, share details of their order, shipping and delivery. This is just the transactional component of email. You will also need email to promote your eCommerce store by sharing latest offers and to market your business to prospective buyers.

You may make use of services like Amazon AWS for transactional emails while there are plenty of options to pick and choose from for marketing emails. AWS can be quite inexpensive although it can be a lot of work to set up. Email marketing tools, on the other hand, can be relatively more expensive but are a breeze in terms of set up and integration.

Advertising costs

Unlike several other costs mentioned in this article, this one is optional. That is, you do not necessarily have to advertise in order to sustain your business. However, when it comes to eCommerce, advertising is sort of unavoidable. This is because a lot of product research happens over third party platforms like Google and Amazon. If you do not have an organic presence, then advertising is the only way to reach your buyers. 

Advertising is also sometimes the smarter way to acquire customers. Investing in organic reach is great; however it is often overshadowed by advertisers. This is especially true on Google Search where Google Shopping links and ads precede organic results. Also, with advertising, the ROI is instantaneous and reliable compared to organic marketing where it can take several months to reach the top spot only for it to be taken away by one of Google’s many flimsy algorithm ranking rules.

Besides Google, on platforms like Facebook too, advertising is the smarter way to acquire customers. Facebook has, over the years, reduced the organic reach of your submissions. Facebook advertising not only guarantees reach, but also helps you reach a very targeted audience based on various demographic and interest profiles.

With respect to the costs, advertising on Facebook and Google can typically cost you anywhere from $0.20 to as many as several dollars for every visit. Considering that the average conversion rate is between 2%-5% for eCommerce, you will need to account for the advertising costs of reaching so many people while pricing your products.

Do you run an online store? Share the other expenses you have in your business in the comments below.

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Anand Srinivasan

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