Many head into ecommerce with no plan and after about 2 years leave disappointed. If you plan you can tell very early on before you build your ecommerce site if you can make a profit to cover your costs and return a salary. If you are a retail store then some of these assets are already in place and ecommerce is an additional selling channel to your existing channels. If you are a pure online channel then you have to take into consideration all the items below.
Some good pointers for your business plan.
- every 100 orders per day requires another staff member
- your product should have a 35% + margin, unless your product is a downloadable or virtual product with no shipping.
- the cost of sale is
- Credit card fees 2%-6%
- Exchange rate fees 200+ points
- Shipping charges
- Packaging materials, ( boxes, bubble wrap, scotch tape, labels, packing notes, shipping manifest )
- The time cost to pick and pack the product.
- Advertising ( google, social media, print, radio, television ) you must advertise.
- Insurance on shipping if shipping high value items.
- Amazon / Ebay fees
- Insurance costs on your building, stock, machinery and staff.
- Rent and rates
- Office costs, paper, toner etc.
- Salaries including your own and state taxes
- Hosting and Site update fees ( dont skimp on hosting its the backbone of your site. )
- Stock, if you are planning to hold stock of items then you have to factor in your capital being tied up in un-sold stock. Generally you try to stock as little as possible and operate JIT or drop shipping.
- Stock Starage rates if you are storing stock in a logistics company warehouse.
For pure online ecommerce you will need to turn more than €700k per anum to make it worth your while presuming you have a 35% margin on your product before tax. This will support 2 staff, some advertising and general overheads. Make sure your business plan holds up for at least 3 years projections.
We have built and installed since 2002 so we know what works and if your site is going to make money for you. If you need help in creating an ecommerce business plan get in contact with us.