An article posted on PracticalEcommerce.com last week did a good job of enumerating some of the hidden costs of owning and operating an ecommerce website. While I’d encourage you to read the full article (and ignore the bit about bandwidth, as there are lots of solutions to that problem), the short list of hidden costs includes:
- Initial and ongoing design costs. Initial website design costs are high, and most people understand that. However, ongoing design costs aren’t exactly minuscule. You’ll want a designer to help with creating sale banners, swapping out various logos, to fixing/changing various portions of your site that cause customer service problems.
- SSL certificates can cost a little or a lot – it depends on who you buy the certificate from and what sort of “extras” you want to have. Some companies – like McAfee or Norton – charge hundreds or thousands of dollars a year for the use of their trust symbols (the good news is that they seem to work).
- Payment processing isn’t necessarily expensive if you’re only going to process credit cards online. PayPal, for example, offers free or low-cost online payment processing that’s cost-competitive. However, if you start processing credit cards online and over the phone, the monthly fee can go from “free” to $75 a month plus fees.
- Other miscellaneous costs mentioned include newsletter management service fees, live chat tool costs, and email provider fees.
Here’s What They Left Out
As far as selling auto parts or accessories online, there are a few other costs you should be aware of:
- Fulfillment is expensive if you do it poorly. Nothing kills the profitability of an online store like fulfillment mistakes. Putting the wrong part in the box is a costly mistake, as you’ll have to pay to ship that part twice (the customer isn’t going to pay to ship the wrong part back to you), you’ll probably want to expedite the correct part to the customer to “make up” for your error, AND you have to worry that the customer will give you a bad review online.
- Someone has to answer the phone. We consistently find that our clients get calls for their bigger orders. The reason? People who are about to buy a $600 part want to call and make sure everything is kosher. Therefore, having a phone number customers can call for help is kind of a big deal…and staffing the phone costs money.
- Developers are always needed too. Designers can create banners and often re-arrange sites, but when you want to change the way a feature works (or add a new feature), you’ll need a developer to help you. They often charge $75-$200 an hour, depending on their experience and specific expertise.
As you can see, operating an online store is expensive – especially for auto parts and accessory retailers.
In my opinion, the best way to “lower” your costs is to raise your revenue, and of course the best way to do that is to hire an online marketing company. 🙂