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How to open an e-commerce store: what it takes and how much it costs

How to open an e-commerce store: what it takes and how much it costs

Update: 6 april 2021 • Reading time: 8 minutes

Without some essential information, opening an e-commerce store can be easier said than done. With acceleration in many areas of e-commerce in 2020, setting up an online store, perhaps in addition to the physical store, is a very important current consideration for merchants who have seen their in-store sales decline.

Opening an E-commerce store is not the same as simply “selling online”. With the former, discussed in this article, we refer to the opening of an online store with publication of a proprietary website or app managed directly by the business owner. “Selling online” generically refers to all forms of sales through digital channels, for example through marketplacestwo of the most famous being Amazon and eBayand on classified ad websites and platforms, including social media networks, typically suited for non-recurring and non-professional activities.

Launching an online store: where to begin

There are also a number of fundamental elements for opening an e-commerce store, which are necessary to comply with all applicable regulations. In particular, the following are required for professional sellers: registration for assignment of a VAT number without this, it is not possible to set up a professional e-commerce storeas well as registration with the Trade Register, registration for social security and welfare and notification of the start of business. From a financial point of view, it is necessary to open a bank account in the name of the company to which sales income will be credited and costs and fees debited.

There may be other bureaucratic steps necessary to comply with the law, depending on the type of products sold or sales outside the European Union, for example. For this stage, it is recommended to consult a specialised accountant, in order to have the support of a professional and to avoid possible future hitches.

Once the more bureaucratic aspects have been defined, we can handle the main activities required exclusively for opening and managing an e-commerce store. Below we have gathered together all the information needed for those planning to engage in online sales.

Site development, maintenance and hosting: user experience is everything

The website of the online store represents our business, just like a physical sales location. A store that is difficult to reach, poorly organised and with little space between the shelves, making it uncomfortable to browse, is likely to be unsuccessful. The same principles apply to your e-commerce store: make sure that the shopping experience is unique, that the navigation between catalogues and products or services is smooth and that completing a purchase takes a few simple steps without any hassle.

Precisely because of its strategic importance, it is advisable to consult a professional for site development. There are specialised freelancers and agencies that offer site development and maintenance services for the specific requirements and type of e-store. Alternatively, you can use platforms such as Vidra, which offers all the tools necessary to create and manage an online store.

Once you have chosen who to entrust with the creation of your website, rely on their expertise but keep a couple of important factors in mind. The first is that it should be responsive, meaning that it should automatically adapt to the various screen sizes currently in use, particularly for mobile devices. Indeed, more and more users are making purchases from their smartphones. According to osservatori.net, purchases from smartphones in 2019 in Italy totalled €12.5 billion (+33% compared to 2018), 40% of all purchases made online¹. Mobile shopping has already become a reality and requires serious consideration.

The second factor is that websites can basically be developed in two different ways: written completely in code or created through platforms called Content Management Systems (CMS). Using code, the site will be exactly as you want it in every respect, but it will cost you a bit more. With a CMS, you will have to make some compromises, but they are increasingly widespread and many of the websites you regularly visit are built on these platforms.

It is also necessary to consider which hosting service to choose, i.e. the company offering the “space” where the site is published. Often, the developer will also suggest a partner for this purpose. All you need to know is that the speed of browsing and accessing your online store also depends on the quality of service offered by the hosting company, so it is important to pay close attention to this choice as well.

Logistics as a tool to improve the customer experience

Warehousing, shipping and returns are three key factors. This is because they are interrelated and excellence in these areas has fuelled the success of big players like Amazon. Efficient stock management can have many advantages, both in terms of costs and customer experience. The better organised you are, the less time it takes to dispatch goods, which also means a more satisfied customer as you reduce the time they wait to receive their products. Management of returns is also important because this can convince your customer to remain loyal to you instead of a competitor that has long lead times or prohibitive costs.

Marketing and advertising campaigns to promote your store

There are many marketing activities that can contribute to the success of your business. Two of the most important are SEO and SEA, acronyms for Search Engine Optimisation and Search Engine Advertising, which include all the activities, with and without costs, to make your website easier to find on search engines. Considering that today, more than 90% of the world's web pages are “invisible” to Google², it is crucial that you invest in your online store to make it part of the remaining 10%. There are also specialists for these activities and, as for any other profession, they should be consulted in order to obtain the desired results.

Reviews, e-mail marketing and management of social media channels are equally important. If you want to know more, read our article on how to promote your company on the web.

The payment management partner: a strategic choice

The last step of a purchase, whether online or offline, is payment. A well-integrated payment system can really make the difference and convince your customer to come back or choose a competitor for future purchases. Again, there are many factors to take into account when choosing the right partner for management of income from your e-commerce store, and this decision can determine the success of your business.

You must first decide what kind of integration you are looking for. You can choose a simple system, which is limited in terms of customisation and may have variable costs depending on the transaction, or more customisable solutions, with greater functionality and costs that depend on the value-added services activated.

Depending on the target group, it is important to consider which payment systems to integrate. For example, for a younger clientèle it is possible to activate the most widespread payment wallets on smartphonessuch as Apple Pay and Google Paywhile if you sell products to Chinese customers, it is important to consider tools such as Alipay, WeChat Pay and Unionpay. If you are targeting B2B, MyBank and iDEAL can make all the difference and increase the conversion rate for your shopping cart. Watch our video on alternative payment methods to learn more.

Another strategic factor is fraud prevention. Today there are platforms that use artificial intelligence and machine learning to minimise fraud and at the same time increase sales, by reducing false positives, i.e. genuine transactions that are incorrectly identified as fraudulent. An effective fraud-prevention platform is also an additional tool in terms of managing the customer journey, as it reduces friction at the checkout stage and makes the payment process quicker and more enjoyable.

How much does it cost to open an e-commerce store?

It is difficult to give a precise answer to this question: a lot depends on the quality and customisation of the services chosen. On the web, there are also agencies and companies that offer packages including some of the services we have listed or even turnkey management of the entire e-commerce store.

It is possible to identify cost categories for opening an e-commerce store:

  • Set-up, contract activation or development
    Often companies charge a fixed, one-off fee for activating or providing a service. In the case of activating an e-commerce store, this may include: site-development costs, activation of the payment gateway and also definition of a marketing strategy.
  • Maintenance or platform and CMS fees
    Site maintenance, updating of the product catalogue, stock management, hosting and access to payment platforms are just some of the cost items that must be considered, at intervals defined in the contract
  • Transaction fees
    These are charged in fixed or variable form on the transaction amount. They may vary according to the payment instrument used by the customer (e.g. credit cards, digital wallets, alternative payment methods etc.) and may be automatically deducted from incoming amounts or charged later.
  • Incidental and variable costs
    Incidental costs must always be considered. These may include stamp duties and charges due to the state (e.g. for registration of contracts), one-off consultancy costs, budgets for advertising campaigns, etc.

In conclusion, opening an e-commerce store can require a significant investment, and not only in economic terms, but it is essential to intercept consumers, who no longer rely exclusively on physical touch points for purchases. With a well-constructed business plan and solid strategies to support it, the opportunities offered by the digital channel allow you to reach potential customers all over the world.

Source
1

Mobile Commerce: online purchases from smartphones | PoliMi Digital Content Observatory.

2

Ahrefs Research 2020.

TagEcommerce

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