Cost of starting an ecommerce business

by Lynn

What’s the cost of starting an eCommerce business? Having an online comes with the advantage of saving costs like rent/lease, furniture and so much more. Despite the savings that come with having an online store there are other costs of starting an eCommerce business.

RELATED: How to start an Ecommerce Business

Here is the cost of starting an ecommerce business:

Business Name Acquisition

Depending on the type of eCommerce business you wish to start, you might require business licenses. To have a successful e-commerce business, you will want to register a business name. The business name is just the first step before acquiring a sole proprietorship or a company. Depending on which one you opt for a company might cost you between 10,000 and 15,000 shillings. A Sole proprietorship will cost anywhere from 500 to 2000 shillings.

Licenses

The eCommerce business you start may require certain licenses and permits like health and safety. Licenses and permits range anywhere from 1000 to 15000 shillings. Other eCommerce businesses may not require any license at all.

Domain name and hosting

If you plan on having a successful business. Your cost of starting an e-commerce business should include a website, domain name, and hosting. A domain name costs anywhere from 5 dollars to 25 dollars per year depending on the type. If you use Shopify you will need 29 dollars per month for hosting. Shared hosting is much cheaper with companies like Bluehost where you can pay as low as 2 dollars per month.

Payment processing

To accept online payments you will need to use payment gateways like Mpesa, PayPal, and card processing companies. With Mpesa you will want a till number with your business or company name. This way you seem more legit than if you did not. If you want to accept card payments on your site you will need PayPal which you will pay 2.9% plus a fixed amount for each transaction. If you want to use a card management platform you will also need to incorporate the charges per transaction as well.

Inventory and shipping

Subject to the type of online store you plan on opening, you will need to budget for your inventory. If you’re starting a dropshipping store, you will not have inventory costs. If you do indeed need inventory, you will need to be very careful about how you purchase the inventory to avoid dead stock. Be careful to include shipping costs as well.

Marketing and advertising

As you’re getting started you might want to start with the free modes of advertising. As you grow you will want to continually market and advertise your business. You can start by marketing your products on your social media pages for starters as you grow your audience.

Ecommerce software

Once your business continues to grow, you will need eCommerce software to help you manage your store. You might want to include developer fees and hosting. You will need an inventory management system, CRM among others. The bigger you get, the more you’ll need more eCommerce solutions. You might also want to include the employees’ salary. The more you grow, the more your expenses and your profit.

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