So, you decided to open an online business, but don’t know what you will encounter with in the future. Unlike traditional business, the behavior of the website is difficult to predict, since you will not be able to estimate future costs until you enter the market and understand the real competing conditions.
The planning of e-commerce business should be based on assessing the level of competition. If it is high, then the costs of creating a website will be the smallest costs of the enterprise.
If competition is low, then you have the opportunity to get rich quickly, if you manage your business in a right way.
Unlike an ordinary business, it’s easy to assess the competition among the online shops. To do this, enter a similar service or product into the search engine and examine the number of offers. If there are more than 50 offers, then the struggle will be extremely difficult. If the number is up to 20, then it will be easy for the company to occupy higher positions in search results.
Costs of creating an online store
The value of investments changes depending on the products the store is going to sell and the storage conditions of the goods. E-commerce business is aimed at selling goods that are stored in the warehouses of a major wholesale supplier and therefore all e-commerce costs will be related to a timely updating of the prices and improving search results for each item.
If the clients are offered a new service, then additional costs should be allocated for familiarizing clients with this service. To do this, you should have funds for making the promo videos, which will be distributed through the social and other channels.
The average cost of getting a new customer is $1. It is these funds that need to be allocated at an initial stage to launch the business. After that you need to focus on making the client come without costs.
- predictable competition
- low startup costs
- the need for substantial funds at a high competition
- dependence of sales on the website technical condition and its perception by the clients.
In general, if you launch the business correctly, the payback period is half a year. However, if you do not have enough skills, it may happen that not a single unit will be sold online.
How to prepare a business plan of an online store in Excel
In our template, we describe the launch of an e-commerce website selling its own products. The sale of goods is carried out through advertising. The average margin for the product is 50%. High profitability allows have a payback period of one year.