While launching an e-commerce business doesn't require the overhead of an office or a physical store, you still need to have a good handle on your costs, Sciambi says. “Starting a website used to be a $10,000 to $15,000 proposition. Now you can build your own website for about a grand, if that.”
But as you're factoring overhead and other costs into your pricing, consider the bottom-line impact of transaction costs, returns, inventory management, fulfillment and shipping. More than 69 percent of online shopping carts are abandoned, and the number one reason is that extra fees, like shipping and taxes, were too high, according to Baymard Institute, a web-usability research organization. By having accurate cost estimates, you can set your prices so that your overhead expenses are covered without creating barriers to sales, Ray says.
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3. Choose the right shipping structure
Anne Renee Timmons courtesy Gus Bennett
How will you get products to your customers? Essentially, you have two options: Do it yourself or have someone else handle fulfillment. For Anne Renée Timmons-Harris of New Orleans, owner of custom jewelry businessBead Bear, in-house fulfillment works. Timmons-Harris, 64, ships the products herself, adding special touches like pretty packaging and handwritten notes to delight customers when they open their orders.
If you're selling products made by someone else, you may choose other models, Ray says. Drop-shipping is when the manufacturer or distributor sends the products directly to the customer after you transmit the order information. Other third-party fulfillment services can manage your inventory and handle shipping for you. Shopify published this useful guide to fulfillment services.
4. Make use of online marketplaces
Many online retailers choose to sell on third-party marketplaces in addition to, or sometimes instead of, on their own websites. Platforms like Etsy, Amazon, eBay and Walmart Marketplace give you access to vast audiences and offer fulfillment options, as well.
Early on, Lane decided to sell her Rinseroo on Amazon. “My goal was to have free time to develop and scale the business without getting burdened with shipping,” she explains. The platform offered her competitive shipping rates, and she says it doesn't cost more than her other options, even with the fees that the platform charges. “Once I shifted from fulfilled by merchant to [Fulfillment by Amazon], my sales started to skyrocket,” she says. Amazon's plans are priced at 99 cents per item or $39.99 per month. Both plans have additional fees, depending on the items sold, volume and other factors.
