How much capital would I need to start an ecommerce business from home?
I recently graduated with a Business Computing degree and would now like to apply my knowledge and skills to starting my own ecommerce business from home. How much capital would I need?
Bootstrap doesn't cost much. But at least you need to know what you want first. If you don't have any idea, it is hard to start. The setup costs for different business varies based on what e-commerce business model would you are adopting.
Kevin: What is your ultimate goal with launching the e-commerce business? Rather than jump in with both feet you may want to consider becoming an affiliate of one or more manufacturers. You can promote their product(s) without ever carrying inventory or handling fulfillment, customer service, etc. You do the marketing and generate sales and simply share in the net revenue generated from you marketing efforts. This can be a lucrative activity if you are in-tune with potential customers. It also allows you to learn the industry with limited financial exposure.
Just something to consider.
Startup capital for a home-based e-commerce business is dependent on what your product or service is. For example, if you are selling a physical good are you holding inventory or are you drop shipping via a set of partnered manufacturers? If you're holding inventory, then you need capital to purchase and hold physical goods. This can be a major expense. If you are drop shipping this expense is virtually non-existent. Similarly, if you are selling a non-packaged digital good or service, inventory expense also doesn’t exist.
The other primary startup expense is the website; however, this has become a minor expense in recent years with out-of-the-box solutions requiring minimal set up, development experience and investment cost. However, if you want a custom website designed this can run anywhere from $20K to $50K for basic CMS (content management), responsive mobile design, and payment integration) if you aren't coding yourself.
Other expense include hosting, payment processing, SSL certificate, domain registration, LLC incorporation, PCI compliance fees, optional third party security (for example, McAfee, Symantec, etc.), and advertisement (typically SEM via Google). Advertisement should be considered a major capital expense as your SEO won’t kick in for 1-3 years so you’ll need to buy your way to the top view of relevant search results.
Long story short I launched PetSquared.com, a drop ship business, almost 10 years ago with a custom design (web development completed in-house) for ~$2,000 before marketing costs.