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?
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.
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.
This is fully dependant on what type of ecomm you choose to work with.
There are many options for ecomm including working with existent manufacturers and drop shippers. This allows you to move other peoples products without inventory hassles or expense, the dropshippers provide for the delivery (often the manufacturer themselves will provide the shipping) This means your average start up cost is then limited to the creation and marketing of the web presence.
This too there are ways to extremely limit the expense involved by organic web placement, if you understand the system (im an expert) then it is possible to achieve front page visibility on the highest converting search phrases organically which means that by design (and a few tricks I can share) your web visibility is natural without paid marketing campaigns.
You can share more of what you would like and I can answer here or it is a business you may wish to connect with me via linkedin and I can answer you there or from there we can schedule a time for a sharing of information.
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.
It depends strongly on what you are selling and your target market. There are a number of e-commerce sites which you need no overheads for. Etsy, TeachersPayTeachers, Fiverr, Amazon Shops, Ebay Shops, Zenler, Udemy, etc.
There are many types of "ecommerce." If you sell info products (that you produce or buy "Private Label Rights" or "Resell Rights" to, you can get by on $50-100/mo. You could be in that range for an affiliate site like one selling other people's Amazon or eBay goods.
If you want to set up your own store and sell drop-ship goods on Amazon, Shopify, et al. you'll have to step up you legal costs so you can communicate "as a business" with your suppliers and to build a store on those platforms. Maybe $1-2K to start up and then $100+/mo.
If you want to sell and fulfill your own product - the computer bit is the least of your cost and worries.
N.B. in all these options you will have to spend on both advertizing and the natural organic draw for your web platforms (web site, FB pages & groups, etc.)
What kind of ecommerce site are you looking to start? Can you give use more details?
I absolutely applaud your entrepreneurship...yeahhh. Now, down and dirty - unless you have a clue about what it is you want to do, noone can answer that question. Here is a place to start https://www.sba.gov/blogs/how-start-successful-e-commerce-business-6-tips-seasoned-pros
then start googling on everything you can learn about starting a business, and defining what type of business you want to have, so you can then either ask the question in detail...or figure it out for yourself.
Yes, this is blunt...but me and the others below just want you to put your entrepreneur/CEO hat on from the get go.
Without knowing too much details, I would say you could start it for less than $1000 not including your inventory. Product development or product acquisition will be your most capital intensive cost. As far as setting up a simple eCommerce store you can do it fairly inexpensively.
1) Get a domain name $10
2) Get a Shopify ecommerce account $10/month +
3) Get a logo designed $50 to $500
4) Get help setting and designing your store, product photos ect...$100 to $500+
5) Setup a blog & social media accounts $0 to $500
6) Start marketing $50 to $500,000/ year...all depends on your specifics.
Your question can only really be answered more accurately if you provided more details.
Selling books online is different than selling clothes and that's different than selling tractors.
You would find lot's of useful info in this book if you want to work from home.
I am assuming that you have already read about different sorts of ecommerce platforms to launch an ecommerce business. Of course, opening an ecommerce store that way is a better option. As for the budget, it will totally depend on what are your requirements. Since, you have mentioned a home-based ecommerce business, I’ll assume you are not planning to build that big an ecommerce platform. So, in this scenario you can work with Yo!Kart ecommerce platform, which is specifically built to serve small –scale startups and will cost you only $250. Check its website: yo-kart com
Now that would be just the upfront cost of opening an ecommerce business. To get your business up & running, you will also have to invest in its marketing as well, which again will depend on your target market size and how aggressively (based on competition) you want to market your business
I am not sure if you mean setting up the eCommerce platform for your business or an average for a startup, on both cases it depends on your business activity. A site can cost anything from $20 a month for a SAAS platform to quite a lot (SAAS), the numbers for a self hosted solution are higher at the low point although cheaper on the long run with quite a lot of advantages in terms of customization, that said you can start with SAAS and migrate later to a bespoke solution, there are many possibilities. Your marketing budget is likely to be the expensier component, but you get free advertising credits with most ad networks, that pays at least for initial mistakes optimizing your campaigns.
Hi Kevin. Congratulations on graduating! As you would expect, the amount of capital you need is all relative to the capability you want to provide. Develop a business plan with specific goals/targets and revenue projects. Then, spend time on Linkedin to identify some potential angle investors who might have an interest in your idea. When launching a new company, I am not a big supporter of blasting a novel idea on an angles list at the expense of competitive advantage. Hope this helps and all the best!
Your question centers on creating a budget. At a base level, quantify your fixed monthly out-of-pocket expenses to maintain the business (rent,utilities,etc). Then, estimate promotional and business development expenses. You would need a 12-month minimum level of capital to cover these start-up expenses.
Tell me something about business you have in mind. Ecommerce is a tool. It cuts across all kinds of industries and businesses.
There are lots of good suggestions here as to the one-time costs. Don't forget you have to pay yourself too ! One can only perform a labor for love for so long, then you have to go out and get a paying job and for most people that is the end of the start-up. I'd say reckon on being able to go some 6-9 months: 2-3 to get the business going t all, and then another 2-3 with very small revenues while you're building core customers or exposure or however the business is going to work By the 3rd quarter you should know whether this is going to pay the bills for you at least or whether it is time to shift to Plan B. By the way, it is only at this point that angels will have much interest in you -- after you've shown the ability to sell some stuff to some people. For those first few months, it is family, friends, savings and (be careful) credit cards.
Just to add to the many good answers above, start-up costs for developing an e-commerce business will depend on how much work you are willing / have time to put in yourself. The real costs come when it is time to get your product / service to market, but there are plenty of DIY growth hacks.There are tonnes of free tools out there to get you started. DIY can be a steep learning curve, but the knowledge you'll gain will be a big plus to managing your business growth ongoing (and can save you wasted $s with unscrupulous predators).
I don't have a figure even as the question is quite general but from experience, I'd say the sky is the limit on what you can get from funding and you could well get nothing but a steady drain on the opposite end of the scale. The current economy is like that - hype and spin and disaster, rewind. So read up on current events like Wealth Daily and just try your luck - even a house mortgage would be painless - nobody can buy your house at bank auction and no bank wants to deprive a homesteader. Just check your facts and borrow beg or steal any capital that isn't moving fast to timbuktu...
I would suggest you start out with just enough to get your company noticed in a very professional and positive light with a mission statement, tag line and vision statement on your web site and you need to make it easy to navigate and order...You need enough start up capital to achieve these goals...Then sell and market and market and sell...Keep your cash needs small until you start to really sell...
If you know how to work with Wordpress CMS then you may not need to spend anything to establish your own e-commerce business. You can literally start it for free. You just need the investment for the products you want to sell and the shipping charges. Creating and launching an e-commerce website will not require any investment because WordPress offers free themes and plugins. Here's the perfect example of how it can be done.
The website by itself, with a shopping cart has an annual fee that is minimum. There are websites like total investment cost will surely depend on if you do it with a web designer, and all the other business related investments, like inventory building, infrastructure, employees. I recommend you to prepare a plan, and then estimate costs.