Whether you’re getting ready to launch your e-commerce business or are already in the throes of it, one of the most important things you’ll do is set up your company’s budget. There are some expenses unique to online selling, so here are some expenses to be sure you take into account.
1. Shipping
One of the main costs that e-commerce businesses will incur is shipping. Whether you charge your customers for shipping or include it in the item’s price, you’ll need to make sure you’re accounting for this expense. This isn’t just the cost of postage, though. It also includes packing materials, receipts, promotional items, and other decorative touches you might add. Figure out how to include these in the prices you charge to make sure you’re not letting them suck more money out of your business than you anticipated.
2. Returned and Broken Items
Whenever you ship your products, there’s a risk that the item will be damaged, lost, or that your customer will want to return the item. Refusing to replace items broken in the mail or not allow your customers to return items will frustrate and drive them away, so make sure you’re prepared to take on those costs. Build these expenses into your financial plan so that you know you can easily make up for these losses.
3. Software and Systems
Even if you start out handling all of your orders by hand, you won’t be able to keep up well as your business grows. Invest in good software that can automate as much as possible for you and your employees. After all, fewer employees processing orders faster and more accurately means more sales and a higher profit margin for your company. You can also find software that will speed up the process of sourcing products, which will save you time and money as well.
4. Bank and Platform Fees
Between the platforms you use to sell your products and the banks you use to handle your finances, there is a world of fees that will grow and change as your business grows. Make sure you’re setting money aside for these and doing your research to make sure the cost is worth it for the platform you’re using.
While e-commerce startups incur many of the same costs that other businesses do, they also have some unique to them. Incorporate these expenses into your financial plan to make sure your business is set up for success.