Nowadays, running a business has become a whole lot easier for anyone that’s willing to put in the time to learn everything from start to finish. Whether it may be higher government subsidies, online guides, coaching, or consultancy, there are various factors that make it easier to put up a business—especially when it comes to running an e-commerce business of any type.
One key advantage of starting up an e-commerce business is that there are less traditional costs, such as overhead expenses, to deal with.
However, the entire operation isn’t as simple as it may seem. There is a whole lot more to successfully running an e-commerce company than just waiting for orders to come in and paying for inventory and shipping. E-commerce has its own unique business expenses that must be planned and budgeted for accordingly.
To ensure that you don’t run into any problems when setting your budget aside for putting up the e-commerce store, here are a few costs to watch out for:
1. Platform and processing fees
If you’ve decided to take the easier route of choosing an existing e-commerce platform and a payment processor to open a shop with, then you’re definitely going to deal with platform and processing fees.
Regardless of whether you go for Shopify, Magento, or WooCommerce, you’ll need to start considering monthly fees in your budgets—and this does not consider all the extra features that you’ll also need to shell out for later on. On the other hand, payment processors may not necessarily charge a humongous bill every month, but it’s best to account for the processing fees that they charge for every transaction in order to avoid overestimating your projected profits.
2. Return or refund costs
With convenience being the norm in determining successful business, it should come as no surprise that the rates of refunds have increased in the past few years. Add in the fact that consumers can’t try your products before you buy them, and you’ll have an even bigger reason to prepare for any refund costs that might come your way. Given the fact that the average rate for refunds with e-commerce businesses is 20 per cent higher than that of a brick-and-mortar, then it’s best to set a contingency fund aside if ever the returns get too high.
3. Storage costs
Unless you’re manufacturing your products and storing them at home, the chances are that you’re going to end up dealing with a storage facility that can store your orders for you. Without an actual storefront, you won’t have to deal with literally opening and closing your business’s doors, but you’ll still have to call a storage facility that can store and ship products for you.
4. Cybersecurity fees
As hacking activities continue to grow even more advanced, e-commerce businesses are at a greater risk of being prime targets for cybercrimes. Much like buying a CCTV camera and alarm system for a brick and mortar, you’ll want to protect your e-commerce business by investing in cybersecurity measures in order to avoid thousands to millions in losses.
No matter what type of e-commerce business you intend to run, it is always ideal to plan a few steps ahead by taking several costs into consideration when drafting your entire budget. By keeping track of the four aforementioned costs, it will be much easier to have a well-rounded expense projection and realistic goals!
If you’re looking for an e-commerce accountant in Australia, get in touch with us today to see how we can help.