More brick-and-mortar stores are integrating the internet into their businesses. Doing so comes with additional costs in terms of a website and supporting it, employee training, banking costs, and shipping. In order to determine the net value of this change and before taking any steps into eCommerce, there are many factors to consider.
The costs of setting up a website to sell your products or services can range dramatically. While some hosting sites require very few out-of-pocket costs up front, they aren’t necessarily the same sites that will get you the best results. Customization is necessary to give your customers the best service, and customization can get expensive. In addition, you will have to pay this money before your internet store can open and start bringing money in, which may cause a crunch in funds until internet business picks up.
Training your employees also requires time and additional costs. Integrating the internet into a business isn’t a new concept, but if it is new to your business, you and your employees will need training to make it work. Depending on the demographics of your customers, transitioning to an online store may take extra time. Therefore, if your plans are to eliminate your physical store front entirely, don’t forget to consider your customer base first.
Your banking costs will change when you start working online. You'll need a secure site to accept credit card payments, and it would behoove you to set up a PayPal system as well. Also, online credit card fees are slightly higher than the fees for in-person transactions, with internet fees as high as 5% of the transaction compared to 2-3% for swiping a card in person.
There will also be additional costs in relation to shipping and taxes within an eCommerce model. Customers need to have products sent to them, and online you’ll have a much farther reach – so how do you charge taxes? Do you charge the rate of the state you’re shipping to, the rate of you store location, or don't charge at all and assume your customers will report their purchases to the IRS? Charging for shipping is a tricky business as well – you have to charge enough to cover your costs but not so much that it will prevent customers from purchasing from you. Shipping gets even more complicated if you plan to ship internationally.
While it seems like there are a lot of negatives about getting into eCommerce, there are positives as well. There may be a lower human resources cost for an equivalent income stream, for example, based on the fact that many customers will be able to complete their transactions without direct assistance from you.
You shouldn't contemplate moving into eCommerce lightly. There may be a lower human resources cost for an equivalent income stream, for example, based on the fact that many customers will be able to complete their transactions without direct assistance from you.
No matter how you look at it, moving into eCommerce isn’t a change to be considered lightly. At Oates & Company, we can help you assess your business activities to determine if an online presence is right for you. Contact us for more information.
