What should an ecommerce site cost?

I have now moved away from the business of developing e-commerce solutions for people (agency side) as it is no longer as attractive a business to be in. I prefer now to focus on other areas or work as a contractor/interim manager with responsibility client side for multi-channel e-commerce. Some obvious observations:
- technology & skill enhancements mean that project fees are tumbling for the development of the site
- the opportunities are now in providing a managed service for the maintenance of the online store or online marketing (SEO, sales promotions, viral marketing, etc.)
- the SME market is frustratingly ignorant ... the need to educate as part of the sales process adds to the problem of low budgets

Personally I believe that the best e-business solutions are ones that evolve. I think one of the strengths of the web is that it is a rapid application development environment. For this reason I think it is (usually) not a good idea to offshore development. Another reason is that the huge amount of competition online means that you have to stand out and be better ... this means high quality and tweaking it to be special.

It astounds me that so many people think it is so cheap and easy to be a successful e-tailer. I always ask them to consider the costs of setting up a high street store to help them put things into perspective. If they just don't get it then I tell them to sell via eBay.

It also astounds me that there are so many cowboys out there. But, there again, people who spend their money without checking out agency credentials and without educating themselves about current legislation, issues and opportunities probably wouldn't be successful anyway.

To answer the original question (what should an e-commerce site cost?) I would say it all depends on the type of product(s), the competitive environment and the demand for the products.
- if you are selling products from multiple vendors it can be difficult to manage product attributes (which is essential for side-by-side product comparisons), product images, etc.
- if your competition are strong then you have to be stronger and this will be expensive
- are you selling on price or on quality? Are the products fashionable/seasonal/limited in supply?

My guess:

£10,000 to £50,000 for simple solutions with low volume
£50,000 to £1m for more complex solutions with high volume

This doesn't include any of the ongoing costs associated with maintenance, inventory management, fulfilment, customer service, returns, hosting, auditing, metrics, etc. If people don't want to spend at least £10,000 on the e-commerce solution then they should definitely just sell on eBay. I don't know much about the low cost off-the-shelf solutions but my gut feel is that they need to be customised to make them stand out and this would cost around £10,000 all in.

To end on a positive note, I think we are in very exciting times. There is so much exciting stuff happening on the web (good e-tailers, user generated content, new types of search, gaming, etc.) People just have to:
- educate themselves
- not be so naive
- be sensible and not throw good money after bad

Personally I think "managed service" providers are blossoming in the current climate. These are companies like Venda and Fresca - Fresca is the one to watch although they have (very sensibly) focused on a particular vertical market which is fashion retailing. I also think mashups like Kelkoo and Google Product Search (ex Froogle) are impressive. I also love the way Web 2.0 is evolving, eg user generated content is working particularly well in providing product reviews to help people choose one product over another. Manufacturers and retailers would be crazy not to leverage this. It's also very interesting to see how Amazon has evolved to become an e-commerce portal to other retailers (they sell other people's products alongside their own) and also as a white label solution provider. I used to be very impressed (in the late 1990s) with a provider called Intershop. They had a good Pearl based solution but when they moved to J2EE they got it all wrong by putting technical components together badly (they tried to put the best components in each area together without considering how well the components worked together). A successful e-tailer is smart to white label their solution to others. Dashford.

On 10:03:37 3 October 2007 MatthewLeighton wrote:
>This has turned into a very interesting discussion
>regarding the shared profit website payment model. While
>this does seem an attractive model to follow, it is full
>of potential pit-fulls.
>
>Does anyone know of a good guide, contract template or
>useful articles for successfully implementing the shared
>profit (commission) based website payment model?
>
>Yes, but make sure you get a good committment.  We
>did a site on this basis, ran it for two years while the
>business built, and then the 'client' decided to save
>himself our (now meaningful) commission by getting another
>site built elsewhere. 
>
>Bob
>
>(http://www.textor.com) Textor
>
>On 13:20:25 2 October 2007 textor wrote: