Costs for 1st Generation E-Commerce Retail Site?

Tony Barker Silver
Director & Founder at eEnablement - Online Interim Management & Consultancy

05 July 2009 19:38pm

I have a client I am working with who currently runs a £125k t/o retail business and is looking to expand the online side of the business. Current website has no product info, images or merchandising and purely provides leads/enquiries only. What would be the typical set-up and running costs for a first generation e-commerce solution for a retailer of this size? Have the E-Consultancy guides and supplier showcase presentations, but any other suppliers anyone would recommend or useful reference documents?
Denis Kondopoulos
Technical Project Manager (MBA, MBCS, CITP, CEng) at Naxtech.com

06 July 2009 14:17pm

Hi Tony,

I think the "typical" setup may vary depending on things such as the quality, cost, and functionality required.

For instance you could go the open-source route and utilise something like OsCommerce which is free to use, in which case you'd just pay for the customisation, etc. which would cost maybe say 2-3K?

Then you have the option of something more commercial but not so costly, which the ability to scale, perhaps something along the lines of http://www.naxtech.com/_preview/eshop/ (demo of a basic e-shop) which with some nice styling can become something like www.greentulip.co.uk or http://www.therugclub.com or www.cadburygiftsdirect.co.uk This sort of think would cost around £5K-20K depending on exact requirements. But it is scalable and good enough to do the main online things you need to as a business.

The next option is then even more commercial solutions ranging from smaller ones to really big and scalable ones (eg. IBM Websphere) which I do not think are appropriate nor cost effective.

Other than the web hosting, etc and perhaps any ad-hoc development/maintenance I do not see any other ongoing costs, but I'm sure that various ecommernce suppliers will try to charge for a 12-month support contract, etc. regardless of whether it is really necessary.

I hope the above help.

regards,

Denis
www.naxtech.com - Web development and online marketing specialists
Ashley Friedlein Staff
CEO at Econsultancy

06 July 2009 16:12pm

I guess you could consider a decent eBay presence as your 1st Generation E-commerce site? Some start out on eBay to 'test the waters' and learn, the cost being in time rather than software / design etc.

At the next stage you're probably looking at around £5k-£10k 'start up' costs (design, license fee, implementation etc.) and then perhaps £400+ a month ongoing commission or fees? For example the likes of eSellerPro work around this level.

Then you're into the £30k+ launch + same again maintenance/development range I guess which would typically be with a smaller agency / e-commerce specialist.

Then perhaps £150k+ then £400k+...? Depending on level of complexity, range, integration needs etc.

Pricing models vary though - some are % commission on sales only, some are a fixed monthly cost (or minimum fee) depending on trading volume, some are a one-off license fee etc.

Ashley
Trevor Ginn
Managing Director at Hello Baby

07 July 2009 09:28am
Hi,

If your requirements are pretty standard, then I think that 2-3K is probably about right for a small agency or freelancer job. For this I would recommend using an off the shelf shopping cart. There are several out there which are really quite cheap (or opensource) and have extensive functionality. Here are the ones that I have looked at which I thought were pretty decent
- Magento (www.magentocommerce.com) - Open source
- Cubecart (www.cubecart.com) - About £200
- x-cart (www.x-cart.com) - about £200
Don't let someone try and persuade you that you need a bespoke cart as this will be more expensive, more prone to bugs and tie you to one developer. Once you have a cart it is a question of skinning the cart with your chosen design. You can either get an agency to do the whole job or if you are feeling poor, get a designer to design a mock up and then go to a site like eLance.com and find someone to code it.
The carts mentioned above will require some hosting space and the cart to be installed. I you are looking for a managed solution, ePages (www.epages.com) or shopify.com will certainly do the trick for about £25 per month. The benefit here is that you don't have to worry about hosting the cart or upgrading the software.
Personally, for my online business (www.hellobabydirect.co.uk) I use eSellerpro.com which Ashley mentions above. This software charges a set up fee and then an ongoing commission of 1.5%. The benefit of this software is that it integrates with online market places (ebay and amazon) and also with couriers. This saves me an ENORMOUS amount of time. The take home message here is that if you have specific requirements (in my case third party integrations) then free or very cheap carts will be unlikely to fulfill them. If you are looking to expand in the future it is best working out what the ongoing requirements will be an ensuring that your solution will grow with your business.
Finally, the marketplace (eBay but also amazon marketplace) option should not be dismissed. Set up and marketing costs are very low and it gets your products infront of an enormous international audience. Some businesses sell a significant proportion of their sales through marketplaces. In my experience they provide a steady flow of business whilst your website ramps up.
Any questions do drop me a line
Trevor
Nic Jones
Head of Digital at UBER

07 July 2009 12:23pm

Hi
You could try an off the self hosted solution such as Blue Park (www.bluepark.co.uk) which offers a template driven e-commerce website. I have one for a personal project (www.thetoyforest.co.uk) all you need is a design and someone to convert the design in to the templates through the online configuration.
There are a number of other solutions available, don't forget you will need a payment gateway provider, even if it is PayPal or you could use something like SagePay (www.sagepay.com) where you can also find a list of suppliers of either cart software or ecommerce solutions.
It would make sense to try an off the shelf package first before spending large budgets on a bespoke solution.
Finally a word about Amazon, make sure you factor in all of the fees (which are a % of the selling price including postage) as this can work out to be a very expensive way to gain sales in terms of cost per order compared to other acquisition strategies

Nic
Rob Smith Silver
Strategy Director at Blueleaf

08 July 2009 14:46pm

All the above replies give some good advice.

As an agency ourselves we would recommend around the £10-20k mark for a site matching what you said above Tony, then there needs to be a discussion about internal resource to decide what needs to be budgeted for maintenance and updates.

Off the shelf software is all well and good and can provide a good base for an ecommerce project such as this however you need good quality design and planning to implement a good online presence.

Hope that helps Tony.
Jim O
Social media guy at CSC

14 July 2009 17:47pm

I would say you're looking at £600 - 1000 for a small agency or freelance developer to set up a store for you. This can be achieved effectively and cheaply using Wordpress E-Commerce, Shopify, Expression Engine or Joomla.

It's actually very quick and easy to do...design the store, install the software, code it...job done. I know plenty of freelancers who can take this from start to finish in a few days.

As Rob says, the real test is in getting it up and running. Smaller clients often neglect to consider where their images will come from, how they will manage online/offline stock control, etc...

I'm basing this on freelance day-rates of approx £120-150 for the design but you can get this even cheaper if you're prepared to work remotely.