How much does an e-commerce site cost?

Key figures that you absolutely need to understand before jumping into e-commerce. mSo I won’t go through them all, but what you have to understand is that today almost 90% of French people are connected to the Internet. You have 63% of those who order online.

And as far as online shopping is concerned, the average budget is 2,200 euros spent every year by the French. However, these are budgets that increase every year. The average basket is 65 euros. Now is the big gap, a basket weighs from a few euros to a few thousand or even tens of thousands of euros. 21% of sales happen on mobile. Mobile is taking on a leading role and is continually growing. Turnover €86 billion and still growing.

More than 200,000 active commercial sites in France. This means you won’t be alone. Don’t worry a priori if you are in a niche. E-commerce works if you have a differentiating offering. This is the main thing. So clearly define your goals. Your relationship with the customer is important.

To promote customer experience you need to have efficient services.

Concrete case:

We will follow Valentine who has a furniture and decorative accessories design laboratory. And Valentine sells through partner stores and boutiques, but wants to launch into online sales.

Valentine has more or less consistent revenue goals. We start in year N at €150,000, then at €250,000 and finally in year N+2 at €400,000. He has an average basket of 60 euros, which is what he already makes in his laboratories. Gross margin 50%. The Life Time Value is 2 (this is the number of times a customer purchases in a year) and this is very important since subsequently in terms of customer acquisition. You will already have customers who will repurchase (loyalty). And it reduces acquisition costs. The number of orders will be 2,500 to 60 euros, the average basket is 150,000 euros. And the number of customers will be 1250 as each customer buys twice. So by the time we figured it out, we’d already come a long way!

Without commercial objectives it makes no sense to start dedicating yourself to e-commerce.
The next step is to define yours ventilation tunnel. I divide it into 3 main phases.

• The traffic acquisition part
• The conversion part that will be on your site, on your mobile or whatever
• The part of loyalty we tend to overlook

Why not try increasing your average cart or getting people to buy from you again. Customer experience is also very important at this level.

Valentine, upon its launch, will launch into several communication and traffic acquisition channels:

• SEO (natural referencing).
• online advertising on search engines
• social networks
• of emailing
• price comparison sites

On product pages you will need to create content that is relevant enough for natural referencing but also for user experience. And then obviously all the commercial animation. Payment and delivery must obviously be handled in the purchase tunnel.
And for customer monitoring and loyalty, a CRM.

I’m not talking about logistics, purchasing, customer relations, accounting…

These are many necessary skills.

When you launch your e-commerce business on your own, understand these skills needed to make your business work. Unfortunately, many creators say to themselves “oh well, e-commerce is easy, I’ll do it, I’ll master it”. And then they realize very quickly that it becomes very complicated.

How to choose the e-commerce solution?

I highlighted some points there. The features are already essential, which means that you will first have to think about your features and write specifications to be able to get support for this aspect too.

Find out if you want to sell internationally or just locally. Do e-commerce locally (of little interest unless selling from producer to consumer locally to provide a service).

The performance of the store based on the number of visitor flow orders you will have will define the technical needs (hosting, cache, etc.).

Commercial animation is all the possibilities you will have in terms of promotions, sales, loyalty, sponsorship.
WPS: This is logistics management software, drop shipping. (This is when your products are sent from a supplier.) So you have to be logged in to have, for example, warehouse returns. Manage orders, deliveries.

Marketing automation, everything omnichannel (physical stores, etc.), hosting and security.

Take a SAS hosting solution that you rent or an open source solution that you own that you can install on the server of your choice, customize it as you see fit, without forgetting all the GDPR aspects and obviously the processing of personal data.

What is the budget for an e-commerce site?

For the example of Valentine’s Day, it will be a PrestaShop because it is a known and standard solution in France. Let’s look at all the notions of project management, configuration of the graphic card, integration of your catalogue.

So we are approaching 12,000 euros if created by a small web agency. What I recommend for launching an e-commerce project, especially for its management, is to turn to an agency.

The e-merchant must create his catalog. It takes a lot of time, between producing images/videos, SEO-optimized descriptive texts, product features… in fact, this is what often causes delays in projects.

And it can take weeks or even months of work in your daily life.

Valentine therefore needs 1250 customers and therefore, since in the decorative furniture sector it has an average conversion rate of 2.6, in the first year it needs 48076 visitors.

The first year no one knows you. So all the communication steps you take, especially in natural referencing, will bear fruit after six months or even a year depending on the competition. So in general we invest a lot in paid advertising initially.

Considering inbound marketing (being your medium) it is interesting to acquire an audience and retain them. We invest a lot of budget at launch. Paid advertising that will be reduced over time.

The total estimated e-commerce budget for Valentine is approximately 43,000 euros for the first year. This is still a substantial budget but calibrated for success in which project leaders spend from 500 to 1000 euros per month thinking of developing their business.

We have an average basket of 60 euros, a gross margin of 50% or 30 euros. So here we are not profitable the first year, we invest at a loss. On the other hand, in years n+1 and n+2 we will be profitable because Valentine was able to reduce the advertising budget and we will collect all the actions carried out in SEO, e-mail, social networks, word of mouth… to finally arrive at a visitor acquisition cost of 14 euros.

Then there are other costs such as commissions on purchases, logistics, transport. Drafting of terms and conditions, accommodation. Annual maintenance.

Bank commissions, if you use PayPal you will have a commission of 2.9% + 35 euro cents per transaction.

Stripe has a fee of 1.4% and 25 cents per transaction. So this eats into your margin. Already every time it is also important to calculate it.

The final team cost of your e-commerce site it is close to 18,000 euros of investment. And if we add the web marketing budget of 43,000 euros we exceed the 60,000 euros of the budget for year N.

Through this example and this demonstration I wanted to point out to you the budget for web marketing which is more substantial than the design of the e-store.

In summary

Your offering and your goals are essential and must be aligned.

The more relevant, differentiating, unique and exclusive your offer is, the lower your web marketing costs will be.

Define clear and measurable objectives because you will have monitoring indicators available to optimize your sales. Choose an e-commerce solution that is scalable but in line with your current business.

Evaluate the design budget for your e-commerce site and your web marketing before investing to protect your project and your investments. Adopt dashboards to limit risky situations.