3 Ways to Calculate The Total Cost of Ecommerce Ownership
Getting started with eCommerce is not as easy as most businesses would think. That’s why it’s fundamental Merchants have a clear understanding of the total cost of ecommerce ownership from the get-go. Let’s dive into the costs of running an ecommerce business.
Many Merchants fail to understand the full cost of ownership when assessing a new eCommerce site launch. Unfortunately, we see it all too often where the front-end platform is designed and discussed prior to ever considering any implication on the back-end systems. As a result, we find a desperate post-site launch Merchant, desperately trying to find a solution in an already spent budget.
In this blog, we will cover the fundamental aspects to consider when setting up a successful ecommerce website. This includes how to determine the average cost to build a website, what is needed to build an ecommerce website such as website design and data integration, and other ecommerce business expenses.
Ecommerce Website Cost: What Is Needed To Build A Successful Online Store
The Total Cost of eCommerce Ownership (TCO) is something many Merchants are re-evaluating in 2021 amidst the continuing pandemic. As your brand evaluates the costs of operating through ecommerce, there are several cost considerations that you must think about strategically.
Here are three costs you should consider when setting up your ecommerce website:
Consideration #1 – Website Development Costs
The first area to consider when calculating ecommerce costs (TCO) is around the reconstruction of an eCommerce website build.
Just think of it: you’ve invested in your next big website. You’ve found an agency expert that you love, they provided you with a breakdown for your custom ecommerce development and an example of how your site can look. Then, you go through the design, construction and launch of the new website. Your team is ecstatic, this new look can be the turn point!
But wait, how are we going to pull all this data into your back-end systems?
This is where things can become tricky: the mechanics of ecommerce beyond just UX. The reality is that a solution built-in isolation isn’t really a holistic solution at all, it becomes a disparate system acting on its own.
The issue now becomes, does the data living in the back-end need to power the front-end? Will it map correctly? Is there process and operational functionality, such as pick up in-store, that you’d love to have?
Well, get ready for the rebuild surprise as many will find that due to a lack of due diligence either a heavily customized integration platform will be required. In some cases, an entire rebuild of the site for better compatibility is the solution.
This simply is just money wasted, and all because you didn’t think about integration. Even if you’re considering integration down the line, in phase 2 or 3, by not planning upfront for data integration, you risk spending unnecessary money.
Consideration #2 – Data Integration Costs
The second sign of not truly understanding the cost of building a successful ecommerce site is simply how surprised brands get when discovering how much quality, fully automated integration actually costs. Hint: It’s not cheap (nor should it be). More on the cost of data integration here.
There are a million reasons why a proper integration system is important, which we cover extensively in our blog posts. Whatever your goals are, growth and scalability across your business require well-designed technology solutions and not just technology products. Otherwise, you’re giving your competition an edge in a highly competitive and global ecommerce market.
Why Is Data integration A Fundamental Piece For Growing Businesses?
At its core, data integration is moving data from point A to point B. Simple, right? The reality is far from. Any business should understand the implication of data across their entire business, especially in ecommerce projects, new or existing.
Ask yourself these questions:
- How do you handle your accounting?
- How are you handling distribution and inventory?
- What does your returns process look like?
- Who and how does your key eCommerce data affect your business and how your data can support the operational side of your business?
There is simply no plug-and-play solution for unique business processes and your unique eCommerce approach. To put it plainly: effective, holistic and consistent integration that is built to fully support your operations costs time and money to implement. There’s no getting around it.
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Consideration #3 – Customer Expectations
The third area that often lacks understanding in an ecommerce project cost when adding in integration is the opportunity costs of ineffective or manual data transfers.
We’ve all been there: put aside a bit of money for that new product and finally take the plunge to purchase, only to have your experience dashed due to mistake when it doesn’t arrive or arrives with the wrong items.
The reality with manual work is that human error will find its way into the process. This problem only scales as the workload and complexity increase due to growth. Thus, mistakenly forcing poor experiences onto customers who’d otherwise be singing your praises.
The unfortunate truth is that Amazon has set a lot of customer expectations in eCommerce. Buyers expect their products fast and accurately. In fact, it’s surprising how avoidable delivering a poor experience is with effective solution-focused integration. Do not undervalue your customers’ trust – but instead, empower it with effective integration solutions. Otherwise, you will cost your business money and long-term growth.
Why Understanding The Total Cost of Ecommerce Is Important
With the above three considerations, you can now effectively build a strategy that will allow you to properly budget and calculate the total cost to build an ecommerce website for your business. Having a full economic picture of what it will take to push your brand further and accelerate your growth with the best customer experience is key. This bigger picture will help your business make smarter decisions about budget allocation and understand what truly needs investment.
Remember, your strategy and total cost of ecommerce ownership (TCO) will change! A good ecommerce strategy is flexible and agile. Plus, it allows you to pivot effectively to a changing market. Investments in the back-end infrastructure of your business such as data integration allow you to never be held back by your application’s technical limitations.
Ecommerce Integration Starts Here!
When considering the above implications of eCommerce ownership, we urge you to consult with experts! With our 27+ years of experience in integration consultation and solutions, VL OMNI can provide you with the technical expertise of what integration will add to your business and the help you calculate your total cost of ownership, aka TCO.
We believe in empowering business with technical knowledge, allowing them to make the right strategic decisions to accelerate their growth.