The "Hidden" Costs of Running An Ecommerce Business
Estimated reading time: 4 minutes, 30 seconds.
This is a guest post from our friends at MerchantSpring, a tool for managing your ecommerce business.
Whether you run a small start-up or a major enterprise, there’s no question that your online presence is a crucial investment for your business.
The trick is knowing where to spend your money for the best results with the greatest return.
In this blog, we’ll be looking at the expected and unexpected costs that come with ecommerce.
Table of Contents
Common Expenses For An Online Business
Here are just some of the base costs you can expect to incur from running your business online:
- Domain fees (usually around $10-20 yearly).
- Web hosting fees (ranging anywhere from $2.99-$1,000+ every month for companies with larger inventories or more complex SaaS setups).
- Payment providers (these could be one-off or recurring fees).
- Professional fees for design and maintenance, if required (this could creep into the thousands for expert help).
A good rule of thumb to remember is: the greater the customization, the greater the cost.
From the theme designs to your checkout process, the security certificates and payment gateways - almost every component has an individual price tag.
But what are some of the lesser-known fees and expenses that seem to catch a lot of sellers by surprise?
Let’s take a look.
The Common Unexpected Costs to Business Owners
We’ll focus on Amazon, eBay and Shopify here. If you sell on other channels, take note - you may see similar things on your statements too.
The regular Amazon fees include monthly account fees (for professional accounts), transaction fees, referral fees and fulfilment costs.
But one cost many new sellers don’t anticipate is to open a business bank account, particularly if you’re outside the US.
Regardless of your chosen payment method, it will cost you to set up and link your bank account to your Amazon account. According to Amazon, these fees are used to maintain your account and handle conversion or transaction fees.
Another unexpected cost to sellers is often related to product returns. If you use Fulfilment by Amazon (FBA), the costs to return damaged or unwanted goods can come to you. You can find out more about Amazon’s return policy and how it affects you here.
And that’s the listing upgrade fee.
Sellers are charged for this when they want to add a “buy it now” button to their listing, as well as or instead of the auction function, or when they want to boost its visibility.
Then there are eBay’s fees for PayPal. If sellers aren’t yet migrated to Managed Payments, or they want to continue using PayPal, the gateway charges for the pleasure. It also charges for handling refunds too.
Many online sellers love the freedom that comes with using Shopify.
It’s relatively easy to use, quite simple to set up and your monthly fees make accounting arguably more straightforward than on other platforms.
Sellers can, however, be thrown off by the difference between the credit card processing fees charged by Shopify Payments, and the often overlooked transaction fees.
These fees are added to orders that are processed in a location outside of Shopify Payments’ remit.
Another common and often unexpected cost is the integration of Shopify with other platforms. Sometimes the Shopify apps you choose don’t just cost you in subscription fees, they may cost you in other ways too.
The Costs of Expansion and Growth
Of course the fees don’t end there.
For businesses wanting to expand, there are any number of tools they can invest in to help them.
Here are just a few:
- Search Engine Optimization (SEO) services, which could cost anything from $30-$1,500 in retainer fees. Why not start with A2X’s free guides in the meantime: Amazon SEO and eBay SEO.
- Custom plug-ins for your website to improve your customer relationship management, expand search functions, and add new interactions like reminding customers who abandoned carts to check back in.
- You might seek professional help with things like product photography, copywriting, branding for your store or content.
The possibilities are endless and exciting.
But they will empty your pockets if you don’t plan for them effectively.
So get your priorities in order, and you’ll be developing your own lucrative ecommerce tech stack in no time!
There are excellent tools on the market to help sellers manage their costs and sales.
MerchantSpring has key profitability features for Amazon sellers through a fully customizable Live Profitability Dashboard, helping them understand their store’s performance - down to each individual SKU across multiple accounts.
Sellers can choose the data they want to see at a glance, and how it’s displayed in terms of currency and cost per product.
Sellers can download industry-standard profit and loss statements, which can be shared with their accountant or Amazon FBA aggregator.
MerchantSpring also helps sellers see their profitability trends, enabling them to monitor the trajectory of every product they sell, and foresee any patterns or changes.
Armed with this knowledge, sellers can make informed decisions about where to invest more in their business and how to make the greatest return.
Want to know more about how MerchantSpring can help your business? Book a call with the team today.
Also on the blog
- The A2X Ecommerce Accounting Hub
- Ecommerce Accounting and What Makes It So Different
- Ecommerce Accounting Principles
- Find an Ecommerce Accountant
- The Development Stages of Your Ecommerce Tech Stack
Ready to get started?
Save time, work smarter and get reliable Amazon and Shopify financials you can trust, in a matter of minutes.