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Planning Guide to Ecommerce success

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Your step-by-step guide to Ecommerce

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Step #3 -- Create A Budget and Determine How to Measure Success

Creating a budget, and measuring its effectiveness, is one of the most important stepsin developing a successful Ecommerce site. How much will your Ecommerce site cost? And howwill you know it was worth the investment?

Ecommerce Costs

Here's a chart outlining the major expenses involved in creating a site:

FEES One-time Monthly Transaction fees Variable fees Do It Yourself option
Website/Catalog Development x x   x x
Website/Catalog Hosting x x x x not practical
Promotion x x x x x
Ecommerce Services (such as payment transaction fees, secure hosting fees, etc.) x x x    

Ecommerce sites vary widely in their size, scope and complexity. And they are being created by every type of technology professional - from independent web designers to large corporations - in every price range. The best way to get a true picture of costs is to talk to an Ecommerce specialist - such as a web hosting service - who has created sites similar to the one you envision. Meanwhile, here are some price estimates to give you a rough idea of what to budget: They include all variables and support personal for maintaining the site.

Full site monthly costs As low as... promote & site service
Small catalog
  • offering up to ten products
  • Hundred of page views per day
$9.95 /mo. $0 to $100.
Medium site
  • few hundred products
  • Thousands of page views per day
$50.00/mo. $2,500+
Large site
  • catalog with thousands of products
  • Hundreds of thousands of page views per day
$100/mo. $30,000+

The rule of thumb is to spend approximately 10 times more on promotion than you do on development!

Also, once you have fully defined the scope of your project, you can send out requests for proposals to a number of Ecommerce vendors to get firmer costs. You will need to evaluate these proposals in-depth -- carefully reviewing the credentials, experience & expertise strengths, and account services organizations of each potential vendor. GET REFERENCES! Price is important but not the only consideration. You will find that no matter what spending level you set, the biggest cost of the project will be the time you have to spend on getting it done right. Often, but not always, the more expensive firms will try to make it as easy on you and your company as possible, but even then you will need to be very involved. After all, your site will be the only 24 hour per day representation of you that is available! Also remember - just like in an computer/accounting installation - no vendor will want to take on the task of entering all your data, photos, prices and qty available.

Measuring Success:The Bottom Line

Ecommerce is an entirely new way of doing business - creating new opportunities and tapping new markets. Because it is so new and different, it's especially important to measure Ecommerce returns. You may want to consider a longer pay-back period than usual. You don't want to abandon your investment too hastily. Your own learning curve, plus the ratcheting up of consumer expectations, may require you to invest more before you can truly know if Ecommerce will work for you. For this reason, it is essential to include in your calculations potential lost business you may experience by not being on the Internet.  Average cost per page for web sites run min. $100.00 ea.

Be sure to consider all the following:

  • Being there first: Will you gain market leadership by creating a site before your competitors? Or, if your competitors already offer Ecommerce, can you continue to compete?
  • Seizing competitive advantage: Have you created a revolutionary Ecommerce business that will make you a "category killer" in your industry?
  • Expanding your customer base: Will you attract a whole new group of customers by offering your product online? Will your Ecommerce site expand your marketing reach worldwide?
  • Encouraging customer loyalty: Will customers buy more from you based on the convenience or value-added services you offer online?
  • Customer information: Can you find out more about your customer's buying habits and preferences through online relationships? Can you transform this information into cross-selling opportunities?
  • Profitability: Is it more lucrative to offer your products online than by retail or mail order?
  • Efficiency: Will Ecommerce reduce your operating expenses and streamline your processes? Will it help you work more profitably with your suppliers and internal resources?
  • Life cycle: Will it take a long time before you can begin producing enough sales to create a profit? How will you generate enough capital meanwhile to keep the site going?

Next...Step #4 - Identify your customers

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