An e-commerce business plan allows you to predict how your project will look like in the future. It provides you with a clear vision about the costs involved: initial and operational alike. Moreover, it gives you input on your idea’s feasibility. We strongly advise you to create a business plan before starting up a web shop for your company.
Basically, an e-commerce business plan is just a variation of a regular business plan. What’s different are the types of costs you have to bear in mind. To give you a heads up, we prepared some tips and a basic template on which you can build your plan.
Don’t forget to monthly adjust your e-commerce business plan according to the information received. This way, you will be able to constantly monitor the results and change your efforts accordingly.
What should you include in your e-commerce business plan?
These are the one-time costs you need to make in order to start up your webshop:
- Webshop development
- The store-house
- Accounting software
- Stock management software
- Visual identity of your business
- Legal counsel
Fixed and variable costs:
The variable costs depend on the activity of your webshop. The higher the production and the turnover are, the higher the cost is. For instance, think about the shipping costs of your orders.
Fixed costs are independent of your turnover or production. An example is the rent of your working space.
Typical e-commerce advertising costs:
- Cost per click/impression (CPC/CPM): maybe 15 years ago, you could launch a webshop without having to pay in order to attract visitors. Now that more and more businesses started to sell online, you should be realistic and take into consideration investments such as Google AdWords or Facebook Ads.
- Shipping costs: each product you sell involves delivering costs. Most shipping companies charge between 3 and 7 euros for shipments under 30 kg. Of course, the price will depend on the regions and the number of shipments. Don’t hesitate to request offers from various companies and choose to collaborate with the ones that better fit your needs.
- Packaging costs: most of the starters forget to take this cost into consideration. You need cardboard boxes and protective packaging. You can even personalize these boxes in order to improve your client’s experience with your brand.
- Online payment costs: Each online payment has a cost. Don’t hesitate to ask for offers and negotiate. Some payment providers charge subscription costs, transaction costs and commissions for every single sale.
The conversion rate is represented by the percentage of visitors that turned into customers. The average conversion is influenced by what you sell.
If you are selling a niche product, your conversion is likely to be higher than if you were selling clothes. Generally, the conversion rate varies between 0.5% and 3%.
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What is the average amount of money you expect to obtain through your webshop? The average order will depend on the products you sell. Sometimes, the period of the year can influence sales, too.
When creating an e-commerce business plan, keep in mind Pareto’s rule: 20% of the products will make 80% of your revenue.
Just choose an average and adjust the value once you start selling through your webshop.
Remark: profit margins can strongly vary from a business branch to another. A small profit margin with a big turnover or a big profit margin with a small turnover can mean that both companies have the same budget to spend.
Gross profit margin is the ratio of revenues remaining after deducting the cost of goods sold to revenues.
On the other hand, the operating profit margin indicates how much profit you make after paying all the variable costs of production. This percentage shows the pure profit on turnover.
Overestimating your costs and underestimating your sales is a good rule. Try to build by correlating costs and sales.
Hopefully, we were able to help you with all your e-commerce business plan questions. Make sure to also read our blog post about how to present your product on your webshop. It’s a must-read for webshop owners!