Hardfacts on Software – The Cost of Cheap

I have been planning to write about the cost of cheap for some time now. You know what they say “Goedkoop is duurkoop” or “buying cheap is going to cost you!” So let’s explore the cost of cheap in relation to e-commerce. Say you want to start an online shop, either as an individual planning to grow to a big business, or as a corporate needing to get onto the bus, or anybody in-between.
But where do you start. What solution do you go for? What approach is best in your scenario? The problem is, there are so many solutions to choose from. Now let me say this right from the start – we are working with the Magento platform so my view might be biased. The big issue here is that you need to do your research, so I just want to kick-start the thought process.
It’s like buying a car – you will want the best you can afford. You will also not want to overspend for the value you get. But your car also needs to be up to the job! You wont buy a fancy Golf if you need to go off-road. Neither would you want a Diesel guzzling behemoth grind you down the highway at 100km/h where you could breeze into the sunset with a six-cylinder double-turbo all-leather seats top-end Jaguar with your Bose sound system entertaining you to a crisp and clear rendition of the Soweto Strings favourites.
So lets examine some of the factors that influence your buying decision (and the cost of your store) when doing e-commerce:
Price
Well of course price is first on your mind. E-commerce stores start from zero (in terms of Rand’s) and go up into the millions. But its not all about the price. You need to ask what you are getting for that. Some of the low priced options are bigcommerce, estore, shopify and many others. Typically you can start a “What you see is what you get” webstore for no money if you have a few items to sell. When you have more items, these stores typically start charging you a monthly fee, but this is typically also very low, from a few hundred Namibia Dollar for a few hundred products. And don’t think these shops aren’t any good. They come with ready-made designs which are attractive and incorporate many of the standard online shopping features that your customers would expect. So this is a very good way to start a shop if you want to start a concept.
But beware, these shops often don’t allow you to scale your operation. Your biggest cost in setting up shop is NOT the store itself, but everything around it, such as advertising – which would normally be your biggest budget item – but also investments into logistics, a new team for marketing and fulfillment. So if you plan to grow quickly or already run a larger operation, then these stores typically do not have all the answers. Here are some of the other issues to consider.
Functionality
Now functionality is a big topic. Typically, most e-commerce platforms offer a similar range of features, but just check whether a feature you need is included in the package you are buying. One of the biggest topics in e-commerce is conversion, so not having the right functionality is going to cost you. Let’s assume you want to enable a “Quick Checkout” or a “Single Page Checkout” and these features are not available, then you could loose 10 or 20% of your sales. If your platform does not offer an “Abandoned cart report” you can never chase customers that did not complete the checkout process. Another opportunity lost. So you need to consider the costs of these factors as well – think about how much sales you can loose simply because you are choosing a cheaper platform?
Wow, I haven’t even started and my space is up. I will cover more of these factors in the following series of articles.
Happy shopping!