According to a Google report, in Indian ecommerce the current number of online shoppers in the country is somewhere around 50 million. It also claims digital retail is influencing many purchase decisions and online retail discounts are no longer an obsession.
The results derived from this report are encouraging yet they also suggest competition among online sellers and marketplaces will become even more intense.
Launching yourself into the online domain requires a bit of prepping. There are certain costs you need to incur as an online seller. Some may be inevitable, some may be reduced. To help you decide what your initial investment in ecommerce should look like, we thought we’d enlighten you on the kinds of costs most online sellers bear.
Cost of goods and acquiring them
This cost will depend on the kind of products you want to sell online. Is it high value like jewellery and electronics? Where will you be sourcing these goods from? Will you be manufacturing them? If you plan on obtaining your goods from a supplier it is advisable to consider the prices of multiple sources before obtaining your commodities in bulk.
Cost of maintaining inventory
Again the costs here will depend on what you are selling in addition to the amount of stock you need to maintain. For example, bulky commodities like refrigerators, furniture and washing machines would take up a lot more space than clothing, accessories, kitchen utensils and mobile phones. Then the kind of quantity you maintain will also affect the amount of storage space you need, thereby influencing the cost of storage.
Online marketplaces like Snapdeal, Flipkart and Amazon offer fulfilment services where they provide you with storage space for your products at a set fee. You can compare the prices of your available options to this and accordingly pick the option most suitable. However, do note, becoming a fulfilled seller means you have to be an online seller on the given marketplace. Drop shipping can help you avoid the cost of storage all together, because this method does not require the seller to maintain inventory.
Cost of packaging your products
To determine the cost of packaging, you need to determine the size or dimensions of your product. The weight and fragility of your product are also necessary facts. They will help determine the amount and kind of packaging material you will need. Fragile products will require more packaging and caution to maintain their integrity.
Cost of marketing your products
If you thought you don’t have to market your products as an online seller, you are wrong. It’s like we said, the competition among online sellers is growing. So you need some way to distinguish yourself from the rest. Online marketplaces promote the products of their sellers however it comes at a cost. Sponsored ads, brand stories and display ads are readily available options you can try.
There are free techniques you can use to improve your visibility online. But marketing your merchandise is essential irrespective of what you are selling.
Cost of selling on a marketplace
You need to pay a fair for using a marketplace’s online platform. This fair is charged in the form of a commission. Commissions are deducted from the seller’s earnings. So only when your products are purchased you are charged a commission. Online software is available to help sellers calculate the fees they owe according to the different marketplaces out there.
The costs involved in selling on a marketplace are far less than on an online store of your own. That is why it is the first option a seller chooses. The best way to learn about online selling on marketplaces is to ask other online sellers. To do that you can join online seller forums or Facebook groups.
What other costs come to mind when doing business on online marketplaces? Do share, in your comments below, based on your online selling experience.
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