When it comes to the world of eCommerce, it is nearly impossible to single out a type of cost involved in the process. Right from setting up your digital store, to ensuring timely delivery of your products and services, the eCommerce functionality is extremely multi-faceted and requires a considerable amount of time and resources.
Is Ecommerce A Fixed Or Variable Cost?
While eCommerce itself cannot be narrowed down into a fixed cost or a variable cost, it is a cumulation of the numerous categories of expenses that a business can incur, depending on their types.
So, here are a few types of costs involved in eCommerce transactions, which may take the shape of fixed costs or variable costs.
- Costs Involved In Setting Up The Platform
Before engaging in any form of eCommerce transactions, you will be required to pick an online medium for it. Generally, eCommerce stores make use of platforms such as Shopify or WooCommerce, which involve various costs that can either be a one-time thing, a recurring fixed cost, or even a variable value. It all depends on what the cost is being incurred for, and the volume of sales undertaken by your business. For example, purchasing a domain is a standalone cost, payments for commissions and plugins can vary, and subscription models will have a recurring fixed cost.
- Marketing Costs
Marketing is a crucial aspect of taking any eCommerce business venture off the ground. Advertising and marketing mostly consist of variable costs, so the scope for fixed costs in this arena is very minimal. The expenses incurred for this purpose, usually depend on the volume of traffic they generate or the type of campaign you wish to proceed with for that time period. In the case of advertising tools, the costs mostly depend on the results they generate, and the marketing techniques also consist of variable costs for most of them.
- Shipping And Payment Processing Fees
Every eCommerce business will be required to integrate additional plugins such as shipping and payment processing options into their platform so that customers can experience a well-rounded shopping experience. The costs involved in such services are also variable in nature unless the third-party service being employed makes use of a subscription-based model.
- Employee Payment Costs
When you engage in eCommerce transactions, you will be required to hire a team of members to ensure proper implementation of the tasks. Be it a technical team or a marketing one, paying the hired workers is going to be a crucial cost that you will have to incur. The nature of such expenses may either be fixed or variable, depending on the salary package decided in advance, by the business organization.
Ecommerce in itself cannot be considered as a fixed cost, since it is an amalgamation of various intermediary costs and expenses. The above-mentioned cost segments are a small chunk of the huge superset of costs that really go behind running an eCommerce store. The nature of such costs will depend upon the volume of your sales as well as the modes you are making use of to reach your customers. The important thing to remember is that while eCommerce cannot be boxed into one type of cost, taking into consideration the categories of expenditure that come under its purview, is extremely crucial.