7 Startup Expenses That Every E-Commerce Merchant Should Keep In Mind

You’ve done the research, narrowed down your target customers, and even prepared a rough business plan for your upcoming e-commerce venture. All that’s left now is to gather your startup capital, right? Well, there’s something to be said of the importance of knowing how much you’re going to incur here. Read on to find out the various expenses you’ll face in the course of setting up your business.


Every ecommerce business should have its own website — even if you’re planning to sell through third-party marketplaces and social networks. A dedicated site will help you set your products apart from the competition and foster closer relationships with customers.

A proper e-commerce site will cost at least $6,000 for the first year; this includes web development and annual hosting/domain registration charges. Alternatively, you could set up a site on a non-selling platform like WordPress for a fraction of the amount. Keep your budget in mind as you consider your options.

Permits and Licensing

You will need to get a general business license and register for sales tax at the very least. Find out how much this costs in your state/district, and whether any additional permits are required. You will also need to pay registration charges if you’re setting up your business as an LLC. Not to forget there are certain products that are regulated at the federal level.

Ultimately, it would help to consult a business registration attorney so they can advise you on what permits and licenses to apply for. Even if it costs more, you’ll have the assurance that your business is operating fully within the law once its up and running.

Public Liability Insurance

Selling through the web shields you from most of the risks faced by brick-and-mortar stores (e.g. slip-and-fall incidents). But there’re still a few loose ends you’ll need to take care of. In particular, a customer could come after you claiming that your products caused them bodily harm and/or property damage. This could end up knee-capping your business if you dont have the correct business insurance.

It’s for this reason that liability coverage should be high up on your priorities list. Look for a policy that covers the following at the bare minimum:

– The claimant’s medical expenses

– Legal fees incurred while defending claims

– Settlements/judgments made against your company


Having products at hand ensures you’re able to fulfil orders quickly and efficiently once they’re placed. And while you don’t want too much of your capital being tied down by inventory, there’re discounts to be had from buying in bulk. Besides, you never know when a pandemic or some freak event might bring the global supply chain to a grinding halt!

Your inventory budget needs to set aside enough funds to find reliable suppliers. Make sure you have enough funds to purchase the minimum quantity specified by your supplier of choice. Other things to take into account include transport and warehousing.

Marketing and Advertising

There’re lots of ways to promote your business online. SEO will particularly be crucial in helping people find you organically through search engines. But optimization takes time — it might help to run a paid search campaign before your SEO initiatives pick up. Or how about partnering with influencers on social media? Nothing better puts you on the radar like an endorsement from an authority figure.

Be prepared to spend a significant chunk of resources on getting word out, especially during your formative stages.

Payment Processing

Customers want to pay through a gateway that’s quick, secure, and convenient. Look for a system that not only meets your current needs, but also provides scope for expansion in future. Payment processors typically deduct 2 to 3 percent plus a flat fee of $0.30 on every transaction. Though not strictly a startup cost, this could substantially dent your profit margins if you don’t do the math upfront. Crunch the numbers and be sure to budget for payment processing when pricing your products.


This is yet another ongoing expense that must be factored in your startup budget. You see, hiring shippers ad-hoc tends to be pricey, and you risk incurring hefty expenses when demand swells. So to be on the safe side, have enough funds to secure favorable long-term contracts with at least a couple of couriers. Check that every company you work with has a good track record in delivery.