eCommerce Integration ROI & Cost of Ownership Calculation
Friday, August 14, 2020Eric Zegarski
Do you know the total cost of ownership of your eCommerce store?
If not, then you should! If you don’t know where to start, we’re here to help.
We will be exploring how much it costs to run your eCommerce store. You should have your costs categorized as fixed and your variable costs. In case you need an accounting 101 refresher, a fixed cost is an amount that remains consistent, and a variable cost will fluctuate based on fluctuating variables.
eCommerce merchants are faced with mostly Variable costs. With SaaS products, many have tiered pricing based on usage. Most card processing service providers take a small percentage off each transaction. Even multi-million-dollar businesses taking advantage of their premium rates, lose several 10s of thousands of dollars a year due to transaction fees. Below you’ll find different cost categories associated with running an eCommerce store.
eCommerce Platform Associated Costs
These costs are expenses related to running your online store. Things like hosting fees and platform-based fees are in this category, including transaction costs. If your eCommerce solution is on prem, you’ll find that your costs are higher than a SasS based solution from eCommerce platforms like
Shopify or
BigCommerce. BigCommerce has a nifty
comparison and ROI tool you can use to see the savings associated with switching to a SaaS based solution.
Additional Applications for Added Functionality
Chances are if you’re running an eCommerce store on a platform like Shopify or BigCommerce, you’re using apps to provide additional functionality for your store. Some of these apps start out with a free version or entry level pricing around $9.99 USD a month. However, in the long run, these apps can become pricey. Most have pricing tiers based off either web traffic, contacts enrolled, or premium features selected. High volume merchants often fall into the “enterprise” pricing category. This is customized pricing based on their needs. Popular eComemrce apps like
Smile.io,
Privy, and
Klaviyo have adopted this pricing structure. Since pricing is based on a variable, these costs fluctuate depending on your store’s performance. It’s important to keep track of your metrics
Agency Related Expenses
Some merchants rely heavily on one or several agencies to help them run their eCommerce smoothly. These agencies can help with everything from theme design, marketing, to even working with Amazon. Most merchants work on a retainer basis with some additional services purchased throughout the year. If you’re looking to step up your eCommerce game, the right agency can make a huge difference. This expenditure should be viewed as an investment in your business. eBridge has a plethora of great
agency partners.
Other Business Tools
Chances are your business is powered by a lot of different technology solutions in the backed. These programs ensure that everything flows smoothly. These tools include productivity software like
Trello, PIMs like
Jasper, shipping solutions like
ShipStation, and ERP’s like
Intuit Quickbooks. Some of these solutions have similar pricing models to SaaS solutions mentioned previously. Others have a fixed component and then a variable per user cost. ERP solutions like Microsoft Dynamics 365 have this type of pricing.
Labor and Materials Costs
Even though eCommerce is digital, many merchants are still manually entering data. For example, some will manually export order information from their Shopify store into their ERP. Once the information is updated it is then reupload from their ERP back into their store. High volume merchants must do this task several times a day. Other labor costs include any salaried or hourly person that is involved with running the business. This includes everyone from product packagers, shippers, and even your marketing team.
In addition, you should keep track of all your shipping materials expenses. Things like boxes, tape, packing peanuts, and other miscellaneous items can eat into your profit margins. This should be included in the cost of goods delivered calculation.
Understanding You’re Your Cost Structure is Just the Start
Keeping a well-documented cost spreadsheet will allow you to effectively analyze your cost structure. In addition, you’ll be able to identify areas that are a drain on your profitability. It will also allow you to track initiatives you undertake to lower your costs.
The ROI of eCommerce Integration
Integration enables you to connect your vital business systems. With your systems connected, your data will be able to flow bi-directionally without any bottlenecks. You’ll eliminate the need for manual data entry, and in turn limit the risk of human error and stock outs. In addition, you’ll be able to fulfill orders faster and offer better customer service. Read more about how your business can benefit from integration here.
Beyond operational efficiency, integrating your commerce systems provides a reduction in your operational costs. It frees up time associated with imputing data manually. Therefore, allowing time to be allocated to more pressing business matters. Other departments’ productivity lag due to not having almost instantaneous access to important information will also be eliminated. In addition, you’ll avoid hefty fees from online marketplaces like Amazon. If repeat occurrences occur, you could even face being delisted.
Calculating eCommerce Integration ROI
eCommerce merchants who process more than 200 orders a month see an instantaneous return on their investment. Here are the following costs you should input into your ROI calculation:
- Labor costs associated with manual data entry between all of your commerce systems.
- Slack time in fulfillment due to not having order inventory at your disposal.
- Lost revenue due to stock outs.
- Penalties faced from marketplaces due to stockout and not fulfilling orders in time.
Every merchant’s integration needs are different. Our
blueprint builder allows you to map out your ideal integration solution. You select your systems and what workflows you would like integrated. Based on the systems, and integration specialist will reach out with more information.
Don’t Take Our Word for It, Here’s How Wilson Electronics Lowered Their eCommerce Costs
“We are loving the eBridge Connections solution we’ve implemented,” said Kyle Brandt, Database Technician at Wilson Electronics, Inc. “This has saved us at least 10 hours a week on just the fulfillment side. This new process has helped streamline the way our orders are inputted into Sage 100, and our team couldn’t be happier with the automation.”
Read more.
Our Integration Platform is Universal - We Grow With Your Business
Our integration solution is universal! You can add or remove systems with ease as your business grows and your needs change. Our integration platform has pre-built connectors for leading
eCommerce platforms,
ERP solutions, and 100s of
EDI trading partners. As a result, we can implement an integration solution in a timely manner.
In addition, eBridge is hosted on Microsoft Azure, therefore ensuring an almost 99.9% uptime and industry leading security. With an integration solution from eBridge, you can ensure that your commerce network is connected and communicating data bi-directionally.