Is it profitable e-commerce for SMEs?
I am convinced that this is the big question that many entrepreneurs, professionals and self-employed do, if you can truly be profitable for them to e-commerce.
If the data que are handled business mortality is around 80% of new businesses disappear within three years, not to say that online businesses mortality should be even greater, reason, universal jurisdiction.
Still, you must know how to calculate the profitability of an online business.
The way is similar to that of a business offline, i.e. realization an economic-financial projections of income and expense that will give us an idea of product margin and profitability of e-commerce.
Simply put, revenues are the number of buyers * product price. However, how do you determine the number of buyers? Say an example for a wine shop that Google is a million monthly searches. Being very good and choosing very specific to try approving long tail and better position products, we might be on the first page. Given that the average conversion rate is 1.7%, Google our universe of potential customers could be 17,000 hits. Being very optimistic of those 17,000 visits a conversion of 4%, which is a very respectable figure, i.e. 680 potential buyers?
This is necessary to quantify because otherwise it is difficult to estimate the selling price of our products.
Following our example wine, so control expenses:
Acquisition costs, the average cost per bottle esteemed three dollars.
Logistics, storage and transport costs can encrypt around 1.70 dollars per bottle.
Advertising, assume that you optimize an Adwords campaign and the cost is 1 dollar per click and 100 clicks per month, i.e. 100 dollars in total are received.
Other expenses would be appropriate to create a brand image online, for what will probably need a community manager or online marketing agency and, of course, web maintenance.
These costs plus the profit margin that you think is what will determine the unit price of each product you sell on your website. Compared with your competition and your online channel it is what you will see the viability of your project and its possible return.