- Introduction
- E-commerce store: Average turnover
- How to Set Rates
- Achieve Turnover Growth
- Boost profitability
- Financial Forecast
- Current Expenses
- Estimer Les Profits
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It’s easy to create a shop on IvoireAchat. Create a IvoireAchat account (if you don’t already have one), tick the become a seller box, define the location and currency of your shop, choose a shop name, create a listing, define a payment method (how you want to be paid) and finally define a billing method. Our IvoireAchat Advisors will help you at every step and fully assist you in taking your business online.
Joining and starting a shop on IvoireAchat is free. There are only relatively small, fixed basic sales fees.It costs nothing to publish an advert on the marketplace. An ad lasts until the item is sold. Once an item is sold, the only transaction fee is applied to the sale price (excluding shipping costs). If you accept payment by credit card or PayPal, you will receive your payment in your account.
Introduction
In the 2.0 era, where all-digital technology is becoming more and more entrenched in society, e-commerce is a thriving business. But how can you enter the world of entrepreneurship and hope to benefit from it? How to launch my e-commerce store while guaranteeing profitability
How much can you earn with an online store?
In the majority of projects we have worked on, the turnover of an e-commerce store, during the first years, is between 100,000 and 500,000 euros. From one online store to another, the amount of turnover may vary, in particular due to:
– the acquisition strategy (SEO, SEA, influencers, partnerships etc.)
– the type of products sold (and number of categories)
– investments made in Google Ads, Facebook Ads, Linkedin Ads etc.
– the economic model of the e-commerce store (distributor, dropshipping etc.)
To estimate the turnover of an e-commerce store, you must first establish several parameters, such as the traffic obtained, the conversion rate on the online store or the average spending basket. To know the forecast turnover of your online store, you can use the financial forecast for an e-commerce store.
How to set sales prices to have a profitable E-commerce store?
1. Variable costs (per unit)
Here is an example of a list of variable costs that you may have to incur for each unit:
Unit cost of merchandise sold: €6.25
Cost of your labor: €2
Packaging: €1.78
Promotional material: €0.75
Shipping: €3.5
Affiliate commissions: €2
Total cost per product: €16.28
In this example, your total cost per product would be €16.28.
2. Profit margin
Let’s say we decide to earn a margin rate of 170% with our products sold on the online store.
If we buy (or have manufactured) a product for 5 euros, then this means that we must generate 170% x 5 = 8.5 euros on its sale via our e-commerce platform.
This gives us a selling price of 5 + 8.5 = 13.5 euros. Here’s how to set a price on it
online store based on an expected rate of profitability.
*It is important to remember that variable costs are not the only costs to consider. Fixed costs are the expenses that will have to be paid, whatever the situation, and regardless of the volume of sales made.
How to boost the profitability of your E-commerce store?
Below are some ideas to implement to increase the turnover of an online store:
– Offer your customers the opportunity to become ambassadors (for benefits)
– Increase the number of product categories sold
– Rework the UX to increase the user conversion rate
– Develop a YouTube channel on themes related to e-commerce stores
– Develop a blog, for organic SEO
– Offer a click-and-collect system
– Work on your SEO with search engines
– Use Google Ads and Facebook Ads tools
E-Commerce: Financial Forecast
What are the current expenses of an e-commerce store?
The most important expense items for an online store:
– the purchase (or manufacture) of product stock
– logistics (delivery of products)
– the marketing budget (Facebook Ads, Google Ads, SEO, Influencers etc.)
– commissions charged by the platforms
– various taxes and duties
How to estimate the profits of your store?
Your e-commerce store is profitable if the total sales (turnover) is greater than the amount of expenses. Usually, the net margin of an online store is between 20% and 50% of the turnover generated.
To summarize, to simplify: when your e-commerce store allows you to generate 290,000 euros in turnover, this means that once the sum of expenses has been paid, the profit will be between 20% x 290,000 = 58,000 and 50% x 290,000 = 145,000 euros.
You can easily estimate the income of your e-commerce store, test different hypotheses, analyze the weight of each expense on the break-even point and estimate the potential profits of your store over the next three years thanks to the financial plan for an e-commerce store.
