How much does it cost to start an ecommerce business? The answer depends on various factors including which ecommerce business model you choose. In this article we will explore the start up costs for:
- An independant ecommerce website
- A private label business
- A wholesale business
- An arbitrage business
- A dropshipping business
We provide useful links throughout. At the end, you'll find the average business startup cost in the UK. We hope this article helps you plan and budget for your ecommerce venture.
Basic Costs (All Business Models)
The cost of starting up a business includes certain basic costs. These apply to all the models we will cover.
1. Business Registration: £12–£100
Registering a company with Companies House costs £12 online, but if you use a third party or set up a more complex structure, costs can rise.
2. Accounting & Bookkeeping: £0–£400 per month
You might spend time managing this yourself or hire an accountant. This is exaclty what we do at Ecommerce Accountants so if you're looking for an accountant who truly understands your ecom business, get in touch with us today.
3. Logo Design: £0 - £50+
You may have the skills to do this yourself or you might hire a designer on, for example, Fivver at a rate between £13 - £50.
4. Insurance: £100 - £800+ per year
Depending on the coverage, insurance for your business may cost between £100–£800 per year.
An Independent Ecommerce Website
How much does it cost to start an ecommerce website? Depending on your preferences, the total cost of your ecommerce website may include:
1. Basic Costs: £12 - £1,000+ per year
These are the basic costs covered above:
- Business Registration: £12–£100
- Accounting/Bookkeeping: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
2. Domains & Hosting: £30 - £120+ per year
These are the fundamental aspects needed to operate a website:
- Domain Name: £6.99+ per year (based on a .com extension)
- Website Hosting: £1.53 - £24.62 per month
- SSL Certificate (HTTPS): £0 - £49.99 per year
- Domain Privacy & Protection: £0–£9.13 per year
- GoDaddy: £7.99 per year
- NameCheap: included
- BlueHost: £9.13 per year
Overall, the cost of a domain and hosting will likely be between £30.93–£112.85 per year, depending on your service provider:
- GoDaddy: £112.85 per year
- NameCheap: £30.93 per year
- BlueHost: £64.58 per year
3. Website Platform: £0 - £259 per month
You will need to choose a content management system upon which to build your website. Some options include:
- Shopify: £19 - £259 per month
- WooCommerce: £0 per month
- Wix: £9 - £119 per month
4. Website Design: £0 - £4,000+
You may choose to build the store yourself to keep costs down. Other options include:
- Full Website Design: £0–£4,000+ (with a professional designer)
- Using a Pre-Designed Theme: £20–£150
5. Order Fulfillment Automation: £0 - £54 per month
You may wish to automate the fulfillment of your website orders through a number of methods. To provide an example of the costs of doing this, we will explore tools which allow you to link your website to Amazon FBA for order fulfillment. Depending on your chosen content management system, these plugins allow you to fulfill website orders using Amazon FBA:
- WooCommerce: WebBee Integrator for WooCommerce
- Up to 30 orders/mo = Free
- Up to 50 orders/mo = $19/mo
- Up to 1,000 orders/mo = $35/mo
- Unlimited orders = $70/mo
- Shopify: Amazon MCF by WebBee
- Up to 30 orders/mo = Free
- Up to 50 orders/mo = $19/mo
- Up to 1,000 orders/mo = $35/mo
- Unlimited orders = $70/mo
- Shopify: Amazon FBA shipping by Bytestand
- Unlimited orders = $25/mo
- $20 per additional marketplace
- Wix: Wix integration with Amazon is possible using their Multi Channel Fulfillment App
- Free to use but only works for US merchants currently
- Free to use but only works for US merchants currently
Initial Cost Summary
- Business Registration: £12–£100
- Accountants for ecommerce stores: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
- Domain & Hosting: £30.93–£112.85 per year
- Website Platform: £0 - £259 per month
- Website Design: £0–£4,000+
- Order Fulfillment Automation: £0 - £53.71 ($70) per month
Startup Cost Guideline
Excluding any inventory purchases, the first year's costs of starting and running an ecommerce website fall into these tiers:
- Low-end: £100 - £500
- Mid-range: £1,000 - £2,000
- High-end: £5,000+
A Private Label Business
How much does private labeling cost? Many private label sellers choose to sell their products via well-known online marketplaces, so we are going to approach this model from that standpoint. The startup costs for a business in this sector include:
1. Basic Costs: £12 - £1,000+ per year
- Business Registration: £12–£100
- Accounting/Bookkeeping: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
2. Marketplace Selling Account: £0 - £437 per month
Each ecommerce marketplace has different selling plans with varying costs you will need to consider:
Amazon: £0 - £30 per month
- Individual selling account: £0 (£0.90 closing fee per item sold)
- Professional selling account: £30 per month (no closing fee per item sold)
Etsy: £0 per month
- Etsy selling account: £0 (£0.15 listing fee per item sold)
Ebay: £0 - £437 per month
- Personal profile: £0 (no Ebay Shop)
- Basic Ebay Shop: £19 per month
- Featured Ebay Shop: £77 per month
- Anchor Ebay Shop: £437 per month
3. Software: £15.35 - £230+ per month
You may choose to employ private label software to further your business:
Amazon Software
Helium10: £22.25 - £175.70 per month
- Starter: £22.25 per month
- Platinum: £60.61 per month
- Diamond: £175.70 per month
JungleScout: £22.25 - £229.41 per month
- Starter: £22.25 per month
- Growth Accelerator: £37.60 per month
- Brand Owner + CI: £229.41 per month
Ebay Software
CrazyLister: £15.35 - £24.56 per month
- Starter plan: £15.35
- Growing plan: £24.56
4. Trademarks: £170 - £2,000+
If you choose to trademark your brand, consider the following costs:
Government filing fee
These are mandatory fees you will pay during your trademark application (in the UK):
- Registering a single trademark for one class in the UK: £170
- Each additional class costs £50
Legal fees
When using lawyers for trademark searches and the application, there will be additional costs (based on Amazon IP Accelerator maximum fees):
- "Knockout" Search of EUIPO Records: £256
- Combined "Knockout" Search of EU & UK IPO Records: £1,024
- Filing an EU trademark application: £460
- Comprehensive brand review including EUIPO & National IPO records & unregistered uses: £1,178
- Filing an EUIPO trademark application: £460
- Filing a UK national IPO trademark application: £240
- Filing both EUIPO & UK national IPO trademark applications: £500
5. Sample Costs: £0 - £400+
Before placing a large order, you may well wish to puchase samples to assess product quality.
Product Samples: £0 - £200+
Some suppliers provide the product samples free of charge. Where products are more complex or where you request custom samples, there will be a charge for these items.
Sample Shipping: £50 - £300+
You will generally pay for the shipping of product samples from the supplier’s location to your own location.
6. Product IDs (GTINs): £60 - £142.80 per year
Many marketplaces require your products to have GTINs (Global Trade Identification Numbers), which are commonly known as UPC codes in the US or EAN codes in Europe. You can acquire these from your local GS1 website:
- GS1 Starter 10 Plan: £60 per year (10 codes)
- GS1 Starter 100: £120 per year (100 codes)
- GS1 Standard Membership: £142.80 per year (1,000+ codes)
7. Initial Inventory Costs: £1,500 - £15,000+
How much does it cost to private label a product? This depends on the type of product so initial inventory costs will vary but here is a general guide.
7.1 Manufacturing Costs: £1,200 - £12,000
Sellers who sell products with an end price between £20 and £50 are generally looking at a per unit cost between £4 and £12 (when manufacturing in China).
Order quantities will vary too however common first order quantities are 300, 500 and 1,000 units which (at the above per unit costs) would result in a total manufacturing cost of:
- 300 units: £1,200 - £3,600
- 500 units: £2,000 - £6,000
- 1,000 units: £4,000 - £12,000
7.2 Product Inspection Costs: £0 - £167
Optionally, you may choose to have your inventory inspected to ensure you're delivering quality products to customers. We will use Alibaba inspections as the yard stick here, which range in cost from £91 - £167:
- Level S-3: £91
- Level G-1: £137
- Level G-11: £144 - £167
7.3 Shipping Costs: £400 - £4,000+
As with manufacturing costs, the cost of shipping your inventory will vary greatly too. As a guideline, we will use the following product as an example:
Each Product
Product’s weight: 0.9Lbs (0.41 Kg)
Product size: 3 x 6 x 8 inches (8 x 15 x 20 cm).
Each Carton
Products per carton: 50
Carton weight: 47Lbs (21.3 Kg)
Carton size: 23.5 X 19 X 18 Inches (60x48x45cm)
Depending on the order quantity, here are the shipping quotes from Freightos as of August 2024 (including insurance and customs brokerage) to ship products from China to the UK:
- 300 units (6 cartons): £462 (ocean) - £1,224 (air)
- 500 units (10 cartons): £474 (ocean) - £2,026 (air)
- 1,000 units (20 cartons): £666 (ocean) - £4,024 (air)
Inventory Costs Summary: £1,600 - £16,167+
- Manufacturing cost: £1,200 - £12,000+
- Product inspection cost (Optional): £0 - £167
- Shipping cost: £400 - £4,000+
Average First Order Cost Guideline:
- Low-end: £1,500 - £2,500
- Mid-range: £4,000 - £7,000
- High-end: £12,000+
8. Product Photography: £0 - £400+
You may handle this aspect yourself or hire a photography professional on, for example, Fiverr at a rate between £40 - £400.
9. Marketing Budget: £0 - £10,000+
You may wish to have an initial amount available for promoting your product at launch, this can vary greatly. Here are some considerations:
PPC Ads
You may wish to ready up an initial pay per click advertising budget of between £200 - £1,000.
Amazon Vine Program
This program allows you to generate product reviews early on. It costs £140 per enrolled parent ASIN.
Influencer Marketing
An influencer marketing campaign may cost between £50 - £10,000 depending on audience size and other factors:
- With Micro-Influencers (1,000 - 10,000 followers), the cost per post will be between £50 - £300.
- With Mid-Tier Influencers (10,000 - 100,000 followers), the cost per post will be between £300 - £1,000.
- With Macro-Influencers (100,000 - 1M followers), the cost per post will be between £1,000 - £10,000
Initial Cost Summary
- Business Registration: £12–£100
- Accountants for Amazon/private label: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
- Marketplace Selling Account: £0 - £30
- Software: £22.25 - £229.41 per month
- Trademarks: £170 - £1,000
- Product Sample Costs: £0 - £300+
- GTIN Product Identifiers: £60 - £142.80 per year
- Manufacturing cost: £1,200 - £12,000
- Product inspection cost (Optional): £0 - £167
- Shipping cost: £400 - £4,000+
- Product Photography: £0 - £400+
- Marketing budget: £0 - £10,000+
Startup Cost Guideline
Including your first inventory order only, the costs of starting and running a private label business fall into these tiers:
- Low-end: £1,500 - £3,000
- Mid-range: £4,000 - £10,000
- High-end: £20,000+
A Wholesale Business
How much does it cost to start a wholesale business? The startup costs for a business in this sector include:
1. Basic Costs: £12 - £1,000+ per year
- Business Registration: £12–£100
- Accounting/Bookkeeping: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
2. Wholesale Management Software: £0–£270 per month
You may choose to employ wholesale software to further your business:
3. E-commerce Platform: £0 - £437 per month
You will need to select how and where you advertise and sell your products. This could be via your own website or existing marketplaces.
Independant website: £0 - £5,000+ per year
As covered above, the total first year costs of running an ecommerce website fall into the following tiers:
- Low-end: £100 - £500
- Mid-range: £1,000 - £2,000
- High-end: £5,000+
Marketplace selling account: £0 - £437 per month
If you sell on Amazon, you can expect to pay £0 - £30 per month:
- Individual selling account: £0 (£0.90 closing fee per item sold)
- Professional selling account: £30 per month (no closing fee per item sold)
If you sell on Ebay, you can expect to pay £0 - £437 per month
- Personal profile: £0 (no Ebay Shop)
- Basic Ebay Shop: £19 per month
- Featured Ebay Shop: £77 per month
- Anchor Ebay Shop: £437 per month
4. Initial Inventory: £0 - £50,000+
This depends on the types of products you sell, your order quantities, and the supplier’s terms. Wholesale businesses often require significant upfront capital for inventory purchases.
5. Storage Costs: £0 - £2,000 per month
You may choose to store low-volumes of product at home initially, however for larger operations, you may need to rent warehouse space or utilize a third-party warehouse. The cost of this will depend on the volume of inventory, the nature of your products and whether you need special storage conditions or climate control.
Initial Cost Summary
- Business Registration: £12–£100
- Accountants for Wholesale: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
- Wholesale Management Software: £0–£270 per month
- E-commerce Platform: £0 - £437 per month
- Initial Inventory: £0 - £50,000+
- Storage Costs: £0 - £2,000 per month
Startup Cost Guideline
Including your first inventory order only, the costs of starting and running a wholesale business fall into these tiers:
- Low-end: £7,000–£15,000 (small, home-based wholesale business with minimal personnel and storage)
- Mid-range: £20,000–£50,000 (medium-scale operation with rented warehouse space and a few employees)
- High-end: £100,000+ (large-scale business with significant inventory and staff)
An Arbitrage Business
What is the cost to start an arbitrage business? The costs in this sector include:
1. Basic Costs: £12 - £1,000+ per year
- Business Registration: £12–£100
- Accounting/Bookkeeping: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
2. Arbitrage Management Software: £0–£159 per month
You may choose to employ arbitrage software to further your business:
- Keepa: £0 - £15 per month (Amazon price tracking)
- Tactical Arbitrage: £59–£159 per month (product analysis and sourcing)
3. Marketplace selling account: £0 - £437 per month
If you sell on Amazon, you can expect to pay £0 - £30 per month:
- Individual selling account: £0 (£0.90 closing fee per item sold)
- Professional selling account: £30 per month (no closing fee per item sold)
If you sell on Ebay, you can expect to pay £0 - £437 per month
- Personal profile: £0 (no Ebay Shop)
- Basic Ebay Shop: £19 per month
- Featured Ebay Shop: £77 per month
- Anchor Ebay Shop: £437 per month
4. Initial Inventory: £1,000 - £10,000+
This depends on the products you plan to arbitrage and involves purchasing products from one marketplace (retail stores or online marketplaces) to resell them at a higher price on another marketplace.
5. Storage Costs: £0 - £500 per month
Although you may start from home, you may need more space to store your inventory which may require you to use a third party warehouse or rent your own storage space.
Initial Cost Summary
- Basic Costs: £12 - £1,000+ per year
- Arbitrage Management Software: £0–£159 per month
- Marketplace selling account: £0 - £437 per month
- Initial Inventory: £1,000 - £10,000+
- Storage Costs: £0 - £500 per month
Startup Cost Guideline
Including your first inventory order only, the costs of starting and running an arbitrage business fall into these tiers:
- Low-end: £1,000–£2,000 (small-scale arbitrage business operating from home, with minimal inventory)
- Mid-range: £5,000–£10,000 (a mid-scale business with a larger inventory, software tools and outsourced fulfillment.
- High-end: £20,000+ (a large-scale business with significant inventory, advanced software tools, marketing, and hired help)
A Dropshipping Business
How much money do you need to start dropshipping? The cost to start a dropshipping business will include:
1. Basic Costs: £12 - £1,000+ per year
- Business Registration: £12–£100
- Accounting/Bookkeeping: £0–£400 per month
- Insurance (Optional): £0–£800 per year
- Logo design: £0 - £50
2. Domain & Web Hosting: £30.93 - £112.85 per year
These are the fundamental aspects needed to operate a website:
- GoDaddy: £112.85 per year
- NameCheap: £30.93 per year
- BlueHost: £64.58 per year
3. Website Platform: £0 - £259 per month
If you're dropshipping from your own website, you will need to choose a content management system upon which to build your store. Some options include:
- Shopify: £19 - £259 per month
- WooCommerce: £0 per month
- Wix: £9 - £119 per month
4. Website Design: £0 - £4,000+
You may choose to build the store yourself to keep costs down. Other options include:
- Full Website Design: £0–£4,000+ (with a professional designer)
- Using a Pre-Designed Theme: £20–£150
5. Dropshipping Supplier Costs: £0–£76 per month
To access the products of some dropshipping suppliers and supplier directories, you will need to pay a membership fee:
6. Marketing and Advertising: £100–£2,000+
Although you don’t need to purchase inventory upfront, dropshipping often involves a degree of marketing to drive customers to your store. This budget may include funds for:
- Google, Facebook or Instagram Ads: £5 - £50 per day
- SEO Services: £100 - £1,000 per month (hire an SEO professional)
- Influencer Marketing: £50 - £1,000 per post
- Email Marketing: £0 - £50+ per month (some tools offer free tiers)
- Sendinblue (AKA Brevo): £0 - £13 per month (Free up to 300 emails/day)
- ConvertKit: £0 - £50+ per month
Initial Cost Summary
- Basic Costs: £12 - £1,000+ per year
- Domain & Web Hosting: £30.93 - £112.85 per year
- Website Platform: £0 - £259 per month
- Website Design: £0 - £4,000+
- Dropshipping Supplier Costs: £0–£76 per month
- Marketing and Advertising: £100–£2,000+
Startup Cost Guideline
The costs of starting and running a dropshipping business fall into these tiers:
- Low-end: £300 - £500 (a basic setup using free tools and with minimal marketing)
- Mid-range: £1,000–£3,000 (a more professional store using some paid tools and with a moderate marketing budget)
- High-end: £5,000+ (a larger operation with, paid tools, substantial marketing and using freelancers for marketing or SEO)
Last Word
So, how much does it cost to start an ecommerce business in the UK? All the models will face the same “basic” ecommerce startup costs for a business. The remaining cost of starting up a business depends on the model you choose, the scale you launch at and the level of supporting services you select. As a rough ballpark, here is a summary of costs for each business model in the first year:
Average Business Startup Cost UK
Overall, using averages of the low-ends and mid ranges, the cost of starting an ecommerce business in the UK will generally range between £3,090 and £10,400.
We work with 100s of businesses across all of these business models. If you’d like an accountant who truly understands your ecommerce business, get in touch with us today.
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