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7 Tips for Starting an E-Commerce Business on a Tight Budget

By: Lending Tree



E-commerce retail sales are expected to exceed $5 trillion dollars worldwide for the first time in 2022. If you’re looking for a new revenue stream, now could be a perfect time to get your e-commerce business off the ground. But while an online shop could mean fewer startup costs, there are still expenses that not all solopreneurs realize. Here are a few you should look out for — and how to pay for them.

1. Use free tools for market and keyword research

Before launching a store, you need to figure out what to sell. For this task, it’s essential to understand consumer trends, consumer demand and what keyword search terms potential customers may use. Conducting this market and keyword research can get expensive.

For example, SEMrush is heralded as one of the best keyword and content marketing research tools around, but it costs $119 to $449 per month to use. Taking a DIY approach to market research using sites like Google Trends, AnswerThePublic.com and the Google Keyword Planner could help you analyze market interests, demand and search queries for free.

SurveyMonkey, Google Forms and Typeform are also free and affordable services you can use to poll an audience on their demographics and preferences.

2. Don’t go crazy with inventory

One of the largest expenses for your business may be inventory, and figuring out the right amount of stock to order is important when you don’t have a ton of money to invest. Darien Harris, the owner of a jewelry and spiritual gifts shop based in Atlanta, says understanding the seasons of business has helped him immensely when inventory planning.

“Some of your products may sell better in the summer or winter,” he says. “You have to learn the flow of your customers’ demands and plan your inventory around that.” He has come up with a strategy where he doesn’t have a ton of inventory in his office. Instead, Harris works with local vendors that let him pick up products on a weekly basis to send out to customers. “Systems like these help lower inventory costs tremendously,” says Harris.

Also, he recommends digging deep to find the original maker of a product. “Most suppliers are reselling other products from the source. The closer you get to the source, the more affordable your supplies will be.”

3. Get creative with your logo, branding and website

Nearly 1 in 4 businesses has increased online offerings since the start of the pandemic. That means there are even more e-commerce shops competing for customer attention. Digital marketing and branding are the puzzle pieces that can help you stand out.

Logo and branding packages could cost $100 to $3,000. And the price of a custom e-commerce site can range widely from $1,500 and up, depending on the complexity of the design and how many products you have in the store. So, how can you keep these costs down?

Consider looking for an inexperienced but talented graphic designer for your brand design. They may be able to offer you a discount because you’re giving them an item to add to their portfolio. Another alternative could be finding an affordable freelance designer on Fiverr.com.

To create your website, some e-commerce platforms have affordable templates and drag and drop building tools that you could set up on your own. But if you don’t have an eye for design (and the time to figure it out), you can recruit a college student to create it at a discount in exchange for a testimonial.

4. Use ads and influencer marketing wisely

“Wasting marketing dollars with ads or influencers or other similar strategies can make or break a business,” says Harris. A sponsored post on Instagram could range from $10 to $10,000 or more depending on the following, and it’s not guaranteed to result in business sales. To keep marketing costs down, Harris’s company focuses on trying to build a loyal community instead of one-time buyers, which can be done by building an email or text message list of raving fans.

If you do want to run ad campaigns to get more eyes on your business, a typical agency might charge small businesses $250 to $1,500 per month for pay-per-click (PPC) ad management on top of ad spend. Facebook ads managers could also charge $100-plus per hour.

However, you could take an online course on a site like Udemy to learn how to run your own PPC and social media ad campaigns until you’re ready to make an investment in professional help. Plus, ad campaign management could be a skill worth learning before hiring so you have an understanding of the role and how to measure results.

5. Shop around for business services and software

When your business is online, you don’t have to pay for a rental space, but you do have to pay for online real estate through domain and hosting fees.

The advantage of starting a business today is that there is no lack of options for these business services. Website hosting is usually pretty affordable, at under $20 per month. Shopping around and comparing hosting services can help you find one that meets your needs and budget.

An accounting and email marketing system to manage the books and send out campaigns are other services you’ll likely need to get up and running. Quickbooks and Xero are two accounting systems that could integrate right into a Shopify store for free. If you choose to go with a WordPress site, Xero can also connect to WooCommerce for just $79 per year.

Hiring an email marketing agency to run your email campaigns could cost $300 to $2,000 per month, but several low-cost email platforms also exist that you can manage on your own. Sendinblue’s first service tier for email marketing is free, Constant Contact offers plans to help you build an email list starting at $9.99 per month and HubSpot plans start at $45 per month.

Need help writing the email copy? Look for an affordable freelancer who charges per hour or per email. HubSpot also has a free email marketing course you could enroll in to brush up on email strategy and writing skills to manage campaigns on your own.

6. Scope out deals for equipment

For Majestic Intentions Sacred Instrument Shop, LLC, Harris invested in jewelry-making equipment, shipping and packaging equipment like label makers. “The best way to save on equipment is research, research, research,” he said. Find out what equipment your top competitors are using and consider alternatives if that equipment would exhaust your budget. Finding niche equipment secondhand could be another cost cutting option.

7. Optimize your packaging

You may have dreams of creating a custom package for your brand, but that cost could eat into your profit. According to Shopify, ordering custom printed boxes can cost $5 to $25 per box with an order minimum of 500+, which would total up to a whopping $2,500 to $12,500 alone.

“Instead of spending thousands on custom packaging, invest in basic packages but put handwritten or typed letters in each package thanking the customer for their support,” said Harris. You could also try adding an extra gift in the package. These small touches can mean more to the customer than custom packaging, while costing you way less.

What if you need more money?

Bootstrapping can get your business far, but there could come a point where you need a cash infusion to keep the show running. In this case, applying for business grants offered by the federal or state government could be an avenue worth exploring.

Applying for a low-interest personal loan could also help you fund business operations. But before you’re ready to expand, using the tips above could help you get proof of concept without a large sum, then you can decide how best to scale as revenue starts rolling in.

Published: May 4, 2022

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Lending Tree

LendingTree is an online loan marketplace for various financial borrowing needs including auto loans, small business loans, personal loans, credit cards, and more. We also offer comparison shopping services for autos and educational programs. Together, these services serve as an ally for consumers who are looking to comparison shop among multiple businesses and professionals who will compete for their business.

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