Ecommerce businesses Funding for 5 Most Common Expenses and how to fund them

Marketing and advertising are two ways to reach potential customers. However, marketing is generally cheaper than advertising. But you may find that some things work better at certain times than others. So, you might want to test different types of marketing before investing heavily in them.

Marketing online can be a long and slow process - and in many cases, expensive!

Offline and online marketing is very important for companies looking to increase their brand awareness!

Offline Marketing

Print Advertising

Print advertising is still one of the most popular forms of advertising today. It's effective because it allows customers to see what they're buying before they make a purchase. Print ads can be placed in newspapers or magazines, on billboards along busy streets - just about anywhere where people will see them!

Print Advertising Commons Costs

• Brochure/Magazine Listings: Free - £200,000+ depending on publication and ad size
• Vogue: Full page £160,000 [source: Vogue]
• The Guardian: Full Page £32,000 [source: The Guardian]

Direct Mail Advertising

Direct mail advertising involves sending out brochures or other promotional materials directly through the mail. This type of advertising works well because people usually don't throw away mail without reading it first - so if they receive something interesting from your company then chances are good that they'll read it!

Direct Mail Advertising Common Costs

There are a wide range of companies you can used to distribute direct mail and choosing the best one depends on your needs and location.

For large national campaigns you need to make sure the company you select can meet your requirements.

Costs depend on the volume of letters/flyers, weight, and size.

Typical pricing

	1st Class per letter	2nd Class per letter
Letter up to 100g	From 60.2p	From 37.5p
Large Letter up to 750g	From 99.7.2p	From 69.3p

[source: Royal Mail]

TV advertising

TV advertising can be a great marketing method for many businesses. Targeting of TV ads to certain demographics has become easier given the rise of VOD (video on demand) and AdSmart from Sky.

TV advertising Common Costs

• TV Ad Average Prices: £3 - £100,000+, depending on time and channel, region(s) and audience profile
• TV Ad Production Average Prices: £5,000 - £250,000 depending on type of Ad

In 2021 1,243 new advertisers appeared on TV.

500 spent less than £5,000.

Over 700 spent less than £10,000

Nearly 900 spent less than £50,000

[source: Thinkbox]

WOW - In 2007, the Guinness advert entitled Tipping Point cost £10 million.

The most expensive advertising time slot is during The X Factor finals when 30 seconds costs around £200,000.

In 2004, Baz Luhrmann produced an advert for Chanel No. 5. featuring Nicole Kidman. It was two minutes long and cost an estimated £18 million.

Online Marketing

There are many different types of online marketing that you can use to promote your brand and drive traffic to your website.

Search engine optimization (SEO) and pay-per-click (PPC) are all very important components of digital marketing strategy that can help increase brand awareness to increase sales conversions over time.

You can use various channels such as social media platforms and search engine ads to increase reach and brand awareness.

Social Media

One of the most common forms of marketing is through social media. Social media is free, easy-to-use, and can help you gain a lot of exposure. Most companies will include some form of paid advertising in their social marketing campaigns.

• 5m active social media users in the UK
• UK marketers spend approx. 15.97 percent of their marketing budgets on social media
• 57bn UK Digital Ad Spend
• £39.4bn UK Media Ad Revenue
• 51% of Ads viewed on mobile devices

Using a good mix of different types of advertising on social media maximizing your impact and reach.

Use a variety of video, infographics, images and resources packs such as e-books. It is worth using different types of adverts depending on the platform you are using. For example, Tik-Tok - video, LinkedIn - Infographics.

Ads and Sponsored Posts

Ad space/sponsored posts: Free - £40,000 a month depending on publication and ad size

SEO Packages Average Prices: £100 - £10,000+ a month depending on what you are focusing on.

• Facebook Ads
• Twitter Ads
• LinkedIn Ads
• Tik Tok Ads

Search Engine Marketing - Paid Search

Search Engine Marketing is the practice of paying for ad space in search engine results.

Also known as PPC (pay-per-click), PPC campaigns are the quickest way to secure high ranking positions in search results but will incur additional costs.

Clicks can cost £0.10 to £200 per click depending on market and product/service.

[source: Google Ads research]

• Google Ads
• Bing Ads

Most companies will opt to secure external finance to give their marketing budget a boost.

Unsecured business loans can be a great option if you want extra cash to pump into your marketing campaigns that they need as soon as they need it.

Stock management is one of the most important aspects of running an eCommerce business. You need to make sure that you have enough inventory to meet demand. If you don’t have enough inventory, then you risk losing money. In addition, if you run out of stock, you could lose customers.

This includes things like raw materials, packaging supplies, shipping supplies, and any other items needed to run your business.

Just look at the global supply chain issues that occurred is 2021 and 2022, many industries faced supply issue and inflated prices due to supply and demand.

Having enough stock and space to store it is a fine balancing act. You need to make sure you are not under or over stock to ensure smooth operation of your business.

Companies can opt for finance to boost stock levels if they are running low on cash flow.

Cash flow finance is a good way to boost spending power to increase the amount of stock held.

One of the main overhead costs is rent or rent and rates, which can be a huge expense for an ecommerce business.

Utilities

Utilities are another common overhead cost that you will have to pay as an ecommerce business owner. The cost of utilities includes things like water, electricity and gas costs throughout your business premises.

Business Premises

Rental fees will vary based on, size, location, usage and contract type. Some business will opt to build their own premise and others will rent.

Whichever option you go for, you must consider the cost and suitability for what you need.

Why Rent?	Why Build?
- Flexible terms - Flexible payment options - Save money upfront - Get started quickly - Less capital investment	- No landlord - No monthly rental cost - Design for your needs - No contracts - Potential rental income

Business Premises - Rent

	Low cost	Average cost	High cost
Industrial units/warehouses for rent in England per square foot	£0.58	£9.44	£72.00
Industrial units/warehouses for rent in Scotland per square foot	£1.00	£6.69	£16.91
Industrial units/warehouses for rent in England per square foot	£1.90	£6.37	£19.59

[source: Rella]

Business Premises - Build

	Low cost	Average cost	High cost
Cost to build a warehouse per square metre - basic	£690	£901	£796
Cost to build a warehouse per square metre - large distribution centre	£760	£1,076	£918

[source: Checkatrade]

There are a range of funding options available for businesses looking to build commercial premises.

Commercial mortgages and development finance can be used to fund new builds or to renovate existing buildings.

Funding for rental fees would usually be in the form of an unsecured loan for cash flow purposes.

Most e-commerce businesses will need a range of hardware and software to be able to operate efficiently.

With the rise in cloud-based software solutions there is less reliance on in-house hardware such as servers and expensive software. This can help keep start-up costs lower.

Although cloud-based solutions can be more expensive in the long run the start up costs are usually lower and set up time quicker than buying and setting up in-house solutions.

Whatever the size of your business, there are a range of common type of equipment and technology solutions you will need to get started and scale up your business.

• Computer(s)
• Server(s) - webhosting and emails
• Platform Fees
• Printers
• Scanners
• Camera(s)
• Subscriptions/SaaS

In addition to hardware and software purchases, there are also ongoing costs associated with maintaining your kit. As the rate of technology developments is quite high, you will find that most companies will upgrade or replace their kit every 2 years or so.

One of the main reasons for this is that new software can be more resource heavy and older hardware can struggle to operate effectively when running it.

Asset Finance can be a useful tool for companies when purchasing equipment and technology. With a range of types available such as HP, Finance Lease & Operating Lease, asset finance is a versatile solution when purchasing new and even second-hand assets.

There are a range of funding options available for businesses looking to build commercial premises.

Commercial mortgages and development finance can be used to fund new builds or to renovate existing buildings.

Funding for rental fees would usually be in the form of an unsecured loan for cash flow purposes.

When accepting online payments, you are going to need a payment processor. There are a wide range of options available, with some easier to implement than others.

Some e-commerce platforms, such as Shopify have their own payment gateways integrated with your online shop. For other platforms such as Squarespace, you will need to select a payment processor and connect it to your site.

Whichever payment processor you choose, what they all have in common is you need to pay a certain amount per transaction.

Most Popular Payment Gateways

Provider	% of Sale Value	Fixed Fee
Shopify	2%	25p
PayPal	1.2%	30p
Stripe	1.4%	20p
WorldPay Online	2.75%	20p

Although there are not any business loan products designed specifically for payment processing fees, that doesn’t mean you can’t apply for a general business loan. There are a number of small business loans for e-commerce businesses available.