The Returns of Investiments of an ecommerce platform

In order to calculate the ROI of your ecommerce site, there are 2 questions you should think about first.

 

  1. What is the overall cost of creation of your ecommerce site?

 

The first year, the profitability of your ecommerce site will have to include the design cost of your website. Which is why it is important to do the overall budget or the setting up of your website.

 

To do so, we recommend to take into account the following criteria:

 

  • The costs of the website
  • The costs of annual accommodation
  • The costs of annual maintenance
  • The costs of annual referencing
  • The costs of the eventual launch campaign

 

  1. What is the expected turnover for the first year?

 

To make such a forecast in the profitability of your ecommerce site, it is necessary to estimate the following parameters:

 

What is the number of potential visitors? Given your market and your communication/marketing investment, your web provider must be able to give you an estimation of the traffic!

 

What is the conversion rate from visits to orders? On average, you can expect a rate of 1.5% to 2%

What is the average basket per order? Your customer analysis, marketing and market experience should normally allow you to set an approximation of the average basket. In the opposite case, it is a question of carrying out a more thorough market study.

 

  • Number of visits x transformation rate = number of sales
  • Number of sales x average basket = turnover over the year

 

It is possible to calculate the profitability of your ecommerce site in year 1!

 

To calculate the profitability of your ecommerce site, here is a fictitious example to put the previous elements into concrete examples:

 

  • Overall cost of the ecommerce site: € 18,700
  • Visits on year 1: 23,000
  • Transformation rate: 2%
  • Amount of sales: 460
  • Average basket: 50 €
  • Turnover year 1: 23 000 €
  • Cost on Sales: 81.65%
  • ROI: 1.23

 

The calculation of the ROI is done as follows: Overall cost of the site / turnover over the year.

 

The return on investment here is 1.23. That is to say that 1 euro spent for the project report 1.23 € turnover!

 

A low ROI of course for the first year that must absorb the cost of the site. Let's calculate now the ROI for year 2.

 

Calculating the profitability of your e-commerce site in year 2

According to the same logic, we will charge to turnover the cost of maintaining and promoting the ecommerce site.

 

  • Total cost year 2: € 10,000 (hosting + maintenance + referencing and advertising)
  • Visits year 2: 70 000 (This will increase sharply with regard to your investments in communication and the quality of your offer)
  • Transformation rate: 2%
  • Number of sales: 1,400
  • Average basket: 50 €
  • Turnover: 70,000 €
  • Cost over sales: 12.84%
  • ROI: 7.78

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