How much will the hardware cost to start up an online retail operation?

I’m starting up an online retail operation. What kind of hardware costs should I generally be looking at to set everything up?

Firstly, congratulations on your new venture, online retail is one of Australia’s most exciting markets, and with the value of the sector expected to double to $27 billion within four years.

For the budding digital entrepreneur, retail represents one of the most promising spaces. Success stories like Kogan.com and DealsDirect.com.au show the potential, and if you have the right product and the right marketing approach there’s no doubt that your business will thrive.

Upfront costs in general can be high, depending on the products you are planning to sell. Besides building the front-end of your business you’ll want to think about the back end.

As with any online retailer in Australia, one of the biggest challenges you’ll face will be getting the product to your customers. The hardware required can include everything from warehouse and, of course, the IT storage infrastructure, to the servers to hold your information.

However, smart retailers may look at an enlightened approach. Instead of shelling out your capital on sophisticated (or otherwise) IT equipment, why not host your business in the cloud.

There are a number of cloud-based service providers that can be used, for example, bigcommerce.com, volusion.com or corecommerce.com.

Instead of buying direct from the producer or a wholesaler and housing, picking and sending out orders yourself, you could also consider drop shipping, where your supplier delivers direct to your customer.

Most of your suppliers should be willing to deliver using your business branding, packaging and shipping label (if appropriate).

Drop shipping will help you avoid inventory costs, increase cashflow and reduce the duplication in picking and shipping items.

While some additional work will be required, including careful due diligence and relationship building with your suppliers – it will no doubt pay off in the long run.

The capital investment you save on hardware will no doubt be better spent developing your website and investing in marketing your brand.

Good luck!