Cheap, on time, and total solution are not phrases companies will bandy about frequently when attempting to break into e-commerce, according to a survey released by GartnerGroup recently.
Blown-out budgets, delays and multiple suppliers better reflect correct industry experiences, according to the report Survey Results: The Real Cost of E-Commerce Sites.
The average cost of building a commercially competitive e-commerce site is $1 million for a five-month project using several Web developers, said the survey. However, prices ranged from $300,000 to $20 million, said Mike McGee, managing director of Sydney developer Oven Digital, claiming "there is no such thing as a generic site or price".
Martin Lindstrom, executive director of Web developer Zivo, said he could not build even a basic site for anything less than $100,000. "There are three different types of sites: interactive branding sites, which is just information; e-commerce sites, where transactions can occur; and e-operations, which is where we create a local customer network for you which is very personalised," he said.
Obviously, the more complex and customised a site the more expensive, with Lindstrom claiming that the top 100 sites in the US cost $10 million to build and a further $9.5 million to market.
McGee claims anyone can build a Web site for $100. "It is building an online business that costs the money," he asserted. "Online businesses need to establish security systems, ordering systems, payment systems and all the other challenges offline companies face. The real expense, and the only way a company can differentiate itself, is by the nature of the online experience. A lot of time and effort is taken up using the best technology to create an ergonomic environment."
Despite the initial staggering expense, Lindstrom is a true believer in the future of e-commerce. "The Internet is the tool of the future and $1 million isn't much to pay for that."
McGee defends the Web development industry with the simple fact that "the online business is still a largely entrepreneurial game, a journey into the unknown. Companies can measure their success against a business plan but need to be aware that they are investing in something and shouldn't be looking at making massive profits."
However, there are still several companies out there that developers are yet to convert. Said Lindstrom: "Some companies simply go online because their competitors do. They haven't decided that e-commerce is important yet and consider it a waste of money as opposed to an investment.
The second type of company thinks of the Internet as part of the company and treat money spent as an investment. They'll spend about $500,000-$600,000 on a site. The third group accepts that the Internet is changing their business so will spend millions of dollars on a site."