The total cost of establishing a Web site for conducting ecommerce is nine times the initial investment in off-the-shelf software, according to recent research.
Market watcher Datamonitor claims in its "Ecommerce" report that the ongoing costs of site maintenance, hosting and Internet connection far outweigh the initial cost of packaged software, which represents only 11 per cent of the total cost of establishing a business online.
Even with the majority of hardware infrastructure in place, a company considering setting up and running an ecommerce site will have to budget for the ongoing costs that make up the other 89 per cent of total expenditure. These figures only apply to sites using packaged ecommerce applications.
A spokesperson for Tesco's inhouse developed ecommerce site, Tesco Direct, said these statistics did not reflect their experience, and that there were many cost variables involved in developing your own site and software.
?It certainly hasn?t been that way for us. It all depends on what the site does and whether the company develops the software or hosts the site themselves,? he pointed out.
The report notes that despite software making up a relatively small proportion of the total costs, it is nevertheless the critical component in the success or failure of the ecommerce venture.
"The integration of the customer's databases, the transaction processor and the host into a seamless whole, that the customer identifies as a single unit, can only be accomplished through quality software," states the report.
Datamonitor estimates the current market size for ecommerce software at $50 million, but this only accounts for the purchase of packaged software by small and medium enterprises (SMEs), ISPs and other hosts. Datamonitor predicts that this market will increase at an average rate of 41 per cent to reach $285 million by 2002.
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