E-Commerce Sites Cost $1 Million to Build

The average cost of developing and launching an enterprise e-commerce site is $1 million, according to a survey conducted by the GartnerGroup.

The report “Survey Results: The Real Cost of E-Commerce Sites” also found that the cost of building an e-commerce site will increase by 25 percent annually during the next two years, and that 79 percent of the total cost is labor related. Ten percent of the cost was spent on software and 11 percent on hardware, the survey found.

Survey participants told GartnerGroup that everything involved in the process of constructing an e-commerce site was more involved than they expected, including the amount of time and money and the hiring of outside firms. Some survey participants spent less than $350,000 on their Web sites, while others spent more than $2 million. Regardless of cost, no survey participant claimed to be “on budget” for their projects.

The average time to complete an e-commerce site was five months, the survey found, although some sites in the survey took up to one year to launch.

Survey participants also reported that they did not get “almost everything they needed” from their e-commerce application vendor. On average, most corporations used two or more external firms, in most cases including a nationally recognized media firm as well as local systems integrators in an effort to control costs.

The survey was taken among 20 midsize to large corporations that were launching a first-phase e-commerce Web site focused on selling goods or services through either business-to-business or business-to-consumer channels.

“Building an e-commerce site is a definite requirement for any midsize to large enterprise that intends to remain competitive during the next two to five years,” said GartnerGroup’s Roy Satterthwaite. “One of the challenges, however, is that today’s state-of-the-art e-commerce site will become outdated in just a few months if the back-end connections and interactive applications do not keep pace with the new technologies that are being developed.”

GartnerGroup’s report also identifies three cost categories that will emerge based on function: “Get on the Map” sites cost $300,000 to $1 million, and are adequate but functionally behind the industry; “Run with the Pack” sites cost $1-5 million and are equivalent to most industry participants; and “Market Differentiator” sites that raise the bar cost $5-20 million.

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