Shipping Price Index

One of the most critical factors for E-commerce businesses is the cost of shipping. It not only affects profit margins but a company’s ability to stay competitive. This map reveals how the average cost of sending a package differs in 40 G20 and EU countries around the world.

The heat map below illustrates the average cost of sending a 2kg package using local express shipping.

The scale reveals how expensive or inexpensive it is to ship a package, with red indicating very expensive, amber indicating an average cost and green indicating inexpensive comparable costs. These numbers are then expressed as a deviation percentage, as can be seen in the data table.

Land
Abweichung vom Durchschnitt (in %)*
Romania -71,96%
Indonesia -70,25%
Bulgaria -70,18%
Turkey -65,91%
China -63,38%
Austria -63,17%
Latvia -56,94%
South Korea -55,49%
Cyprus -54,84%
Ungarn -53,97%
Czech Republic -52,08%
Belgium -51,77%
Croatia -46,94%
Slovakia -46,07%
Japan -42,31%
Russia -32,71%
Switzerland -31,13%
South Africa -31,06%
Lithuania -23,18%
Portugal -21,51%
Mexico -21,33%
Estonia -18,79%
Spain -17,21%
Polen -16,48%
Slovenia -10,11%
Malta 0,85%
Sweden 3,53%
Greece 5,06%
Canada 7,23%
Italy 13,13%
Denmark 29,33%
Finland 39,44%
Ireland 56,98%
United Kingdom 67,41%
Saudi Arabia 74,18%
Germany 83,29%
Australia 102,89%
France 103,72%
Netherlands 114,42%
USA 385,78%

* % Difference Of Local Costs Compared To World Average.

BEST CITIES FOR LAUNCHING AN ONLINE BUSINESS

How much savings you need to start a web-based venture around the world
  • Calculating how many months you need to save if you want to quit your job
  • Detailing if unemployment benefits are sufficient to start a business if you get laid off
  • Revealing the locations with the best online business infrastructure

At Sellics, our mission is to help entrepreneurs optimize their success on the Amazon Marketplace. As we work with sellers from all over the globe, we thought it would be interesting to find out which cities around the world are the best for launching an online business. With the evolution of modern e-commerce solutions such as dropshipping, companies no longer require inventory to get their business off the ground, and millions are now taking the opportunity to make a living online.

Whether an individual is looking to quit their job and want to know how many months they should save for, or if they’ve just been laid off and want to know if it’s possible to start a new venture solely on unemployment benefits, this study highlights that the feasibility of launching a web business depends mostly on the affordability of the location.

The study begins by pinpointing cities* with a strong existing online business presence, as well as countries that are becoming increasingly popular with web entrepreneurs. We then split the research into two sections; the first section looks at the online venture infrastructure, and the second section looks at the cost of both living and launching a new business. The first section awards each city a score for five business factors, including access to financing and the popularity of online shopping, to determine an overall average score for the ‘Best City to Start an Online Business.’

The second section looks at practical elements including the cost of living, venture setup fees, and potential unemployment benefits. We then combined these two data sets to calculate how many months an individual would need to save in order to launch an online business, both with and without claiming unemployment benefits.

“It’s never been easier to start an online business, with new technologies giving us simple marketplace tools, and third-party seller opportunities enabling almost anyone to set up shop.” – Franz Jordan, CEO of Sellics.

“However, most digital businesses concentrate around big cities, whereas this study shows that smaller cities where the cost of living is cheaper offer entrepreneurs a much more affordable entry into online business. For example, someone in New York would have to save for over a year to amass the nearly $64,000 needed to launch an online venture, compared to 5 months in Detroit to save just over $31,000 – half the capital and almost half the time.”

Below you can find two results tables. The first table showcases the results for the American cities included in the study, and the second reveals the international overview.

Access to financing

Internet Speed

Total venture setup costs

Cost of venture & living expenses

Online business setup fee

Rent

Healthcare

Unemployment benefits (as % of average wage)

Ease of import/export

Time to register a new venture

Average monthly living costs

Required savings if receiving unemployment benefits

Computer

Cost of Living

Average monthly wage

Online purchasing popularity

Cost of venture & living expenses (% of annual wages)

12 Month unemployment benefits

Registration

Capital

Internet Cost

Unemployment benefits granted (# of months)

Best International Cities to Start an Online Business (USD)

The following table is sorted by the fifth column named “Monthly salary to save for the start of the online business WITHOUT unemployment benefits” which accounts for the number of monthly salaries a person needs to save in each city without unemployment benefits.

Best International Cities to Start an Online Business (EURO)

The following table is sorted by the fifth column named “Monthly salary to save for the start of the online business WITHOUT unemployment benefits” which accounts for the number of monthly salaries a person needs to save in each city without unemployment benefits.

Best International Cities to Start an Online Business (EURO)

Brian Johnson

Brian Johnson

Amazon PPC Expert

“Cities often vie for large companies by improving their infrastructure and taxation to companies. Detroit has been quite depressed for several years, so it likely has received the most “turn around” investments by the city and state to bring back technical employers to the area.

Such improvements as better access to Google Fiber and fast internet access, along with low cost of living and office space availability may be attractive to startup companies and entrepreneurs that prefer to stay closer to their area families and wish to build a company with low overhead.”

Methodology

This study determines the best cities for launching an online business, based on 22 factors relating to the online venture infrastructure, and the cost of both living and launching a business. *To choose the cities for the study, OECD nations were analyzed according to their available business infrastructure statistics in order to determine a final list of 130 cities.

Scoring

Scores are normalized such that 0=the lowest value in the final dataset and 10=the highest value in the final dataset. For columns where a low value is better, the score is inverted such that a high score is always better.

The score is inverted for the following columns:
“Time To Register New Venture”
“Cost of Venture & Living Expenses, % of Annual Wages”

Therefore, the higher the score, the better the city ranks for that factor in comparison to the other cities in the index. For example, a score of ‘9’ for “Time To Register New Venture” indicates that the city has a low number of days to register a new venture.

The equation for normalization is as follows:

score = 10 *x – min(X)max(X) – min(X); or scoreinverted = 10 -10 *x – min(X)max(X) – min(X)for inverted scores

Metropolitan Areas - Definition and Selection

The analysis was performed on metropolitan areas as defined by Eurostat/OECD. The shape and size of the metropolitan areas are determined through a data-driven process that identifies high-density urban centres and extends them to incorporate the commutable area surrounding the centre. The aim of the exercise is to create so-called “Functional Urban Areas” that represent the entire labour and commercial market of a city. In the United States, metropolitan areas are constructed through a similar process that also attempts to capture the extent of media markets.

The full methodology for the construction of “Functional Urban Areas” can be found here:
http://www.oecd.org/regional/regional-policy/Definition-of-Functional-Urban-Areas-for-the-OECD-metropolitan-database.pdf

The shapefiles for the “Functional Urban Areas” can be found here:
http://www.oecd.org/cfe/regional-policy/functionalurbanareasbycountry.htm

Savings Required to Start an Online Business

Months Required to Save Before Quitting Your Job – WITHOUT Unemployment Benefits
The number of monthly wages required in savings in order to finance the first year of setting up your online venture, assuming you are unable to claim unemployment benefits.

Sources: Column “Combined costs: Cost of Venture & Living Expenses”, divided by column “Reference Income & Benefits: Average Wage, Per Month”


Months Required to Save Before Quitting Your Job – WITH Unemployment Benefits
The number of monthly wages required in savings in order to finance the first year of setting up your online venture, assuming you are able to claim unemployment benefits.

Sources: Column “Combined costs: Required Savings if Receiving Unemployment Benefits”, divided by column “Reference Income & Benefits: Average Wage, Per Month”

Online Venture Infrastructure (Scores)

Best City To Start an Online Business
A weighted average of online venture infrastructure scores and the normalized score for “Cost of Venture & Living Expenses, % of Annual Wages”. The weighting emphasizes the cost of venture and living expenses and online purchasing popularity.

Details: The weights are as follows:
Access to Financing: 5%
Ease of Export/Import: 10%
Online Purchasing Popularity: 25%
Internet Speed: 5%
Time To Register New Venture: 5%
Cost of Venture & Living Expenses, % of Annual Wages: 50%


Access to Financing
A score of the infrastructure for applying for business loans. A higher score indicates better infrastructure.

Sources:
World Economic Forum “Doing Business” Database;
http://www.doingbusiness.org
Indicator “Getting Credit” – Using the DB 2018 DTF score.


Ease of Export/Import
A score of the infrastructure for dealing with customs and other import/export agencies. A higher score indicates better infrastructure.
Sources:
World Economic Forum “Doing Business” Database;
http://www.doingbusiness.org
Indicator “Trading Across Borders” – Using the DB 2018 DTF score.


Online Purchasing Popularity
A score of the percentage of the population that has made an online purchase in the last 12 months. A higher score indicates a higher share of the population having made a purchase.
Sources:
OECD “ICT Access and Usage by Households and Individuals” database;
https://stats.oecd.org/Index.aspx?Datasetcode=ICT_HH2

Breakdowns: “All (individuals aged 16-74); Indicator: “G1 : Individuals who have purchased online – last 12 m (%)”; Using the most recent available value.


Internet Speed
A score of the average internet speeds available in the country. A higher score indicates faster internet speeds.
Sources:
http://www.speedtest.net/global-index (July 2018)

Breakdowns: “All (individuals aged 16-74); Indicator: “G1 : Individuals who have purchased online – last 12 m (%)”; Using the most recent available value.


Time To Register New Venture
A score of the time to register a new business venture. The score is inverted–a higher score indicates fewer days required to start a new business venture.
Sources:
World Economic Forum “Doing Business” Database; http://www.doingbusiness.org
Indicator “Starting a business”/”Time – Men (days)”; in the countries covered in this study, no countries had different values for women.

Costs & Benefits

Cost of Venture & Living Expenses, % of Annual Wages
The sum of one-off costs associated with setting up the venture, plus 12 months of monthly living costs – expressed as a percentage of average monthly wage.

Details
The sum of the following columns:
Total Venture Setup Costs
Average Monthly Living Costs multiplied by 12


Total Venture Setup Costs
The sum of one-off costs associated with setting up the venture

Details
The sum of the following columns:
One-Off Cost: Registration
One-Off Cost: Online Business Setup Fee
One-Off Cost: Computer
One-Off Cost: Capital


Average Monthly Living Costs
The sum of monthly living costs.

Details
The sum of the following columns:
Monthly Cost: Rent
Monthly Cost: Cost of Living
Monthly Cost: Internet Cost
Monthly Cost: Healthcare


12 Month Unemployment Benefits
The total amount of unemployment benefits provided in the first 12 months, assuming average wage.

Details
The product of the following columns:
Reference Income & Benefits: Unemployment Benefits Granted, Months
Reference Income & Benefits: Unemployment Benefits as % of Average Wage
Reference Income & Benefits: Average Wage, Per Month

Reference One-Off Costs

One-Off Cost: Registration
The cost of registering a new business venture.

Sources
World Economic Forum “Doing Business” Database;

Indicator “Starting a business”; we added up all costs as enumerated under section “Details – Starting a Business in [Country] – Procedure, Time and Cost”

Details
We assumed all filings used the lowest cost possible, e.g. digital filings when available, avoiding express registration fees etc. When costs depended on the amount of starting capital, we assumed a starting capital of USD 5,000.


One-Off Cost: Online Business Setup Fee
The cost of registering a non-premium .com domain name and the annual fee for a web hosting service.

Sources
Average of Namecheap, Hostgator, GoDaddy and Bluehost

Details
We assumed the same costs for all new ventures:
Domain registration with WHOIS Protection : $21.06
Webhosting service (shared hosting, SSL Certificate not included unless free of charge): $61.03


One-Off Cost: Computer
The cost of an Apple MacBook Pro.

Sources
www.apple.com
Details
The prices reflect the following model: 13-inch Macbook Pro – Space Gray : 2.3GHz dual-core 7th-generation Intel Core i5 processor / 8GB 2133MHz LPDDR3 memory / 128GB SSD storage / Two Thunderbolt 3 ports


One-Off Cost: Capital
The required minimum amount of capital required to start a new business.

Details
World Economic Forum “Doing Business” Database;
Indicator: “Paid-in minimum capital requirement”

Reference Monthly Costs

Monthly Cost: Rent
Average monthly rent for a one-bedroom apartment in the city centre.

Sources
Numbeo; www.numbeo.com
Indicator “Apartment (1 bedroom) in City Centre”


Monthly Cost: Cost of Living
Average monthly living costs for one person.

Sources
Numbeo; www.numbeo.com
Indicator “A single person monthly costs, without rent”


Monthly Cost: Internet Cost
Average monthly cost of a 60+ Mbps broadband connection.

Sources
Numbeo; www.numbeo.com
Indicator “Internet (60 Mbps or More, Unlimited Data, Cable/ADSL)”


Monthly Cost: Healthcare
Average monthly cost of healthcare, per capita.

Sources
For the US, the average cost of healthcare was estimated using two sources:
Insurance premiums: average cost of a gold-tier insurance premium, as determined by Avalere;
Healthcare out-of-pocket costs, as determined by JPMorgan Chase Institute;
For other countries, the average cost of healthcare was provided by the OECD “Health expenditure and financing” database;
Financing scheme: “Voluntary schemes/household out-of-pocket payments”; Function: “Current expenditure on health (all functions)”; Provider: “All providers”; Measure: “per capita, current prices”, converted to USD.

Reference Income & Benefits

Reference Income & Benefits: Average Wage, Per Month
Average monthly wages.

Sources
For the US, average annual wages by metropolitan area were collected from the “May 2017 Occupational Employment and Wage Estimates” database
For other countries, average annual wages by country were collected from the OECD “Average annual wages” database
Series: “Current prices in NCU”, converted to USD


Reference Income & Benefits: Unemployment Benefits Granted, Months
The number of months of unemployment benefits granted during the first year of the venture–that is, in countries where unemployment benefits cover more than 12 months, the value is capped at 12.

Sources
The unemployment benefits system of each country was evaluated one-by-one, using OECD “Benefits and Wages: Country policy descriptions” database.
Additional Sources: Official government websites, Wikipedia and the EC Website


Reference Income & Benefits: Unemployment Benefits as % of Average Wage
The average unemployment benefit as % of the average wage.

Sources
OECD “Benefits, Taxes and Wages” database
Indicator: Initial (Previous Earnings 100%)
Family: Single Person
Supplements: No Supplements included

Reference Aggregate Calculations

Combined Costs: Cost of Venture & Living Expenses
All one-off costs and 12 months of monthly costs, including rent, cost of living, internet, and healthcare.


Combined Costs: Required Savings if Receiving Unemployment Benefits
“Cost of Venture & Living Expenses”, minus unemployment benefits. If unemployment benefits exceed venture costs & living expenses, the required savings are capped at $0.

Please direct any general press inquiries to: angela.yuan [at] sellics.com Tel: +49 (0)30 555 70 10 – 0