SaaS vs. Custom eCommerce Platforms: What’s Better for Startups?

SaaS vs Custom E-commerce Platforms

Want to do online business? Good, but are you confused with all of the e-Commerce Software that is available in the market today? From the hundreds of options which one will you choose? Even if you go through the documentation, will you be able to understand the pluses and the minuses? Or should you hire a consultant for the same?

Don’t worry; we will give you two choices currently ruling the market. This should simplify your burden.

SaaS (Software as a Service) which gets up and running quickly and is easy to learn & understand. There is no setup involved and for a small fee everything is taken care of. Once you start earning, a fixed percentage of your turnover is charged forever.

Custom e-Commerce solution is something wherein you hire an expert who documents your needs and then recruits developers to do the coding. You further purchase a domain name, get hosting and upload the code and get your website up and running. However, you need to retain these coders to maintain your website and modify as and when situations arise.

Comparing SAAS and custom e-Commerce options

Both SAAS and custom e-Commerce have their respective plusses and minuses. The following treatise will help you make an informed decision. Here we use Shopify platform as the SaaS option.

COSTING

For SaaS

For Custom e-Commerce
As a Startup if you are setting up your business and have no time understanding the nuances of setting up a website, SaaS is the platform to go for. As a Startup, if you prefer having an upper hand, have deep pockets and willing to walk the extra mile for long term benefits; this is the way to go. However, you need to arrange for the following:
  1.  You just purchase the domain and the service provider will set up everything and within no time, you can start earning.
  2. Shopify’s current offerings start from $9 to $299 per month plus up to 2.9% commission. Some discount admissible on yearly payments.
  1. Recruit a consultant who plans the roadmap, hires coders and using the open-source software like Magento, creates the software. Once done, the rest like hiring hosting, datacenter etc. is easy.
  2. The initial costs include Consultant’s fee and salaries of the coders for approximately 2-3 months.

TIME FACTOR

For SaaS

For Custom e-Commerce
At the most one day and you are ready to earn. Minimum 3 months to get the software up and running. However, custom additions and special facilities may need more time (say one month more).

SCALABILITY

For SaaS

For Custom e-Commerce
  1. Cater to majority users with generic structure.Minimal Scalability as you need to move within established structure.
  2. Business expansion not possible because limitations within software.
  3. Too late to move out of this conundrum.
  4.  Frustration and more frustration
  1.  Cater to all with personalized structure
  2.  Fully Scalable and that too with Ease
  3.  Business expansion without limits as software can be customized anytime
  4.  All investments made earlier paid full dividends
  5.  Free as a Bird and situation fully under control

REVENUE

For SaaS

For Custom e-Commerce
Loss Making Proposition because

  1.  Shared servers cannot handle heavy load. Too many visitors and site can either,a)  crash, orb)  become inoperative for a few minutes, which means Huge Revenue Loss
  2.  Poor Servers mean Poor Extended Searching Capability, and
    a)  No Special Festive Bundlesb)  No Special Discount Codesc)  No Custom Checkout Flowd)  No Custom Shipping Discounts
 All sales revenue is yours, and you are free to use as you want.

  1.   Robust Server & Datacenter handle heavy load easily. Too many visitors and site can either,
  2.   Extended Searching Capability, and endless customization for
    a)  Special Festive Bundlesb)  Special Discount Codesc)  Custom Checkout Flowd)  Custom Shipping Discountse)  Custom Look & Feel
Further Loss

  • As revenue climbs, the per-transaction charge is a bit too much (around 3.0%) in this era of cutthroat competition.
 Extra Benefits of Custom e-Commerce

  • Initial costing is high, BUT the running costs are fixed, and mostly under your control.
  • With no middleman, your margins keep increasing phenomenally.

SUMMARY OF SAAS VS CUSTOM E-COMMERCE

For SaaS

For Custom e-Commerce
Get convenience in the beginning and Pay through your nose later. Sow today (invest maximum) and Reap the Benefits for your lifetime.

 

The Best Solution

When entering e-Commerce operations, it is best to test waters and get a feel of what it is like. This is a new world and operating successfully needs investment in time to understand the whole process. There is always a learning curve and trial and error teaches you the gamut in a more civilized way.

 

The Path to Real Progress

  1. It is best to start with Shopify and learn the whole process first.
  2. When revenues start to flow, keep aside a hefty percentage away to start investing for a custom e-Commerce platform for the future.
  3. Hire a consultant and get the roadmap for future course of action.
  4. Get yourself trained on how you can manage the setup.
  5. Hire a few coders and, on-a-small-scale build your infrastructure and start testing.
  6. Network your computers and identify the user experience and find the glitches that hit normally.
  7. As your revenue grows substantially, ditch the Shopify platform and …

 

A word of Caution

Don’t view the gigantic e-Commerce sites as your role model. StartUps just cannot match the resources these big enterprises have and trying to imitate them can make you fall flat on your all fours. You will go down even before takeoff.

 

Conclusion

It is better to think about a long term solution. Opt for a system which is always under your control which you can scale and shrink as per your needs and save. Learning new technology always pays good dividends and helps you stay competitive.

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