Open Source Ecommerce is Free, but not so cheap!
Many startups has this basic notion that choosing an Open Source eCommerce Platform simply mean that it’s free to download and will be cheaper to use. Well guess what, you are absolutely wrong ! Choosing an Open Source eCommerce Platform like Magento, Prestashop or Opencart doesn’t mean it will be cheaper to use, though the first portion is true that mostly Open Source are Free to Download.
Previously we have seen a trend that High Street Retailers prefer to go with SaaS based Ecommerce platform like Shopify or Bigcommerce, simply because they do not have technical expertise to run an Open Source eCommerce Platform and Pure Online Retail Merchants prefer to go with Open Source Platform just because they want to have full control of their eCommerce Store and it’s a very competitive market for them to be profitable. Let’s dispel the myth that to be successful an Online Retailer has to do everything in-house! People look up at the like of Asos, Net-a-porter, Yoox etc… They started early 2000 and they did not have a choice, but do everything by themselves. Initially it created a competitive advantage, but with time that became a huge headache, very expensive to treat and with rising technical debt.
On the other hand there are also success stories of fast growing Online Retailers who have adopted SaaS, e.g. Boohoo. So there is a debate for a long time which eCommerce Platform to choose, it depends on many factors, but simply let’s first understand what do you require basically to launch an eCommerce.
Basic Ecommerce Requirement:
Hosting –
You need a Hosting Partner to install, configure and run your Ecommerce Store. If you are using own server, you can continue using Open Source Ecommerce Platform. But the server need to have capability to scale up resource utilization with time and also on high shopping seasons like ‘Christmas’. So often instead of having a costly server to purchase and maintain, we choose Hosting Partners like Amazon AWS who will take care of all server requirement and you can scale up or down server resources as per the traffic you are receiving or expecting. But Hosting is a good amount of investment in both approach.
While SaaS based platforms takes care of this part and has pricing plans in place which scale up all requirements in one go both hardware, software and usage. So until you have very complex business processes in eCommerce, having few hundred thousand products, getting 5000 or more orders in a day; it is always beneficial to use SaaS based eCommerce Platforms for an easy operation.
Bandwidth –
Bandwidth is generally associated with Load in the server. How many concurrent visitors can access your website at a time without any disruption. The more visitors increase, the more Bandwidth you need. Often this is difficult if you have your own server hosting your eCcommerce website. If you have traffic of 25-50,000 Concurrent Users in website, then third party hosting plans can also be very costly to continue operation.
SaaS based eCommerce mostly has restrictions of number of transactions per day and pricing plans are designed in this way. So really it doesn’t matter how much traffic is there in website, you will only be charged for the traffic which is getting converted to a transaction.
Online Payment –
With the choice of Open Source eCommerce, you need to also take care of integration of eCommerce with your Payment Gateway. Not all payment gateways are supported by Open Source eCommerce by default. Payment Gateway integration is an integral part where you might to coordinate with third party developers.
SaaS based eCommerce mostly has a long list of payment gateways already integrated within the platform. When you are starting your plan, you need to choose from that list. This is not very flexible in terms of choice, but easy to use as available under Out of the Box features.
Security –
PCI Compliance and PA-DSS Certification is needed in eCommerce while you are accepting online payment. It’s not easy to maintain this certification year after year, because it needs defined set of rules which you need to satisfy each year.
SaaS based eCommerce platform maintains PCI Compliance as a standard offering, so merchants need not to be involved in complex PCI Audit Process
Customization –
This is the part where Open Source eCommerce is at the upper hand. It can be fully customized in terms of designing and functionality as per business process. It might be transformed into a full-fledged B2B eCommerce Portal.
SaaS based eCommerce Portal has limitation in terms of customization. You can add few custom fields and custom functions, can use extensions provided by Platform Partners to extend features, but in no way it can be compared to Open Source flexibilities. SaaS based eCommerce Platforms are not good candidate if you wish to launch complex B2B eCommerce Portal. In terms of design, though now there are thousands of themes available to choose, but still it can’t match the design changes and theming you can do in Open Source.
So in conclusion SaaS based eCommerce will be very cost effective choice if:
- You are not a Pure eRetail Enterprise level business
- You don’t need exclusive UI in eCommerce different from all other competitor brands
- You don’t have complex functionalities in eCommerce (like a very different pricing and discount rules, etc.) and not doing B2B Business in full scale
A Comparison here might help you:
A midsize company having about 50,000 Products, 10,000 Customers and 1000 Orders receiving a day:
- Open Source eCommerce Project over Magento might cost 25-35,000 USD in first year, about 5000-8,000 USD from second year onwards (Including Hosting and Web Development Company Charges, excluding In house resources cost)
- SaaS based eCommerce Project in such scenario over Shopify can be met through Shopify Advanced at 300 USD Per Month/3600 USD Per Year (Excluding in house resources cost)
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