Eighty percent of Americans have made an online purchase in the last month. Just four percent have never ordered something on the internet before. These statistics prove that U.S. e-commerce is thriving, with more consumers choosing the mouse over the mall. E-commerce platforms — software used by online retailers in various niches — fall into two categories: self-hosted and hosted. Both come with pros and cons. But which one is better?
WHAT’S THE COST OF BUILDING AN ONLINE STORE?
Before comparing self-hosted and hosted e-commerce platforms, it’s important to understand how building an online store will fit in your budget. An essential factor to consider with both self-hosted and hosted e-commerce platforms is the total cost of building your online store and maintaining it after it has launched. The hosting portion represents one of the largest portions of this cost, but don't forget to consider additional elements like web design, support, apps and search engine optimization.
SELF-HOSTED E-COMMERCE PLATFORMS
Self-hosted (or non-hosted) platforms provide you with lots of control over your digital retail business, and you can personalize your store just the way you like. Product pages, banner ads, coupon codes — all of these features are available.
Unlike hosted e-commerce platforms, you can download and run this software yourself. This means you need at least a basic understanding of e-commerce applications, including security and fraud issues. This is a little harder than it sounds. Some small businesses struggle with self-hosted platforms and, as a result, are unable to fully optimize their digital store. Moreover, open-source software is more vulnerable to information hacks, which can result in tens of thousands dollars in recovery costs.
In most cases, self-hosted e-commerce platforms do not have central support systems that you can contact if you run into an issue. While user communities can be very responsive, it’s not their job to provide you with answers. Educating yourself on how to troubleshoot problems will be necessary if you go the self-hosted route. If troubleshooting doesn’t sound up your alley, hiring a qualified developer would be a good idea.
If you plan on hosting your e-commerce platform on your own server, having an IT team on staff to maintain the infrastructure will be necessary. The number of IT staffers will be dependent on the size and complexity of your operation.
While self-hosted e-commerce solutions might appear less expensive at first, costs can pile up once your store starts to take off. You will be in charge of meeting the virtual demands of your customers if you wish for your online store to be successful.
Magneto is the most popular self-hosted e-commerce application out there right now. It accounts for 29.1 percent of total e-commerce platform market share. Other popular self-hosted solutions include Spree Commerce and WooCommerce.
WHAT BUSINESS WOULD BENEFIT FROM A SELF-HOSTED PLATFORM?
Self-hosted platforms are best suited to large business with a dedicated IT team. Typically, you have to pay all the costs involved in setting up your online store, so you need a sizable budget to get started. Open-source software will also require more time to be set up before launching your store. So, as long as you’re not in a particular hurry and have a dedicated team to handle the maintenance, self-hosted e-commerce could work for your business.
HOSTED E-COMMERCE PLATFORMS
Hosted platforms run on someone else's server, which reduces the amount of control you have over your online store. These solutions, however, are perfect if you just don't have the time to manage your online store. Hosted providers install updates and security patches, reduce downtime and implement the latest features that consumers love. As a result, you can focus on other areas of your business.
E-commerce is booming. Still, some companies face a number of issues when incorporating this technology into their business. Forty-seven percent of B2B executives, for example, say integrating e-commerce with traditional sales models is a challenge, while 62 percent have trouble finding the right e-commerce technology. Hosted platforms solve some of these problems. A third-party provider will manage your site and make sure everything runs smoothly. There's no need to worry about code or customization — a hosted provider will take care of everything for you. There are also technical support and customer service — things you don't always get with self-hosted solutions.
Hosted e-commerce platforms normally provide the client with one flat rate, as opposed to the unexpected costs one can encounter with a self-hosted platform. This is great news especially for small to medium-sized businesses that can’t fit fluctuating expenses into the budget. Moreover, using hosted software often means security is guaranteed by the professionals who maintain the server. If you have a self-hosted e-commerce platform, you’re responsible for all safety precautions and protocols.
WHAT BUSINESS WOULD BENEFIT FROM A HOSTED PLATFORM?
Hosted platforms are great for small or medium-sized businesses who want to sell products online without any stress. Usually, you pay a monthly fee to a third-party provider, so you don't need lots of capital to launch your online store. This lets you generate a profit from online sales right from the very beginning. Additionally, you won’t need any experience with specialized development language like HTML to do any updates on the back-end.
The security of your store will be guaranteed - or, at least managed - by the experts whose jobs it is to keep your information safe. When dealing with self-hosted software, it’s necessary to have the internal capacity that it takes to keep customer information secure. If your business does not have in-house developers or IT technicians, it can be a shot in the dark to use a self-hosted platform.
Self-hosted and hosted e-commerce platforms both provide you with advantages and disadvantages if you want to sell products and services online. While self-hosted applications give you control over your retail store, hosted software is simpler to manage and comes with lots of flexibility. If you want to take the stress out of building your own digital storefront, using a hosted e-commerce platform will give you with the ultimate return on your investment.