Buying or Renting E-Commerce Software?
The difference between Open Source and SAAS
Before your online store can be launched online you have to make many chocies. One of those choices is: will I buy e-commerce software or rent it? Let me first explain the difference between buying, renting, Saas and Open Source.
When you rent the online store, you use a SaaS platform.
When you buy the software, you (almost always) use Open Source software.
What is Open Source and what is Saas?
With Open Source all the code is public. You can make unlimited modifications in the source code.
With Software as a Service (Saas) the code is not public and administered by one party. You therefore can not make modifications in the source code.
Open Source E-Commerce Software
The advantages of Open Source E-Commerce software
Because the code is public there are often hundreds of extensions, plug-ins and add-ons available. This often gives you the possibility to link also that not very well known payment provider, logistical partners, comparison websites and the like.
There are hundreds to thousands of templates available which you may use. Sometimes you need to pay one time to purchase it, but that’s it. All templates are also free to modify to suit your needs.
In case you need a link that is not yet available you may develop it yourself. The code is freely accessible and thus allows you, if you have the required technical knowledge, to develop and/or modify whatever you want.
You are completely free to build the coolest and most profit generating online store you can think of!
The disadvantages of Open Source webshop software
You need to make a lot of adaptions for your local market, especially if not in the US
Good e-commerce software that is open source is internationally oriented. This is a great advantage if you have plans to develop your business internationally. If you just want to stay in a local market, you probably need to make a lot of adaptions for it.
Updates are a headache
Updates often provide their own problems. Open source packages generally release a big update once per year. The problem is that many of the modifciations you made – your design, plug-ins – are often not compatible with the newest version. Updating your online store sometimes takes weeks of work for this reason.
One example from our own experience. We tried to update Magento in Fall 2013 from version 1.4 to 1.8. It didn’t work out: we adapted the code already too much. This necessitated us to rebuild the online store on the 1.8 installation, including adding all products again. This took us one and half month of work. 😉
The costs of Open Source
Downloadable for free, but excluding hosting costs
Because the code is public you can dowload it for free. This is obviously überchill because you have already enough costs with your online store!
Unfortunately there are some costs added. You will need to host your online store somewhere. The hosting costs vary between 15 USD/10 GBP and 70 USD/40 GBP per month.
Design and modifications cost money
Obviously you will need a design for your online store. You will need to buy it. A good design costs about 200 USD/120 GBP.
When you can’t make all the modifications yourself (and, depending on your wishes and your local market, there are probably quite a few) you have to calculate about 5000 USD/3000 GBP to 7000 USD/4000 GBP to hire a developer.
There are cheaper contractors but from my own experience I know that you then often don’t get the high-quality you seek.
Updates cost (a lot) of money
Take the updates into account. When we were updating Magento I wanted to hire a contractor to do everything. They were asking 15.300 EUR (21000USD; 12500 GBP)!
Fortunately I can do quite a bit myself and the rest of the update cost me 2500 EUR in the end (and 1.5 months of valuable time).
SaaS E-Commerce Software
The advantages of SaaS e-commerce software
Low starting fees
The advantage that becomes apparent right-away is the small investment, both in terms of time and money, to get your online store online. Because all important plug-ins are already made you can often start with sales within a week.
Local markets, local SaaS partners
In the European country we know best, the Netherlands, there are many national SaaS suppliers that have a lot of standard integrated solutions with important probable partners in the area of payment systems, shipping agents, and the like. This makes integration as easy as checking a box.
Europeans shop in another way than Americans, and Italians look in another way than, say, Japanese. A local SaaS partner already adapted its e-commerce software for your market.
Updates are amazing when you use SaaS. You don’t have to do anything yourself! 😉
When you wake up in the morning you may suddenly have new features available.
You shouldn’t underestimate the advantage of automatic updates. Of course it IS important you choose a SaaS provider who is always working to provide their software.
The disadvantages of SaaS e-commerce software
You will never own it
The reason why many people don’t choose SaaS from the start is because the software will never become yours. I don’t find this a good reason…
The e-commerce industry develops so fast that in 5 years most of the e-commerce software will not be of any value at all. When you invest a few thousand EUR now, take into account that this is an investment you profit from for 3-4 years only.
What will keep its value is your (domain) name and your customer data. Both can always be transferred if you choose another provider.
Limitations of the system
Limitations of the system may be a disadvantage. Not all SaaS providers have the same features. Moreover with some of the providers the features are more well-developed than with another.
Choose therefore for a SaaS platform that has already proven itself but is also still fully developing!
The costs of SaaS
The costs vary from 10 USD/GBP to 150USD/100 GBP per month. Each provider often has various packages available for you.
Do not choose the cheapest provider
I would like to warn you not to directly choose the cheapest e-commerce solution. Good SaaS software will set you back for about 55 USD/35 GBP per month. This will provide you some features you will not use at the start (for example an API or multiple languages) but nothing is worse than having to transfer to another provider after a year because you found out that your current one has too many limitations for your e-commerce business.
SaaS is often the best choice for the starter
I became a fan in 2013 of SaaS e-commerce software. Before that I often advised people to start their online store with the open source package from Magento.
Advice when you choose for SaaS
For starting e-commerce entrepreneurs in the Netherlands I recommend SEOshop. It is perfectly suitable for both the Dutch and European/international market.
The biggest international player, which originated in Canada and has a big US focus, is Shopify.
It is very important to find out, apart from what features are offered, if the requirements of your local market (payment providers, links with shipping companies, language, etc.) can be met by the e-commerce provider. You can read in our pages on Shopify and SEOshop what their differences are, and why we would sometimes choose SEOshop over the (much) larger Shopify, especially because of those local requirements. Apart from that, SEOshop is very good with Search Engine Optimization.
When we were updating our Magento online store to 1.8 I wanted to transfer to SEOshop. I looked together with SEOshop and a local e-commerce partner at this case. In the end I didn’t transfer because my whole company is based on Magento. A transfer would mean that I needed to set up the administration again, and the administration was recently completely checked and finetuned.
When you choose for open source, choose Magento
Magento is currently the most advanced open source e-commerce platform. The active community continually develops a growing choice of plug-ins, links and improvements.