Self-hosted Vs. Proprietary Ecommerce by Market Action Research
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Many business owners have a lot to consider when building a custom ecommerce site. Which all stems from the decision to build your own self-hosted ecommerce site or using a pre-built propriety ecommerce site. One common mistake people are easily pulled towards the “easy way”, and will go for what seems like the path of least resistance, but later to find out that the only easy way is in, but then in a short amount of time come to find out they are stuck and can’t get out without more complications.
In this article we will share with you some of the key things you will want to consider when building your online ecommerce store.
The ability for your business to scale, is an important measure of how well your business will be able to handle growth. If your business framework does not scale well to fit your future needs, then the framework can get in the way of your business success and limit your online growth. In some cases, even turn away customers to your competitors. This is why it is so important to choose the right framework.
Using a proprietary ecommerce platform such as Wix, Shopify, Etsy etc. are known for their ability to quickly launch a small and start-up business without very much time. These sites all pre-built with ready-made themes, where all you have to do is practically upload your logo and some basic information. These are great for businesses that want to experiment with selling online, but also have some limitations if you have aspirations to grow your business.
While these platforms are great for start-ups and small businesses that are looking to experiment with online sales, there are generally some disadvantages any business would want to consider compared to using an open-source and self-hosted solution. For instance, proprietary platforms have a set monthly fee with ala-carte add-on monthly pricing for every little feature. For example, if you want to show one little line at the top of your page telling people about your latest promotion, it costs $4.99 per month. Proprietary ecommerce platforms also tack on 2.5% transaction fee for in-person credit card transactions, and additional 1% on transactions made through other processors, which is an extra fee on top of the transaction fee charged by the processor. Want more than one login for your site? There’s a monthly fee for that. Want to be able to add a custom pricing structure for your products (i.e. customizable products, rush shipping, etc.), there’s a monthly fee for that too. There’s a whole lot of other fees to mention too, but suffice it to say that there is a separate fee for just about everything you can think of.
This bait and hook business model, is a pretty basic concept. The base product is sold at a low price (that’s the bait), and hook comes when customers need to keep buying additional products to make the initial product they bought work. For first-time or new business owners however this can be discouraging after countless hours and time is invested to come to find-out they have hit a pay wall to add features that customarily are included in open-source platforms, and something that can be a deterrent for businesses that rely on smaller margins to make a profit.
Proprietary ecommerce platforms are also a lot less flexible, in that they only let you make limited customizations compared to a self-hosted solution where anything is possible. One of the biggest drawbacks of not being able to customize your ecommerce platform is it takes away from being able to provide a competitive advantage from your competitors, since there is no real way to differentiate your business. In fact, anyone could theoretically have in very little time exactly what you have with a different name on it. In other words, the barrier to entry for other businesses to do what you do is very low on a proprietary ecommerce platform.
Let that sink in for a moment. You also give up more when you do not self-host your own solution. For instance, you do not have control over your data and not as many data points can be transferred when your business out grows a proprietary platform. In fact, when you look at the fine print, you’ll see that often times your data is sent to places outside of the country you live, where your data may be subject to far looser rules and regulations than the country or state where you live. This is the complete opposite of a self-hosted solution, since a self-hosted solution allows you to have full control and privacy of your business’s data. You can also add as many features and data points as needed for your products and customers, on a self-hosted solution, whereas a proprietary ecommerce solution is limited to the same data sets available to everyone else.
Self-hosted generally means that your website is built on your own server or within a network that can be controlled, which means you have the greatest flexibility when it comes to making changes. Self-hosted sites are typically built on custom code or open-source platforms, with the major advantage being not having to pay monthly or annual licensing fees just to have your site running. One of the major advantages self-hosting is you have full control over your site, control over your data, and do not have to pay added fees for your transactions regardless if it’s online, with your own processor, or in-person.
Self-hosting not only gives you flexibility, but it gives you more options too. If you care about the aesthetic of your website and want to make it look unique, than self-hosted is the way to go. This is because self-hosting does not rely on using the same theme that thousands of other small and startup businesses have used too. If you want to have interactive features, such as more than a few videos, image carousels, control of how your site looks on desktop vs. mobile than self-hosting is the way to go. If having the ability to have specific controls of your website’s look, product features, specific functionality, and custom integrations are important for your business than a self-hosted solution will be without a doubt the best fit for your business.
When you have a self-hosted solution, you can build whatever you want on your site. This means that when a feature is added, its there! No monthly fees, just the one-time build cost. There are also no wacky limitations, like charging for additional administrative users or adding an announcement banner at the top of the page. Once a feature is added you won’t have to pay a monthly fee forever to have it. Plus, one of the big upsides of a self-hosted and open-source solution is many of these features are already built-in, so in some cases these features do not even need to build custom developed. Thus saving you time and money, while making your website costs more predictable.
Having control of your own data is important for several reasons. For one, it gives you the assurance that it is not being sold, won’t be sold, or shared elsewhere without your permission. This also can give a business greater confidence in knowing that their customer or product data is not being taken without their consent. Furthermore, having full control of your data helps you to be able to analyze and interact with your data to give you the insights that you need. Proprietary platforms give very limited access to data and creating data points, which often times does not fit the specific needs of business. This is another major drawback for businesses that rely on data to make more informed business decisions or care about being able to dissect their own data if they want to.
This will depend on several factors to have the best answer, but generally speaking it is important to understand where you are in your business lifecycle. If your business is a pre-startup or start-up phase, have a limited number of products, or on a slow growth track, than a proprietary platform might be a good place for you to try and experiment with seeing if online sales works for your business. If your business is in the growth, maturity, or renewal phase of the business lifecycle, have many products, are on a fast growth track, or expect to grow your start-up business quickly, than building a self-hosted solution will be the right way to go. The important considerations when choosing all stem from some of the key fundamentals, including scalability, customization, ala-carte monthly fees vs. open-source development, and control of your data. There are several other things to consider too, such as the number of products, product categories, the ability to customize products, payment processors, the ability to make changes to the checkout process, profit margins, and your overall business model.
If you need help choosing or figuring out what platform would be best for your business, contact us today to learn more about how the MARS team can help you start or grow your online business and take your business where you want it to go.