The digital commerce market is growing rapidly at the rate of 23% globally, and is netting more than $2 trillion annually. This trend shows no sign of slowing down; projections suggest that by 2021, annual global eCommerce sales will be closer to $5 trillion annually.
These projections are making the digital commerce market increasingly competitive. Merchants need to balance the need to build a user-friendly eCommerce site with the costs of maintaining it. With this balance in mind, merchants must decide whether to go with Software as a Service, commonly known as SaaS, or Open Source eCommerce platforms. Each platform type comes with pros and cons for the merchant. We delve into the differences between SaaS and Open Source platforms below. We also review the costs and benefits of each.
What Is a SaaS eCommerce Platform?
SaaS is software that is hosted, rather than downloaded. Users pay a subscription to access a SaaS software solution. SaaS tends to be a cloud-based software solution with a pay-as-you-go subscription model. Because the user is essentially leasing the software, the user pays for use of the software but does not own it outright.
On SaaS model eCommerce platforms, businesses are able to configure the application. They can use pre-created templates and set up forms rather than having to make customized forms. The code is proprietary, meaning that the user cannot access the back-end code. Users agree that they will not modify or alter the source code.
Because SaaS platforms are hosted by software companies, they tend to follow a one-size-fits-all framework. As such, businesses have less control over functionality and features.
What Is an Open Source eCommerce Platform?
Open Source platforms are an alternative model to SaaS. Open Source means that the source code is freely available. Anyone can use, distribute, and modify the source code, e.g., by developing add-ons to increase functionality. However, the original developer needs to receive credit.
The Hidden Costs of SaaS
At first glance, SaaS may appear to be the more cost-effective option, especially for smaller eCommerce businesses. Indeed, there are good reasons to choose a SaaS eCommerce platform. The cost of development is lower in the short term. Merchants can use off-the-shelf business utility tools, and the cost of hosting is usually covered by the provider. Maintenance incurs fewer costs since the software vendor takes care of day-to-day maintenance. Finally, SaaS is quick to deploy and does not require much development from the user.
However, SaaS may be more costly in the long run due to some of its hidden costs. SaaS provides standard website features, but they are the same features that you are likely to see on your competitors’ sites.
Integrations are another potential pitfall. Your site is likely already integrated with systems that help you to manage your business. If a SaaS platform does not integrate with the tools you use now, the costs in terms of both money and time to migrate to alternative tools will be higher.
Additionally, finding a responsive source of support for SaaS platforms can be difficult. One of the reasons that SaaS platforms tend to have lower up-front costs is they offer very little by way of support. Finding experienced support when something goes wrong tends to be more costly in the long run. This is because SaaS platforms are proprietary or closed code.
Finally, while SaaS platforms have a low start-up cost, they are not optimally configured for medium- or long-term growth. SaaS platforms tend to have limited processing and SKU capacity. Additionally, they have a limited ability to integrate with other software and systems that you may want to use to expand your site to meet new customer demands or expectations. As such, you may have to eventually migrate to an Open Source platform. Starting out on an Open Source platform may, therefore, be a sensible up-front investment to eliminate the long-term costs of migration and other hidden costs of growing an eCommerce business on a SaaS software platform.
Which Platform Is Right for My Business?
Why choose an Open Source platform instead of SaaS? Open Source platforms have a number of advantages designed to help you grow your eCommerce business.
Open Source platforms are more flexible and offer the ability to customize underlying code. This customization ability enables you to more easily integrate your existing systems as well as systems you may want to use in the future. Since anyone can develop them, you can further customize the look, feel, and usability of your site with available applications and widgets.
The code in Open Source platforms also tends to be of higher quality. Anyone can access the code to produce fixes for potential bugs. This level of access also makes it much easier to get support from expert developers who have experience working with a particular platform.
One of the pitfalls of Open Source eCommerce platforms is that they require more technical work in terms of developing the site, identifying the right host provider, monitoring for security updates, performing software updates, and ongoing management. If you decide to handle everything yourself, this level of work can be a significant cost. Instead, many merchants prefer to outsource to an experienced developer who can take care of these needs in a more cost-efficient way.
Of the available Open Source eCommerce platforms, we recommend Magento. IronPlane is a full-service Magento eCommerce agency that offers a full suite of services based on the Magento platform, from eCommerce website development to on-premises and cloud hosting. IronPlane’s highly experienced, Magento-certified team of developers and solution specialists are lead by a developer who has been named a Magento Master by Magento several years in a row.
Schedule a free appointment with IronPlane today to learn more about the services we offer. Our team is ready to learn about your business’ requirements. We look forward to explaining what we can offer you for custom development, integrations with third-party sources, and other custom development tasks.