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For aspiring entrepreneurs, the information age offers several benefits, including fewer barriers to entry. With access to the internet, no one needs a brick-and-mortar storefront to start selling their product; they just need a laptop. Despite obvious advantages, the world of eCommerce is not without its distinct challenges.

Online retail has always been a crowded market. Thanks to the numerous free and paid website builders and eCommerce platforms and marketplaces, it is more competitive than ever. With more online stores popping up every day, eCommerce merchants face increasingly stiff competition. One of the best ways to succeed online is to ensure that a shopper’s experience on your website, from browsing to checkout, goes as smoothly as possible. This requires more than a beautiful, intuitive website design — it demands a top-notch holistic eCommerce solution.

If you manage or are looking to implement, an online store, you may have wrestled with the pros and the cons of software as a service (SaaS) eCommerce vs hosted or open source solutions. The good news is that you do not have to figure it out alone; the eCommerce experts at Smart Solutions are here to help. Keep reading to learn about the pros and cons of SaaS eCommerce solutions.

What Is SaaS eCommerce?

These days, you hear SaaS mentioned a lot. SaaS business models are popular because they essentially offer software on-demand, free from the many complexities that come with hosting and maintaining your own eCommerce software. When an online merchant uses a SaaS eCommerce platform, they are not buying the eCommerce software but merely renting it as well as hosting through a subscription. SaaS eCommerce is a pay-as-you-go service following a licensed subscription model that allows customers to use the software without downloading and installing it.

If you are considering a SaaS eCommerce system, it can be helpful to think of it as renting a property. Depending on customizations and the complexity of requirements, SaaS systems may require a relatively small upfront investment as well as month-to-month fees for a contracted licensing term. SaaS providers host and maintain the software for you. Automated software and security updates do not require the time, cost, and expertise of a development team.

Your SaaS provider is responsible for the security, performance, and maintenance of the application on their servers. You are not responsible for maintaining the servers or eCommerce infrastructure of a SaaS application, but you also do not have the ability to update the backend or underlying code directly. You will need to customize SaaS eCommerce platforms through APIs and marketplace apps. Like with any other subscription-based service, using a SaaS eCommerce platform system has advantages and disadvantages.

Pros of SaaS eCommerce Platforms

SaaS eCommerce applications are an attractive alternative to traditional eCommerce platform systems for a variety of reasons. Most of the SaaS eCommerce system’s advantages would not be possible without utilization of the cloud.

Easier Managed Experience

Most online retailers who are just starting out do not write software or code and cannot afford a dedicated developer. Although they will likely need the help of an eCommerce agency along the way, retailers do not need to be technical to maintain and successfully use a SaaS eCommerce platform. SaaS software is designed to ensure key features and basic functions can be turned on and are configurable by non-technical administrators. SaaS eCommerce platforms provide users a more managed experience than self-hosted systems by offering a large number of free or paid apps and pre-built integrations, automated updates, and access to a full-time technical support team.

Lower Startup Cost

Traditional eCommerce systems generally require a larger upfront implementation investment to get started, as well as a dedicated, full-time development team or eCommerce agency team to assist with customizations and ongoing maintenance. By using a cloud-based system, SaaS eCommerce providers are able to cut overhead costs considerably. As a result, retailers with a basic set of initial requirements can avoid hefty startup development costs and pay only for use — an appealing offer for most eCommerce entrepreneurs.

Security and Compliance

No online vendor wants to be the target of hacks that can result in sensitive customer data and payment information being compromised or stolen. Online merchants may be held liable for online fraud if the proper steps are not taken to prevent it. Hacks can be very costly and damaging to a brand’s reputation. Merchants who have websites for online shopping must ensure their sites are protected from online hackers and fraud. Not only are cyberattacks on the rise, but they can result in stolen intellectual property, customer data, and financial information. Needless to say, an attack like this would hurt any online business. 

eCommerce SaaS providers ensure that you meet PCI compliance standards. It’s their responsibility to stay up to date with any hardware or software patches or bug fixes that impact your website security. SaaS eCommerce platform providers are also responsible for Payment Card Industry (PCI) compliance.  The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that ALL companies that accept, process, store or transmit credit card information maintain a secure environment. For online vendors who juggle many different roles, not having to play security guard brings peace of mind and is a benefit worth the subscription price alone.

Cons of SaaS eCommerce Platforms

SaaS eCommerce is a terrific solution for many online merchants. However, it is not the best fit for all online retailers. Let’s review the potential downsides to SaaS as well.

Less Ability for Complex Customization

SaaS platforms often use prebuilt templates and typically contain a lot of built-in functionality. While these built-in, easily configurable features make SaaS platforms easy to use and quick to get started with, they might also limit your online selling capabilities. Although there are ways to extend core SaaS functionality,  SaaS eCommerce platforms often lack the ability for extreme customization.

Unlike open-source and many hosted solutions, most SaaS eCommerce platforms don’t give you access to the core application code. So, you cannot make changes to it. What you get is what the platform releases. If you need highly customized, unique functionality, then a SaaS platform might not be able to make that happen within an acceptable budget and reasonable timeframe. Software limitations and the roadblocks they often represent can be very frustrating. 

The Lock-In Effect

Even if you have not heard the term “lock-in effect” or “vendor lock-in,” you know what it feels like. It feels like knowing that getting out of a particular arrangement is going to cost you, so you decide to stay. Unfortunately, subscribers to SaaS eCommerce platforms (whether eCommerce or not) often struggle to migrate or control digital assets after the partnership is dissolved. Leaving an eCommerce SaaS platform means you lose your eCommerce website when you go. There is simply no option to “port your entire SaaS website to a new platform or host”.

Rising Costs

For small businesses with limited funds, SaaS solutions will generally win out against self-hosted systems, simply because many SaaS eCommerce platforms have a much lower startup cost. However, much like renting an overpriced apartment instead of buying, SaaS platforms may not be a great deal over time. Depending on annual revenue, SaaS eCommerce providers can charge a pretty hefty monthly premium, which can be avoided if you can afford the higher upfront costs of self-hosted alternatives.

What Is the Best eCommerce Platform?

When it comes to your best eCommerce platform, there is no one-size-fits-all solution. Both SaaS eCommerce platforms and self-hosted platforms offer distinct advantages and disadvantages. If you find yourself stuck on which to choose, it is important to take stock of your budget, timeline, and technical resources. More importantly, you need to ask which solution will realistically get you from point A to point B and allow you a path toward point Z. Define your long and short-term goals to choose a platform that will help you reach your targets and one you will not outgrow quickly.

If you have access to an experienced eCommerce team or agency, hosted eCommerce solutions may appear more appealing. However, if your business is less technically inclined, choosing a SaaS platform will probably be the quickest way to get your business up and running, bringing in the money you need for future growth.

Smart Solutions eCommerce Agency

Operating an online business takes hard work, and each decision counts. The choices you make about eCommerce platforms, website design, SEO, and overall marketing strategy have the potential to change your entire trajectory. Lean into the expertise of a trusted name in eCommerce, Smart Solutions

When it comes to eCommerce, every aspect of website design, development, and optimization is within our purview. Have a question? We have answers. Get in touch with us today and start selling at a higher level.