SaaS vs Custom Ecommerce Platform: Which approach to take for your Store

People are getting comfortable in shopping online more than ever than they were 5 years back.

Ecommerce is transforming the way businesses are done in India.

It is rapidly growing with more and more players wanting to enter into this segment and wanting to do business the eCommerce way. Why would it not?

The Ecommerce order volume increased by 36% in the last quarter of 2020 in various segments, even with the pandemic being around. People resorted to purchasing the products they need and getting them delivered to their homes rather than moving out due to restrictions by the government. We, humans, tend to adapt to methods that make our lives easy.

So eCommerce is not going anywhere by up.

This is a morale booster for people who wish to start or are already in the retail business.

A huge number of traditional manufacturers, wholesalers, distributors, and retailers have been forced to or rather have taken up the online route to sell their products to fulfil the demands of the online shoppers.

The sellers have multiple marketplaces to sell their products. But it is also very important to have their online store to get their loyal customers onto their platform to gain the profits which they end up sharing to the marketplaces who have huge charges for every product sold through their platform.

Whenever I have discussed with sellers who have wanted to build their online stores, this is the primary and most important question that comes up. Which platform does your eCommerce store should be built upon?

Today we have a whole lot of options available compared to 3 years back.

Many SaaS-based platforms like Shopify, BigCommerce, BuildaBazaar, Martjack, etc, and also quite many open source solutions like Magento, WooCommerce, PrestaShop, etc. Plus you have the option to build your custom solution straight up from the ground and customize it how you want it.

The platform you choose is one of the most important and mainly one of the initial decisions that you need to decide on for your online business.

Let me break down the differences in each model, so that it becomes easier for you to identify your needs and make a choice for your business.

There are mainly just two types of eCommerce websites: one is built on a subscription-based platform and the other is built on a fully owned eCommerce platform.

Therefore, choosing the right one among these two depends on your business requirement.

Understanding the differences between both models would help you choose better for your business.

SaaS stands for Software-as-a-Service.

It’s a software licensing and delivery model in which software is licensed to a user and accessed via the internet.

SaaS platforms are cloud-based solutions, where no software is installed on your premise (server). The entire software is hosted by the SaaS providers themselves on their hosting infrastructures.

They deliver the software to your business from their servers in a readymade format and you can start operating your business by tweaking the necessary settings from day 1 itself.

There is no need to set up the website and the hosting is taken care of by the vendor. You need not put efforts and the simple thing you gave to do is uploading your products on the site to sell them instantly. The vendor charges a certain amount monthly for providing hosting, payment channels and you can start selling in your platform on the site instantly after delivery.

The biggest advantage of SaaS eCommerce platforms is that the provider hosts and maintains the software. You don’t need to search and find a hosting provider to work with. Instead, they’re also responsible for uptime, performance speed, software bug fixes, software updates, and anything else of the sort. Your provider is constantly watching and monitoring the performance of your store. SaaS providers are usually known for their helpful and quick support teams.

If you don’t have your own IT team to manage this level of administration, then this is an important distinction of SaaS platforms.

In contrast to SaaS-based platforms, Custom eCommerce means that building the eCommerce software from scratch or using one of the open-source solutions that are readily available in the market today and customizing them to our needs. Hosting the software built on one of our hosted servers. Maintaining them ourselves or through a team of IT professionals who are proficient in handling servers.

There is far more freedom with a self-hosted, custom-built e-commerce platform, but that freedom comes with additional responsibilities.

Yes, we need to do most of the work in this case.

You cannot go live on day one itself as the initial build does take some time.

You need to maintain your servers and make sure that the software is maintained to adapt to the demands of the customers’ interaction with the online store. Yet, on the plus side, you can decide how and when to optimize your website to offer a unique user experience for your customers.

For a vast majority of businesses starting with e-commerce, a SaaS-based solution will work out just fine in the beginning. It can help just start immediately and also test their idea.

But as the business grows, it may begin to hinder expansion or even put your business at a competitive disadvantage due to limited tools for optimization. It is at this point when businesses typically begin to look to a custom, self-hosted model only to realize moving off a SaaS platform can be incredibly expensive in terms of time and money.

The major decision-making point being the cost factor while choosing any of the models.

SaaS-based solutions are cheaper in the initial stages and you tend to pay a monthly amount and the amount keeps increasing as your business increases.

While in terms of custom solutions, the initial investment is higher, which is mostly comprised of one-time development costs with marginal recurring costs towards development other than the maintenance part that can come up or any additional module development that comes up during the journey of your business.

1. You do not need to have much technical knowledge and do not require installations. It comes preinstalled with few settings to be done at your end.
2. You can start selling from day 1 itself
3. The providers provide the hosting services along with the software in a bundle
4. You are offered only those services that you have chosen from for the amount pre-decided for those services. So it is ideally a pay-as-you-go service model, where you pay for the services taken only.
5. The design options for your store are limited to the options offered by the provider. There are options where you can get your design done, but that comes with additional costs and even after your subscription gets over, you do not own or can use that design code anywhere else as they are made for that particular software of theirs.
6. The payment, shipment, and communication modules are limited to the functionalities provided by the provider.
7. There could be limitations to the number of products you can add based on the subscription plan you are on.
8. The initial costs look to be cheaper but eventually as your business grows, your subscription costs have a steep increase. Hence it does not look to be worth it when considering for the long run.
9. Many store owners migrate their service providers due to limited options of plugins, integrations over the period, and these migrations could be tedious and extremely time-consuming, and expensive.
10. It is good for start-ups and small businesses who want to test their market.

1. You need at least some technical knowledge to get your online store up and running. You also can hire someone like me to get this part done for you.
   
2. You can start selling only once your store is set up, which can be anywhere from 3-7 days and above based on all the functions that you need to get going.
3. You need to have your own hosting services hired. Many hosting providers offer good hosting solutions at very nominal costs. For starters, you can start with a shared hosting environment and move on to upgrade your infrastructure as and when you are growing.
4. You can have your store and its functionalities customized at will and design and develop your store on how you want your customers to experience your store.
5. You completely own the code of the store which you have developed. Some of the open-source solutions come with a one-time license fee for their entire code whereas many open source solutions are community-built and are open for anyone to download and develop around it at no cost.
6. There is no limit on the number of products you can have in your store.
7. A wide range of third-party API integrations can be integrated to enhance your online store at will.
8. You have more control and freedom over how you want your online store to operate as you have more control over the code.
9. There are no additional transaction charges which the SaaS platforms charge. You only need to pay up the operational costs like the payment gateway fees, shipping costs, etc.
10. A custom eCommerce website can suit any kind of business be it B2C, B2B, or any other. From start-ups to large-scale enterprises.

If I was to be given a choice and based on my experience in the field, a custom E-commerce platform solution is the best option.

You can choose to have what you want to offer and how you want to offer, thus allowing you have the USP you need to offer it to your customer.

If you take SaaS, you can experience only limited features and there is no availability of customization.

SaaS is a closed source and if you choose that then you have depended on the provider or developers around that platform for everything.

If you are serious about your business and want to be successful in the business during the long journey then you should function independently and use a Custom eCommerce platform solution.

You are the owner of your own business so ideally, you should be able to customize your e-commerce platform and select the website host, developers, design, and special features according to your preferences.