E-commerce platforms have evolved over the years and now come in three varieties, including:
Saas: A software as a service platform is less complex, which is why they’re popular with merchants. You “rent” the platform instead of creating or buying the
software. They are quicker to set up than an open-source platform and are easier to use and maintain, but you do give up control of the e-commerce environment.
Open-source software: Open-source e-commerce applications give businesses greater control over the software that runs the store. Open source means the code source of
the software is made freely available to everyone. With an open-source application, one can modify the code to suit the online store. It’s up to the business, however,
to find a hosting plan to host the software, to regularly update the software, to ensure it complies with industry standards and rules (such as payment card industry
compliance), and keep it secure. An open-source platform is best suited for an entrepreneur or store owner who wants more control over their e-commerce environment
(versus what they would have with a SaaS option) and who has the technical expertise to manage it themselves.
Licensed software: A licensed e-commerce software program is one you purchase from a vendor to run your e-commerce store. You typically get access to the software, as
well as support and updates, for a set period. Once the license expires, you’re required to renew it to continue to sell your products online. The drawbacks of using a
licensed application include that it’s up to the business to find a web hosting service that supports the software. Further, licensed software requires time and money
to support it, which may not make sense for all small business owners.
Key takeaway: E-commerce platforms can be SaaS, open-source or licensed. Open-source and licensed platforms offer businesses greater flexibility to customize the
software, but they require more expertise, as well as time and money. With a SaaS platform, you rent the platform and the software company is responsible for updates
Cost of e-commerce platforms
The cost of e-commerce platforms varies, depending on the type of business you’re running. If you’re selling apparel, furniture, or food, for instance, you’ll need
inventory and customer-relations management tools. If you’re providing a service, you’ll require less functionality.
Costs are also impacted by whether you’re integrating an existing brick-and-mortar business or if your venture is new. Expect to pay anywhere from $29.99 to $299 a
Shopify’s basic plan, for example, costs $29 a month. Customers receive an online store, the ability to sell on Instagram and Facebook, unlimited products to list, two
staff accounts and four store locations that are supported. For its advanced plan, which costs $299 a month, you get everything in the Basic plan, plus up to 15 staff
accounts and eight locations that are supported. Customers also have access to professional reports and advanced report-building capabilities. Credit card processing
fees are also cheaper with the advanced plan. Merchants pay 2.4% plus a per-transaction fee of 30 cents. For the basic plan, it’s 2.9% plus 30 cents per transaction.
Additional costs include a domain name, which is about $15 a year, and web hosting, which can cost $80 or more per month. Some e-commerce platforms include web hosting
in their pricing.
Benefits of an e-commerce platform
E-commerce platforms have significantly lowered the barrier to entry to entrepreneurs and small businesses wanting to launch an e-commerce site. But that’s not the
only benefit of using an e-commerce platform. Here are five other advantages:
It’s easy to use: Small business owners need an easy-to-use, low-maintenance solution and that is a significant benefit of e-commerce platforms. These solutions are
designed with novices in mind. Setting up an online store is significantly streamlined, thanks to templates, drag-and-drop capabilities, and a database of product
images and prices you (or your staff) can upload with a few clicks. These platforms also automate certain aspects of e-commerce, including e-mail alerts and inventory
management. The systems track when a product is running low and will alert you when you need to order more. These platforms also let you run real-time reports on
everything from shopping cart abandonment to customer engagement. And because these solutions are hosted in the cloud, you don’t have to worry about infrastructure
(like servers) and security – the e-commerce platform handles all that for you.
It enhances customer engagement. If your website is unappealing or hard to navigate, customers aren’t going to buy from you. E-commerce platforms offer inviting,
well-designed e-stores that are easy for customers to navigate and buy from.
A platform offers increased security protections. A data breach can be devastating to your business. Much of the threat that hackers pose can be lessened by using an
e-commerce platform. Leading vendors include multiple security measures with their platforms.
Many platforms integrate with dozens of third-party apps. A single platform that hosts your e-commerce site; manages your inventory; and helps with your accounting,
marketing, and customer service is a business owner’s dream. An e-commerce platform can make it a reality. Many of these e-commerce platforms integrate with third-
party apps, which allows you to handle all aspects of your e-commerce operations through a single, unified platform.
It easily supports expansion. Many e-commerce platforms are designed to grow right alongside your business. Since many solutions reside in the cloud and aren’t a
physical piece of software, it can handle all aspects of your website, whether you are selling 20 or 200 products a month.
Key takeaway: An e-commerce platform can cost as little as $29.99 per month or as much as $299 per month (which is what popular e-commerce platform Shopify charges).
For most businesses, the basic plan may suffice. If you have a large business, however, the benefits of higher-priced plans, which include multiple staff accounts and
store locations, as well as advanced reporting capabilities, may be worth the extra monthly expense. Be aware that other fees, such as web hosting and credit card
processing, may apply.. There are lots of reasons small business owners should consider an e-commerce platform for their online shop. These platforms are easy to set
up and manage, have built-in security to protect data, integrate with your other business apps, and can easily scale as your business expands.