Am I choosing the right ecommerce software?
When we are first working with a client, one of the initial questions we are asked is, “Am I choosing the right shopping cart for my business?” The fear of making the wrong decision is often a big source of stress for all of our potential clients.
With all of the spam / affiliate reviews that are posted all over the web, its almost impossible to get a straightforward, honest answer to this question. As a result a lot of people don’t make the right decision initially. They lose their initial investment of time and energy, and if they hired a designer they also lose valuable capital.
This post is designed to help you make the appropriate ecommerce software selection. Its not all encompassing, and its not a book, so if you have added questions please contact us and our team of developers and marketing professionals can help guide you further.
A Broad Overview of Shopping Carts.
Its important to have a good understanding of the fundamental differences in ecommerce software before you start talking about specific platforms.
The very base level of the ecommerce world is sites that we refer to as ‘marketplaces’. These ecommerce marketplace providers include some of the most recognizable on the internet- eBay, Amazon, Etsy, and others. They have the lowest ‘barriers’ to entry in that all of your products and information are housed with them, and all of the templating, communication tools, and other features are also provided for you. Of course, these inclusions come at a price. By adding up the fees and other transaction costs, they are able to effectively monetize this service for everyone. Ultimately though, this transaction cost does reduce the profitability of this marketplace model for most businesses. (Fees can reach costs upwards of 10% of revenue, depending on product type and services used with marketplaces). Marketplaces can be a good first step when starting up your ecommerce venture. Because Amazon, eBay, and others already have domain authority and a customer base, you can ‘borrow’ off of them for your first few sales while your own site gains traction.
SaaS eCommerce Stores.
The next step up is perhaps the muddiest one. SaaS (software as a service) ecommerce carts are probably the most common online and are designed for people and businesses looking to make their first foray into online sales (or making less of a commitment to ecommerce). In most models, you pay a particular company a monthly or annual fee to use their programming and development to offer an ecommerce shopping cart to your customer. There are a number of large companies that offer these products and some of these carts spend a lot of money on advertising. Because these platforms also frequently use affiliate partnerships, you’ll find that most ‘reviews’ are fairly biased and don’t really provide an in depth analysis of a cart’s benefits (or flaws). Even developer partners can be risky to ask for recommendations because they often only work with one shopping cart and can’t accurately speak to what’s right for you. (Coalition Technologies is a development partner with 9 of the leading ecommerce options available today, but we’ll get to that later). In general, if a site focuses on comparing one shopping cart to another (Volusion vs. A, Volusion vs. B, Volusion vs. C) and features prominent links to sign up through their site, you’re probably looking at an affiliate partner (someone who makes a lot of money to get you pointed towards the “right” shopping cart). If the website designer that you’re talking to only talks about one shopping cart, than they may just have limited experience with other carts (so be careful there too).
Software as a service carts usually require that your site is hosted with them, and typically have some restrictions on the types of features and customizing that you can do. One of the most important things to consider with these carts is their long term viability. Don’t just focus on a shopping cart features or sales pages that are relevant now. Look at their parent companies, look at any financials, recent investments, or general ‘business health’ documents available. You are paying them for use of a service (and for hosting, technical support, feature upgrades, etc). IF THEY DON’T HAVE FINANCIAL SECURITY, YOU MAY NOT BE ABLE TO RELY ON THEM BEING COMPETITIVE FOR LONG.
These carts are generally built with features and content management systems that will appeal to the masses. They usually are more difficult to create specialized features within, are usually not capable of providing full business integration (accounting, warehousing, fulfillment, internationalization, CRM, etc), and are generally focused on ‘broad’ appeal for feature additions. This means that for most mid to large sized businesses they will quickly force limitations on direction and efficiency. But they also provide advantages in ease of use (again they are built to appeal to you, your Chamber of Commerce buddies, your grandmother, next door neighbor, and the high school dropout down the street).
Now things are really getting interesting. When you leave the safety of the marketplace and have outgrown the confines of an SaaS shopping cart, the typical next step is moving to an open source shopping cart. This move is kind of like going from the zoo and into the jungle. Those wild animal noises that made your toddler giggle now seem startlingly more like dinner calls.
We don’t recommend going into an open source shopping cart on a small budget and we don’t recommend doing it without a lot of time dedicated to researching not only the cart, but the partner that will be developing it for you. Never work with an ecommerce developer who has not worked on a specific cart before. This is more true than anywhere else with the open source model of ecommerce software.
Open source shopping carts are fundamentally different than the other types of ecommerce software that we’ve discussed in that they are generally provided free of charge. Most companies behind OS shopping carts are either selling an upgrade later to an enterprise level, or they’re making money through other partnerships or advertising. The free of charge component means that there are no guaranteed updates, fixes, or support teams lingering around for you when you need them. Whatever happens to your store is completely up to you. Once that initial code batch is downloaded and installed, everything is in your hands. In case you hadn’t picked up on it yet, I want you to understand that the responsibility for maintenance, security, and upgrades largely falls to you.
So why bother with open source carts at all?
They’re the closest you can get to an enterprise level cart without paying outrageous licensing fees from SaaS companies or from major software companies. Because you have a lot of control you can take them and make them whatever you want.
I often use this analogy when describing the difference between SaaS and open source. In SaaS, you’re acting as a stylist. The software provided is a living, breathing, functional human being. You get to play dress up and change the hair color, add some color to the cheeks, and put on some trendy outfits. In open source carts, you’re given a box full of organs, cells, bones, and other matter that you get to take and make into a horse, dog, cat, dragon, human, or whatever. Styling something is easy (we all did it with our GI Joes, or Barbies) and creating a new life form is a bit more challenging (but you can have a dragon)!
The undisputed leader in open source carts is the Magento Community edition. Now owned fully by eBay, Magento has been the long time leader in open source ecommerce (and a general leader in ecommerce software). It has a huge development community, lots of deployment ready plug ins and extensions, and a natural next step (the Magento Enterprise edition) if you grow rapidly. Behind them are a number of other carts like OSCommerce. Typically these carts struggle to survive because they can’t afford to reach a large developer community and find it challenging to get a way to monetize their cart that doesn’t alienate their base.
The biggest issue for most people considering eCommerce with an open source cart is the process of choosing a developer. I can’t tell you how many of our clients hired someone else and later regretted that decision. Eventually they found us, and we were able to help them along. But all in, the cost of making the first misstep limits their opportunity for growth early. Hire only experienced developers of particular open source shopping carts. Never get someone who is going to ‘learn’ as they go. This always (100% of the time) ends in disaster. Most broken shopping carts you see online are sites that were built by incompetent open source developers. More than any other ecommerce type (other than custom), the adage, “You get what you pay for” proves true. Spend $3k on an open source cart and you’re guaranteed to have problems.
Custom and Enterprise.
If you’re hitting seven figures a year with your current ecommerce store or have a successful traditional business, the most likely prescription for an ecommerce solution is custom or enterprise licenses.
These two types of ecommerce carts are harder to define since they can be so many things beyond simple product sales. Custom sites can be built to sell anything to anyone. They can integrate with nearly any other piece of software and can have as much or as little as you want. A good, fully custom ecommerce solution typically costs well into the six figures (conservatively $250,000 is not an unreasonable price to pay). BUT, these carts are the perfect reflection of you online and can be anything you want them to be.
Enterprise carts are the luxury vehicles of ecommerce. Typically the companies behind enterprise carts are the who’s who of software development. IBM, Oracle, Magento, and others, offer enterprise licenses. Much like the initial SaaS carts, enterprise licenses usually address hosting, customer service, support, security, features, and more. The key difference is at the level to which they follow through. Typically an enterprise license means you have a dedicated contact for support or service (not just a ‘live chat’ feature), managed dedicated hosting, security monitoring, as well as extensive add on software solutions for CRM, accounting, data management, inventory fulfillment, and more. A lot of time goes into ensuring that your cart never breaks, even as new features are introduced to the software. Enterprise licenses typically start at $15,000 (not including any development work) and go up from there. Again, its fully reasonable to expect your enterprise development to run upwards of $100,000.
That’s a pretty high word count, I know. But the information is valuable and I hope that you appreciate it. If you have follow up questions immediately, feel free to add a comment or give us a call. We’ll be building out a series of these posts that will inform you more on each of the cart types, whether or not a particular one is right for you, and what typical costs associated with work are. If you’d like to read on, visit Part 2 of Choosing an eCommerce Shopping Cart.
As I mentioned in the introduction, Coalition is highly unique as a digital marketing agency. We’re extremely experienced in the ecommerce sphere and have passed certification and testing with what we consider to be the leading ecommerce softwares. We test these shopping carts extensively and are constantly evaluating new comers for worth. If we find something we believe to be appealing, we’ll pursue development certification and will build several test carts to evaluate features and capabilities.
We have a team of just over 20 between our Seattle and Los Angeles offices, and hire selected developers internationally who are willing to work full time under direct supervision with our team in the U.S. We are experts at all things web related- SEO, PPC, social media, email marketing, PR, content production, video, etc. Our team works with small startups and major organizations, brands, and established corporations. From SaaS solutions to custom ecommerce, we’ve successfully completed a large number of projects.