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SaaS-Based vs Custom-based eCommerce software Comparison- Which is better for you?

by GK August 08, 2020

The eCommerce industry has evolved drastically over the past 10 years. We have moved from mere virtual shopping carts to advanced eCommerce capabilities resulting in new business models and revenue channels. Thanks to the new models like the multi-vendor marketplace and dropshipping, we are no more limited to building in-house stock and infrastructure to start selling online.

Today, an eCommerce website deals with a multitude of business models and accommodates cutting-edge revenue channels, which certainly is the need of the hour. In fact, the eCommerce software development market is brimming with both ready-made and customizable solutions to house all kinds of modern requirements in this regard. Be B2B, B2C, P2P, or hybrid eCommerce requisites, one can find a solution to build any kind of eCommerce store in N numbers of ways.

Two such ways to build an eCommerce store are the SaaS eCommerce platform and custom eCommerce platform. Which technology or eCommerce software suits your requirements the best? It is the biggest dilemma an entrepreneur faces at the very beginning of the journey.

E-Commerce software solutions: SaaS or Custom Development?

Let me begin with the fact that both of these approaches are completely efficient. They offer some of the best ways to build an eCommerce store without re-inventing the wheel. In either of the options, you need not spend your time, money, and efforts doing redundant implementations, as you can leave most them of the experts and focus your resources on your business development.

Let’s understand these approaches with their pros and cons so that you can make an informed decision for your eCommerce development project.

A.      SaaS eCommerce platforms

The concept is made up of two crucial terms, which are two independent technologies in themselves:

E-Commerce platforms: An eCommerce platform is any ready-made software solution that would allow you to set up an eCommerce website or mobile app with a mere installation. In simple words, an eCommerce platform is a ready-made eCommerce software, which you can customize and give your unique brand identity to it. It comes with all the necessary eCommerce solutions and features out of the box. For example- a front-end and an admin panel.

SaaS: The term expands as “software as a service”. Any kind of ready-made software solution delivered via the cloud with technical support, maintenance, and security is the responsibility of the provider is a SaaS. In short, a SaaS solution comes hosted and does not require any local installation. For example, Google Docs. Unlike MS Word, you need not install Google Docs on your computer to use it. Just sign in to your Google account and you can use the solution on the go from the cloud.    

Combining both the concepts together, we get SaaS eCommerce platforms.

To put it in simple words, a SaaS eCommerce platform is a ready-made eCommerce store builder that respective SaaS eCommerce providers deliver to you via the cloud. You need not install any source code on your local server or conduct complex technical deployments to use a SaaS eCommerce platform for setting up your eCommerce store.

Just sign up with SaaS eCommerce providers of your choice, log into your user account, and use a graphical user interface to customize your ready-made store with your unique brand identity. 

For example, Shopify is one of the top SaaS eCommerce platforms in the market. You can create a Shopify store by following simple steps, without going through the source-code or any kind of server deployment. Shopify takes care of your web hosting and maintenance. In return, you are required to pay a subscription fee as per the package you choose.

B.      Custom eCommerce platforms

Custom eCommerce platforms are turnkey software with ready-made solutions, just like SaaS platforms, except they don’t provide hosted applications. Instead, in a custom eCommerce software development, the developers will provide you the source-code, which you can install on a web-server and set up your eCommerce store on the go. The setup process is pretty similar to that of SaaS.

In short, a custom eCommerce platform is an on-premise solution built by a third-party developer and can be self-hosted by the store owner on a server of choice.

For example, Genstore is Shopygen’s custom eCommerce platform for building multi-vendor marketplaces. You can install the source code of Genstore on a web server of your choice and follow a GUI to set up your multi-vendor store in just a few steps.

Note:

Custom eCommerce platforms are different from traditional E-CMS solutions such as Magento, PrestaShop, WooCommerce, OpenCart, or Drupal Commerce. An E-CMS is not fully customizable, as you cannot edit the original source code, even though they are open-source. You can only use prescribe frameworks to develop independent modules or templates to add new features. Whereas, you can customize a custom eCommerce platform with 100% flexibility and 100% source-code access.

E-Commerce software comparison: SaaS VS Custom Development

Now that we are aware of the fundamentals, it’s time to compare both the approaches on different grounds and decide which one fits best in your requirements. We will take some of the most crucial grounds for our custom eCommerce and eCommerce SaaS comparison.

Integration with business tools:

An eCommerce platform is not enough to run a full-fledged eCommerce business. In a competitive market, you need several other tools to facilitate an array of tasks as smoothly as possible. For example, ERP system, push marketing tool, email marketing tool, tax tool, SMS tool, SEO tools, inventory management systems, etc. A competent eCommerce platform must provide seamless integration with all these tools.

Integration in SaaS eCommerce platforms Integration in custom eCommerce platforms
You are limited to only SaaS APIs for the integration of essential tools with your eCommerce store.   If the SaaS eCommerce providers haven’t added the ready-made support for the tools, you cannot integrate them into your store. Custom eCommerce platforms can integrate APIs from any popular tool in the market.   You are not dependent on the SaaS providers to have your API integrated. Any skilled developer can do it.

White label customizability:

Although eCommerce platforms are ready-made solutions, they are customizable enough to let you devise your own user-experience and brand identity in your store. White label customizability refers to the degree of customization where you can eliminate the provider’s branding and imprint your unique brand identity in your store. 

White label customizability in SaaS platforms White-label customizability on custom platforms
Most of the SaaS eCommerce solutions do not provide any kind of white-label customizability.   You would get the option to engrave your brand identity, but your store still remains the property of the SaaS provider. Hence, you cannot eliminate the provider’s brand identity from the store. Custom platforms do not hold you back from customizing your platform on any degree.   You can make as many feasible customizations and eliminate the providers branding completely. Besides, unlike SaaS, you become the absolute owner of your store once you purchase the source-code.

Ownership cost:

This is where both the approaches differ completely from each other. In fact, the cost is the most crucial factor that can nudge an entrepreneur like you towards one of these approaches. The total cost of ownership may include charges such as cost of customization, integrations, deployment, and maintenance. Both models follow a different route when it comes to the ownership cost.

Ownership cost in SaaS Ownership cost in Custom platforms
First of all, you never get full ownership of your SaaS-based eCommerce store. Instead, you would be renting it from the SaaS provider with an inbuilt hosting facility.   You will be paying a monthly subscription fee, which continues for as long as your store is active.   The overall subscription cost of a SaaS platform like Shopify depends on the packages you choose and addons to purchase in addition to the basic platform. The ownership cost of a custom eCommerce platform depends on two simple aspects: ·         One-time price of the stock source-code ·         Cost of customization, if needed  By paying an upfront one-time cost, you earn the full ownership and full access to your source-code.   If the stock features of the platforms seem insufficient, you can always hire a developer to implement new features on top.

The bottom line of the cost estimation: Not everyone can afford to pay upfront costs for custom solutions. In such a situation, one can always opt for a SaaS solution, which would allow paying in smaller monthly installments as a subscription fee. 

Security:

Security is always the biggest concern of eCommerce business owners. You never know when your data gets compromised and you end up losing everything to the hackers. Besides, eCommerce websites are also always susceptible to fraudulent activities, where rogue users try to leverage from the loopholes and steal from you. In either of the situations, you cannot afford any kind of compromise with the security of your store.

Security in SaaS platforms Security in custom platforms
Honestly speaking, top SaaS eCommerce platforms are always safe and secure. One cannot doubt the security measures taken by Shopify, or it would have not reached this level today.   However, you are dependent on Shopify for the safety and security of your web store and its data.   Since you have no control over the web hosting and source-code, you are at the complete mercy of your SaaS eCommerce provider. You own the source code of your eCommerce platform. You have the freedom to choose the most secure web hosts in the market.   You are not dependent on your software provider for anything. If you think that your current host is not playing by the safety standards, you can always switch to a more secure option in the market.   However, having complete ownership brings a lot of responsibilities on your shoulders. If you can’t handle the pressure, it’s better to trust a reliable SaaS provider instead.

Time:

The overall time required to set up your eCommerce store depends on several factors. Since both options offer ready-made solutions, you won’t have to go through the complex SDLC processes to set up your store. However, it still takes some time to launch even a ready-made store.

SaaS eCommerce platform Custom eCommerce platform
If you are going to work with the stock features, deployments of a SaaS-based eCommerce store take no time. It’s almost immediate.   Besides, you can always install ready-made integrations with the click of a button to add new features on the go.   However, if you are looking for enterprise-level customizations on top, you would have to hire a reliable development team, which will increase your deployment cost and time drastically. You can set up your custom eCommerce platform in a few minutes in its stock form. It’s as quick as SaaS.   You can find usable modules and extensions for your store from the provider, which will allow you to add new features pretty quickly.   However, the implementation of additional features, apart from ready-made modules, would definitely take some time. But you could always hire a skilled developer or the provider itself to complete the same as quickly as possible.

Conclusion: Which one is the best?

Both SaaS and custom eCommerce platforms have their fair share of popularity in the market. However, certain limitations of SaaS-based eCommerce solutions are not suitable for all kinds of entrepreneurs. SaaS is great for small-scale businesses and entrepreneurs who cannot afford upfront investments, but it comes with certain conditions that you cannot ignore:

  • You have to pay for more than what you need: All SaaS solutions come with defined packages. These packages might offer tons of features for hefty subscription fees, but you might not need all of them. They make you pay for tons of nuanced features that you don’t even need.
  • Paying in small installments does not mean it’s cheap: Apart from unwanted features, SaaS providers charge extra in multiple kinds. For example, Shopify charges an extra transaction fee on every sale you make if you don’t use their inbuilt Shopify payment solution. If you calculate the overall expenditure in SaaS, the annual subscription fee itself turns out to be much more than what you could have paid to a custom solution provider at once.

If you want a more reliable solution for your business, which does not put any kind of limitation, paying upfront for a custom eCommerce platform is always a wise choice. SaaS is best for entrepreneurs with limited products to sell, but if you want to set up an eCommerce business empire, you must switch to custom eCommerce software development eventually.

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