Businesses have been transitioning from traditional on-premises software to web-based solutions at a steady pace. However, switching from on-premises solutions to the cloud can be challenging, mainly because cloud computing is yet to get fully mature, while many platforms are fairly new to the market. Click here if you are interested in learning more about the history, evolution and future of SaaS.
We have already covered the basics of an e-commerce platform, different types and how they benefit businesses, especially small and medium businesses in a dedicated post. This post focuses on the advantages of SaaS e-commerce solutions over open-source and on-premises platforms and some of the best SaaS ecommerce platforms.
What is a SaaS E-Commerce Platform?
SaaS can be defined as a delivery channel through which software or other services are delivered using the internet/web browser. SaaS e-commerce platforms are one of the many SaaS software delivered online, including CRMS, PMs, Sales and Marketing and HRM solutions. Different solutions are designed to fulfill specific business functions.
E-commerce platforms enable businesses to start selling online and provide the tools and features they need to take, process and deliver orders and process payments. Like other SaaS solutions, SaaS ecommerce platforms are not installed locally and instead, are accessible through a web browser from anywhere. The main benefits and challenges of using a SaaS e-commerce solution are almost the same as other SaaS solutions. Here is a quick summary of some important points:
- Much lower upfront cost
- No installation required
- Can be accessed from anywhere, using almost any device
- Cross-platform compatible
- No hardware purchase or maintenance required
- Highly scalable and flexible
- Automatic patches and updates
- Customization options and white labeling
- Easier to switch between different partners
- Integration with other systems and apps
- Rapid deployment, easy to get started
- Flexible subscription-based payment plans
- Low time-to-deployment, faster prototyping
- Makes budgeting and IT expense forecasting easier/more accurate
- Less control over processes
- Service disruption can cause applications to become unavailable
- Security breaches can compromise sensitive data
- Latency might not be on par compared to local servers
- SaaS subscriptions can turn out to be costlier in the long run
- SaaS offering are still rather limited and not all on-premises solutions are available as a cloud-based solution
SaaS vs. On-premises and Open-Source E-Commerce Platforms
Installation, Management and Maintenance
The SaaS service provider is responsible for most of the stuff related to successfully running an e-commerce store, including hardware, maintenance, installation and updates. Most open-source and on-premises platforms require manual installation and updates. That’s one of the main reason behind popularity of SaaS or cloud-based solutions.
Ready-to-use, No Juggling Between Different Providers
SaaS solutions allow businesses to get started immediately and provide them with all the functionality they need right out-of-the-box. With open-source or on-premises solutions, the user has to pick and set up hosting services, install the platform, make sure it works well with extensions and integrates with their existing systems. This can be challenging for businesses that don’t have the IT expertise needed to get things done. They also have to juggle between different vendors to make their online store work.
SaaS e-commerce platforms save businesses from the hassle of managing everything by themselves including security, compliance and performance. This allows businesses to focus on growth instead of spending a lot of time setting up, managing and maintaining their online store. Merchants get real-time and instant access to the SaaS e-commerce platform and can manage their online store from anywhere.
Most open-source e-commerce platforms are free to use and make available the source code. However, tinkering with the source code, customizing it to your own requirements and managing other things such as hosting requires IT expertise and in some cases whole in-house teams. That’s something majority of SMBs cannot afford (or don’t want to).
Easy-to-use, Less time-to-market
SaaS e-commerce solutions work right out-of-the-box and most have a built-in shopping cart functionality and other tools needed to quickly set up an online store. E-commerce businesses that want to get started quickly can use the built-in and customizable themes without requiring services of IT professionals. PCI compliance is another important factor to consider for business that plan on selling online. SaaS providers are responsible for PCI compliance to safeguard customer’s financial information, which ultimately builds trust.
Scalability is another important factor and allows businesses to easily scale as they grow. In context of e-commerce it means the ability to take and process more orders, take on new customers and add complex/additional functionality when required. With SaaS platforms businesses don’t have to rebuilt it when they add new sales channels, apps or change business processes.
SaaS e-commerce solutions are also easier to work with when it comes to integration with other systems such as ERP and POS. This allows businesses to use the best software for each business part and integrate them to sync orders, inventory, products, customers, shipping and so on.
Things to Consider When Considering SaaS E-Commerce Platforms
Although for most businesses the pros of SaaS platforms generally outweigh the cons, there are a few things business need to consider before making the move. Although SaaS solutions are ready-to-use, they don’t allow a lot of customization due to standardization.
You can customize the source code of an open-source platform as much as you like, but your options are limited when using a SaaS solution. Some SaaS providers offer the source-code (Open SaaS), but the level of customization is still limited compared to traditional open-source platforms such as Magento.
Businesses working with multiple vendors, warehouses, markets and distributors have to handle complex processes, which require deeper customization that might not be possible with ready-to-use solutions. In such cases, open-source solutions can be a better choice provided businesses have the IT expertise needed to implement them.
B2C e-commerce platforms whether on-premises or SaaS don’t usually work well for B2B selling because of different requirements. These requirements include the difference in payment terms, wholesale pricing and discount-by-quantities. B2C E-commerce platforms are designed for B2C transactions and although they might work for B2B businesses at a certain scale, they are not designed to do it well.
Who Should Use SaaS E-Commerce Solution?
Thanks to the advancements in technology and customer’s increasing interest in online buying, anyone can be an online entrepreneur. If the answer to some or all of the following questions is yes, then a SaaS e-commerce solution might be the best option for you.
- Do you want to launch your store and start selling right away?
- Do you have limited IT resources or cannot afford to hire an agency to launch your store?
- Plan on exclusively selling online?
- Are working with a small team with team members who have to handle different operations?
- Plan on integrating your online store with other systems such as POS, accounting, ERP?
- Don’t plan on building everything from scratch and managing all the stuff yourself?
- Find built-in themes and some customization options good enough?
- Don’t have time, money and resources to install, configure, maintain and ensure security, performance and uptime?
- Want a cost-effective platform with low upfront costs?
- Expect a seasonal spikes and rapid growth?
SaaS E-commerce Platforms and Large Businesses
Although a large number of SaaS E-commerce platforms generally target SMBs, many are designed to handle large-scale and complex operations. These platforms are scalable enough to handle traffic surges and sudden increase in order volumes. Magento (provides free open-source platform as well as paid/premium managed services) is one such example and works well for businesses that want to ‘outsource’ the shopping card functionality. Enterprises can leverage the integration capabilities of SaaS e-commerce platforms to extract the best value out of their existing systems.
Top 5 SaaS E-Commerce Platforms
There is no such thing as a SaaS e-commerce platform that’s perfect for all businesses. Choosing the right provider requires a deep understanding of your own needs and matching them with what a solution has to offer. Some open-source e-commerce platform developers also offer SaaS e-commerce solutions. But here we’ll focus on providers known for their SaaS offerings to avoid overlapping with the dedicated post that covers open-source e-commerce platforms. Here are our top picks for this category:
With more than 1mn businesses spread across the globe, Shopify has grown to be one of the biggest providers. The platform comes integrated with all the essential stuff SMBs need, including storefront design, performance analytics and content marketing. Upgrading the store with extensions is simple and easy and allows users to add functionality as they grow. It supports a variety of verticals including food and beverage, beauty and cosmetics, fashion and apparel, consumer electronics and home furnishing.
Shopify Lite: Allows accepting CC payments for $9/month
Shopify Plus: Custom pricing for high-volume businesses and enterprises
Pricing plans: Starts from $29/month (Basic), $79/month (Standard Shopify), $299/month (Advanced Shopify)
Payment – Online credit cards 2.9, 2.6 and 2.4 percent respectively + 30¢ per transaction
Payment – In-person CC: 2.7, 2.5 and 2.4 percent respectively per transaction
Payment – Other Options 2, 1 and 0.5 percent additional fee using other payment options
Key features (Standard Plan)
- Online store
- Unlimited products
- 5 staff accounts and up to 5 locations
- Sales channel including social media and online marketplaces (depends on the region)
- Manual order creation
- Gift cards and discount codes
- Professional reports (advanced report builder included in the advanced version)
- Shipping discounts
- USPS Priority Mail Cubic Pricing
- POS lite (POS Pro costs additional $89/month)
- 133 currencies, manual exchange rate option, up to two languages, support for international/country-specific domains
BigCommerce offers the flexibility of Open SaaS and works well for businesses that want deeper customization and something more than a ready-made solution. It also serves the same verticals as Shopify and although a little more expensive than other platforms, it justifies that by offering more features. However, advanced features such as shipping integration are only available in higher tiers. Compared to Shopify that charges a per-transaction fee, BigCommerce does not charge a transaction fee when using supported payment partners and instead, caps the amount of sale for different tiers.
Pricing: Starts from $29.95/month (Standard, up to $50,000/year), $79.99/month (Plus, up to $180,000/year), $299.95/month (Pro, up to 400,000/year), Enterprise pricing by quote
No transaction fees when using the supported payment options
Credit card rates: 2.9%/2.5%/2.2%/2.2% percent + $0.30 respectively per transaction
- Unlimited staff accounts, products, bandwidth and file storage (all plans)
- Branded stores
- Supports Amazon, eBay, POS, Facebook and Google Shopping
- Single-page checkouts
- Responsive websites
- Supports PayPal one touch, Apple Pay, Google Pay and Amazon Pay
- Real-time shipping quotes
- Professional reporting tools
- 24/7 live-agent support
- Customer segmentation and grouping (Plus)
- Abandoned cart saver and persistent cart (Plus)
- Stored credit cards (Plus)
- Google Customer reviews (Pro)
Salesforce Commerce Cloud
Previously Demandware, Salesforce Commerce cloud is designed for enterprises and offers a complete range of functionalities and features for both B2C and B2B. The complex, but highly capable platform can handle almost any business application and supports a wide range of verticals. Pricing is available by quote and depends on the features and functionality a business needs.
Key features (B2C)
- A powerful and sophisticated e-commerce platform
- Mobile commerce
- Price books
- On-demand Sandbox
- Fully-featured reference App and certified integrations
- Native A/B testing and targeting
- Guided navigation
- Multi-site management
- AI-powered e-commerce
Being one of the oldest e-commerce platforms (founded in 1999), Volusion is still popular and serves over 30,000 stores. It works well for SMBs and startups that want to quickly get started while being confident that they would be able to scale as they grow. Most of the essential features are baked right in to the dashboard and do not require users to install them from the app store.
Although it might not be as advanced as other newer platforms, it is able to serve most businesses well at a competitive price. Volusion also offers different services, including image ad asset creation, Google Analytics training, Facebook Pixel and homepage optimization at an additional cost.
Pricing: Starting from $29/month (Personal, $50,000/year), $79/month (Professional, $100,000/year), $299/month (Business, 500,000/year), Prime (Based on GMV/year)
Key features (Professional)
- No transaction fees
- 5 staff accounts
- Up to 5,000 products
- Unlimited bandwidth
- Online plus phone support
- Responsive themes
- Drag-and-drop tools
- SEO tools
- Social media integrations
- Reviews and ratings
- Abandoned card reports
- Phone orders and CRM
- Amazon and eBay
- Batch order processing
- API access
- Customer loyalty plans
- Advanced report builder
- 3rd-party gateways
The platform works great for businesses that are focusing on mobile users and cannot wait to launch their online store. The WYSIWYG editor makes it easy to customize built-in templates without having to deal with HTML and CSS code. A drag-and-drop interface takes away most of the complexities involved in creating an online store. The all-inclusive, mobile-focused SaaS platform is designed to be customer-friendly, scalable and is competitively priced.
Pricing: Starting from $9.50/month (Startup), $14.50/month (Basic), $39.50/month (Plus), $64.50 (Power), $114.50/month (Pro)
- Responsive design (core themes)
- Google AMP auto integration and Google-preferred design conventions
- Code is optimized to load important page elements first
- Upload unlimited products without any coding experience
- Up to 15 staff users
- Unlimited bandwidth, products and orders
- Up to 30 email accounts
- API access
- No transaction fees
- Real-time shipping
- Unlimited product variants
- Google Customer Reviews
- Single-page checkout
- Domain registration
- Facebook Store
- Built-in blog
- More than 100 payment providers supported including PayPal, Visa/Masterpass, Apply Pay, Google Pay, Bitcoin
- CRM (except the Startup plan)
In addition to the top 5 SaaS ecommerce platforms covered above, there are some other options too that are primarily targeted at novice users. These include Squarespace and Wix that allow startups and small and medium businesses to start building their online store using an easy-to-use and drag-and-drop builders. However, these might not provide the flexibility, integration and customization many businesses need for their online store.
The most important factors to consider when choosing between open-source/SaaS solutions or between different solutions include understanding your own business requirements, processes, technical know-how and of course the IT budget. The decision is pretty straight forward for SMBs that want to get started right away without having to worry about all the backend stuff. But large businesses have to carefully weigh all the pros and cons and choose a system that offers the best ROI both in the short and long term.