By far the most requests for website quotes that I get are from small business owners who want to develop sites that allow them to sell products online. Back when I started in the industry in the early 2000s, ecommerce was not necessarily an easy thing. There were a lot of moving parts to program, and while there were pre-made shopping cart solutions we could use, they were extremely limiting. Most customers chose to hire programmers to build custom solutions. Any time you see the word “custom”, think expensive.

Today, those pre-made solutions are much better and can handle just about any conceivable ecommerce situation. While costs are much lower and upkeep burdens on the business owner are simpler than they have ever been, every business owner is still going to be faced with some serious upfront decisions.

Choose between a hosted or self-hosted solution

Most of the ecommerce solutions you hear about today, and are advertised to the public, are hosted solutions. Think Shopify, BigCommerce or Squarespace to name a few. These solutions are advertised as all in one, easy to use solutions that can “get you selling quickly”. “Hosted” means you are housing your website on cloud servers, using software, checkout, order management systems, and security which you are renting for a monthly fee. All you do is choose a template, input a few products with images, and you are ready to go.

Self-hosted solutions, on the other hand, are more customized options where you really would be looking at hiring a professional website developer and building a solution tailored to your needs. You sign up for a monthly hosting account or set up your own server and deploy your own ecommerce package.

Pros and cons of a hosted solution include:

  1. Ease of use: If you are comfortable with creating a Word document with text and images, you can probably figure out how to build a descent website through a hosted solution without hiring a website developer. Therefore, upfront costs can be much lower with a hosted solution.
  2. Credit card processing and security are built in: Credit card processing and the need to provide customers with a secure checkout process are typically all included in hosted solutions so there are less moving parts to worry about.
  3. Long term costs are higher: Over the long haul though, you are most likely going to pay more for a hosted solution. Shopify’s standard account, for example, charges $79 a month versus a self-hosted account with BlueHost with SSL starts $14 a month – that’s a difference of $780 a year! Credit card processing fees are about the same in either case.
  4. There is no going back: Once you go down the path of using a hosted solution, you are locked into their proprietary system. So, if you start at Shopfiy, and decide to move to BigCommerce, you need to start over from the beginning – redesigning everything inside BigCommerce’s proprietary software.
  5. Add-ons are expensive: Let’s say you want to add on a unique feature to your store such as complex product options, or social sharing capabilities, or maybe you want to integrate with an external accounting system; add-ons with a hosted solution are all extra, and the costs can really add up over time. Taking a quick glance at Shopify’s add on page, I can quickly see addons that range in price from $10 a month to $499 a month!

Pros and cons of a self-hosted solution include:

  1. You own your site: While you are most likely going to need to hire a developer, once the site is done, you own it. You can move the code to any hosting company you want – even to your own dedicated servers allowing you to dramatically scale up if your business becomes huge. Many hosted solutions limit the amount of sales you can transact or the amount of bandwidth you can use for each price level, so when you get bigger, they charge you more. For example, BigCommerce has a $30 a month plan, but sales are limited to $50,000 a year. Go beyond that, and they start charging you $79 a month for up to $150,000, and even more beyond that.
  2. Hosting fees are reasonable: With a self-hosted account, your monthly costs are typically lower. BigCommerce charges between $30 to $250 a month for their hosted solution, versus self-hosting with GoDaddy starts at $8 a month including SSL security.
  3. Upfront costs are greater: Business owners are not likely going to be able to develop their own custom website, so you are going to need to foot the bill for a developer. Prices for eCommerce development can range between $2,000 to $50,000 or more, and can take many months. But, you are getting a solution customized to your specific business and marketing needs.
  4. Credit card processing and security: Most hosted solutions include all security and many include credit card processing. If you create a self-hosted solution, you need to make decisions on how to provide these to your customers. It’s not difficult, most hosting companies can take care of the security for you, but they are decisions that need to be made and separate services that you need to sign up for. Talk to your website developer and they should be able to walk you through the options.
  5. Unlimited add-on options and customization: Really, the main reason to go with a self-hosted solution are the add-ons and ability to customize. Most developers use open-source software such as WordPress, and the vast majority of add-ons are free or can be installed for a minimal cost. If you have any ideas of going beyond the basic product title, image, description, price, and buy now button, you are going to need add-ons and with a hosted solution, you are stuck with only the add-ons they provide. Third party software is generally not allowed. Right now, for example, CodeCanyon, a leading third-party add-on reseller, lists 5,940 lost cost add-ons for WordPress, and zero for Shopify or BigCommerce.

Choose between onsite checkout versus offsite checkout

I approach every decision from a marketing perspective, so to me, this choice is a no brainer, but it is a choice you need to make. Self-hosted ecommerce solutions require you to decide on the type of checkout system you want. The decision is largely based on the type of credit card processing you choose to go with. Onsite checkout is a true checkout system where credit card information is gathered by your website, on the checkout page. Offsite sends your customer out of your site to an external page, such as a PayPal page, to collect sensitive information such as credit card number, and then back to your site if the charge is approved.

Benefits of offsite checkout include:

  1. Security is taken care of: Since credit card processing is done offsite, you don’t need to worry about securing your hosting account. Hosting fees are much lower.
  2. Credit card processing fees are sometimes lower: PayPal for example has two options. Normal PayPal is an offsite solution and PayPal Pro is an onsite solution. The per transaction fees are the same, but the onsite Pro version charges a $30 monthly fee and no monthly fee is charged to the offsite solution.

Benefits of an onsite checkout solution include:

  1. Minimum clicks necessary to complete transaction: I am a big believer in the concept of putting your customer first by making the shopping experience is easy as possible. Once someone clicks that “Checkout” button in their shopping cart, how many pages are you going to send them through, and how does that affect the possibility of abandonment? With an offsite solution, they will enter their billing and shipping information on one page (that’s 1) then continue to a PayPal login page (that’s 2), then they go to a PayPal checkout page (that’s 3), then a PayPal confirmation page which will send them back to your site for final confirmation (that’s 4). 4 clicks, versus an onsite checkout can be done on a single page, 1 click. All of that is assuming they have a PayPal account and can remember their login and password.

The best overall solution

The best solution overall is one that is customized to your needs. Every business is different and you need to decide. If you are selling simple products, T-shirts for example, and shipping them in boxes, and that is it, a hosted solution may be the best choice.

Like my clients, if your business is a little more complicated, or want a solution that you own that can change and evolve with your business, the choice is clear, you need to hire a developer to build a self-hosted customized solution with a single page checkout and an order management system.