What is an E-commerce Platform?
An e-commerce platform is a software application that allows online businesses to manage their website, marketing, sales, and operations.
What Ecommerce Platform Options Are There?
There are 3 main ways to classify the different types of e-commerce platforms:
- SaaS (Software as a Service).
- Headless Commerce.
Beyond this, there are two ways in which e-commerce platforms offer a hosting environment for their customers.
All business owners need a hosting environment to run their e-commerce store.
The two types of web hosting environments are:
- Cloud: Hosted Elsewhere.
- On-Premise: Self-hosted on your business premises.
Open-Source Ecommerce Platforms
Hosting Environment: Cloud or On-Premise, though all patches and platform updates require manual implementation across the board.
Open-source e-commerce platforms are e-commerce solutions in which you can modify all aspects of the code.
This type of e-commerce platform was the most popular in the early 2000s and remains popular with development and IT heavy organizations who want 100% control of their e-commerce environment.
Using an open-source e-commerce platform means the brand is responsible for:
- PCI Compliance.
- Hosting (depending on if your open-source solution is on-premise or cloud).
- Cloud commerce solutions that are open-source differ from on-premise only in that your hosting environment is offered by your provider and managed off-site.
- Keep in mind that just because your e-commerce platform is hosting your store using a cloud environment doesn’t mean you have unlimited bandwidth like you would see on a SaaS solution. Ask about specific bandwidth allowances, specifically if you are evaluating Magento or Volusion.
- Manual patch and update releases from the platform provider.
- Security issues.
- QA for all additional applications, often including integrations with:
- Analytics and BI tools.
- The building of net new tools for the site, often including:
- Discount and promotion engines.
- Merchandising and marketing tools (e.g. SEO features, email marketing).
- Design drag-and-drop builders.
For many brands, open-source e-commerce platforms are too cumbersome, expensive to maintain, and require too much technical knowledge.
As such, there has been a massive movement to the two other types of e-commerce platforms:
- Headless Commerce.
In fact, open-source e-commerce platforms hosted via the cloud (i.e. not on-premise) are today only 46% of the consideration set for large e-commerce brands.
Because on average, open-source e-commerce platforms and sites have a 6x annual cost of ownership versus SaaS or Headless Commerce models.
Brands can get to market materially faster with SaaS and Headless Commerce, in an average of 55 days.
SaaS ecommerce platforms
Hosting Environment: Cloud.
SaaS ecommerce platforms remove much of the complexity from running an online business because instead of managing the software yourself.
Instead of building and developing a custom solution or an open-source solution (which is often developed upon so much as to be custom), you essentially “rent” the platform.
When factoring in development cost, this is a vastly cheaper option than open-source solutions.
Product updates, security, hosting, PCI compliance, and every other task that comes with managing your own software are managed by the SaaS provider.
Marketing and growth teams at ecommerce brands are often the internal cheerleaders for SaaS ecommerce solutions at their organizations. This is due to a SaaS solutions ability to go-to-market quickly and affordably.
IT and development departments are often concerned about a lack of flexibility and customization due to the closed off portion of code on a SaaS solution. APIs help to ease this concern, as well as non-proprietary coding and staging environments for UX build outs.
Platforms that meet the above criteria are often referred to as “Open SaaS.”
Headless Commerce platforms
Hosting Environment: Cloud.
Headless Commerce is a version of CaaS (Cloud as a Service) ecommerce in which the shopping cart is decoupled from the CMS.
In these use cases, brands often use a design experience platforms (DXP) such as Adobe Experience Manager and Bloomreach or a content management system (CMS) like WordPress or Drupal. Then they plug in a decoupled ecommerce shopping cart solution to serve as the cart.
SaaS technologies like BigCommerce are also often used here in place of decoupled carts due to their low total cost of ownership and high API flexibility.
Historically, with on-premise hosting, open-source platforms or proprietary platform builds, IT and development departments at large brands have been controllers of the business.
However, due to the high cost of monolithic technology stacks and need for speed and innovation from a marketing standpoint, SaaS and cloud hosting disrupted the model.
Headless Commerce alleviates this pain point by allowing for faster go to market with significantly lower total cost of ownership.
Using APIs, plug-ins, and occasionally decoupled technology, brands can maintain their single source of truth monolithic systems on the operations end.
Other decoupled solutions a Headless Commerce provider works with include:
- Content Management System (CMS).
- Enterprise Resource Planning (ERP).
- Email Service Provider (ESP).
- Product Information Management (PIM).
- Order Management System (OMS).
- Point of Sale (POS).
- Marketplaces like Amazon or Ebay.
Olive & M is a great example of a Headless Commerce solution. The brand is using WordPress as their CMS and a BigCommerce cart as their checkout.
Self-hosted e-commerce platforms
Self-hosted e-commerce platforms require online store owners to find hosting, deal with installations and oftentimes perform updates to the software manually.
Running an ecommerce website using self-hosted ecommerce software requires developers to maintain and update the website, which can get quite costly and time-consuming.
The benefits of this option include more control over your online retail platform, greater visibility of your own data, and a better understanding of data security.
While this route makes sense for some extremely complex businesses, it usually results in higher expenses and lower revenues.
Cloud-hosted ecommerce platforms
Cloud-hosted ecommerce platforms offer hosting for their customers via off-site solutions like Amazon Web Services.
This means the cloud platform manages uptime for the brand. Cloud ecommerce platforms like BigCommerce manage 99.99% uptime annually and have had 4 years of 0 downtime during Black Friday and Cyber Monday, the highest trafficked times of the year.
Not all cloud-hosted ecommerce platforms offer automatic installations of patches, updates or upgrades. Only SaaS and Headless Commerce solutions do that.
This is where solutions like BigCommerce and Salesforce Cloud Commerce (both SaaS solutions) differ from a solution like Magento Commerce (Cloud).
What Are Important E-commerce Platform Features?
Every online shop has unique needs, and choosing the right solution is wholly dependent on the platform’s ability to solve the day-to-day challenges inherent within your organization.
There are, however, some basic things you should find out about prospective provider.
Important ecommerce platform features:
- Hosting environment, domain name, year-over-year uptime and bandwidth.
- Unlimited API call volumes.
- Website builder with free, user-friendly site themes in non-proprietary languages.
- Extensive application marketplace full of pre-built integrations with best-in-class service providers.
- Mobile optimized site, checkout and full experience (out of the box) and fully customizable.
- PCI Compliance mitigation.
- Search Engine Optimization (SEO) features and fully customizable URLs throughout the site.
- Built-in basic ecommerce features including promotions and discounts, analytics, catalog management, WYSIWYG editors, etc.
- The State of Ecommerce Platforms: Cloud Commerce, Open SaaS and The API Economy (Updated 2020)