E-Commerce? How Much Do You Pay Before You Get Paid?November 26, 2012
So, you plan on starting to make money by selling online. Beware! Web Site Magazine published the findings of an interesting new study, about the hidden costs of e-commerce platforms.
The study was commissioned by Demandware and carried out by Forrester Consulting, on 156 US, UK and German eCommerce, Marketing and IT technology leaders.
What does it say? Well, basically what we have been telling our clients for years: the cheapest isn’t cheaper. Most of the times, the cheapest solution you purchase, “just to get started” with eCommerce, will end up cost you much more than you envisioned, a lot of times a whole lot more than you would have paid for a more comprehensive solution right from the start.
When it comes to selling your product/service through online shopping carts, there are several factors that you need to consider. Among those, the most important are:
1. The type of shopping cart you implement
2. The Merchant Account tied to your shopping cart
3. The Payment Gateway linking the Shopping Cart with your Merchang Account.
While the costs of the Merchant Account and Payment Gateway are relatively easy to project, it is the type of shopping cart that you chose, that will cause you most of the headaches, the study shows.
Chosing a shopping cart means deciding on the following:
a. Type of Ownership
b. Type of Licensing
Befor you purchase your next shopping cart solution, pay attention to both!
Most people think that if they own something, they pay once and have it for life. Not so when it comes to most things “digital”, i.e., the ones you can’t really touch.
a. Ownership: 43% of the companies surveyed stated that their total cost of ownership (TCO) was generally bigger or significantly bigger than they had anticipated.
Buying the software and installing it on your own servers, won’t prevent you from forking out big bucks down the line if you don’t chose wisely. Like any software, shopping cart solutions might come with limitations, out of the box. Paying a subscription to an online service provider might prove cheaper, but those subscription costs might add up. The only advantage is that you can chose a provider that offers and even implements updates automatically. And that brings us to:
b. Licensing: most of those limitations have to do with the terms and conditions of licensing the software to the ultimate user. As many of us know, owning a piece of software doesn’t stop the company that sells it from coming up with updates periodically. These updates might or might not be critical, however, sooner or later you would need them. If you don’t read carefully the contract that grants you the license, you might end up paying a lot more than you think, and not only for updates.
One of the most important limitations when it comes to eCommerce software comes from restrictions on the number of licenses itself. Depending on the markets you are deploying in, maximum number of users threshold of order volume, you might run into unforseen costs depending on how fast or how far you end up expanding your online business.
As a result, placing your eCommerce platform entirely in the Cloud, becomes an option that more and more business owners start to become accustomed to. As the standards and regulations of conducting business and transactions online are getting stricter, the confidence in the safety and efficiency of those solutions grows. The level of confidence of the companies surveyed, in cloud-based eCommerce solutions, was at 41%.
If it seems to much to swallow in one sitting, eBiz Miami, Inc. will make it go down easier, whenever you’re ready to tackle your future eCommerce needs. We will advise you of the choices that are out there and help you chose the right one for your business.
For the entire article on this new study, use this LINK