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Questions To Ask About E-commerce Websites: Hosted vs. Non-Hosted

• 08/06/10
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Many people are considering e-commerce as their primary sales method or at least as part of their comprehensive sales and marketing plan. If you’re thinking about this virtual sales tool, there are a number of key issues you need to clarify about your future, or current, e-commerce based website.

I’ve just finished reading an excellent article on the Smashing Magazine titled “Getting Started With E-Commerce: “Your Options When Selling Online”written by Rachel Andrews. While Andrew’s main audience is web developers, I’ve summarized and expanded her information about hosted vs. non-hosted shopping carts for the benefit of business owners.

PayPal

While not actually a shopping cart, if you only have a few products and your customers are willing to pay only by PayPal, it’s relatively quick and easy to set up a PayPal account.  It is now possible to accept credit cards with PayPal Pro which adds merchant services (credit card processing) to your account.  PayPal Pro’s fees are relatively high, so if you plan to accept credit cards for transactions outside of your online transactions, you are better off setting up your own merchant account for all credit card transactions and using a shopping cart for your online transactions. 

To Host or Not to Host, That is The Question

There are many hosted and non-hosted shopping cart solutions on the market. Why should you care about hosting?  It has an impact on on-going costs and profitability, security, and the appearance of your site.

You may ask yourself: Why can’t my web designer make this decision for me? Well, some will, yet it is much better if you understand your options.  Many designers don’t have the education and experience in creating e-commerce sites so they only recommend the one solution they are familiar with - even if it’s not a great fit for your needs.

Most shopping carts have a lot of built-in functionality and features; before you make a final decision you need to think about what you specifically need so that you pick the right one.   If you need a lot of products, you’ll need a cart with categories and sub-categories.  In addition, sales tax and shipping fees are handled in a variety of ways so do your homework first. 

What is Hosting Anyway?

When a shopping cart is hosted, this means that you lease the shopping cart on the host company’s server.  Depending on the service, they can have monthly, per transaction or percentage of sales fees or some combination thereof.  These fees are in addition to the fees you pay for merchant services (credit card processing).

In contrast, you can purchase a non-hosted shopping cart for a one-time fee and set it up on any server that meets the shopping cart’s technical requirements.  You may need to purchase upgrade packages every few years.

Hosted Shopping Cart Solutions Pluses and Minuses

Hosted cart minuses:

• If you have a busy shopping cart, the monthly transaction fees can become quite large. In addition, most have monthly fees which you pay even if you don’t sell anything.
• Although it varies by provider, most have very limited ability to customize your shopping cart pages.  Unfortunately, this means it can be glaringly obvious to your customers that they have left your website and gone to another website.  Some may not buy because they think your site has been pirated; others may respond to the provider’s branding as safe and secure.

Hosted cart pluses:

• The hosting provider takes care of security updates to keep hackers from getting into the backend of your shopping cart and causing trouble.
• You don’t have to buy a server or shop for hosting in addition to selecting a shopping cart.

Recommended Shopping Carts

One of the better online-hosted shopping cart providers with competitive fees for hosting and transactions is Shopify http://www.shopify.com.  Their rates (as of this date) start at $24 per month and assume a 2% transaction fee.  

One of the better non-hosted shopping cart providers is Ecommerce Templates  http://www.ecommercetemplates.com.  They charge a one-time $129 fee (as of this date).

Summary of E-commerce Solutions

• PayPal: If you have only a few items and your customers are willing to pay only by PayPal
• Non-Hosted: If you want to minimize your monthly fees or already have your own server and don’t mind managing the security issues
• Hosted:  If the features and fees of your provider fit your e-commerce situation

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