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Saas-Based vs Licensed based | Which eCommerce Multivendor Platform Is Right For Your Business?

YoKart Chef05.15.2020
SAAS vs Licensed Based

The eCommerce industry has grown exponentially in recent years with the increasing number and sales of the online multi-vendor marketplaces. 

According to eCommerce statistics worldwide retail eCommerce sales are expected to reach $4.5 trillion by the year 2021 while B2B eCommerce sales will reach $6.7 trillion in 2020 surpassing B2C sales. These aren’t just numbers but proof of the substantial marketplace growth online.

So, investing in eCommerce is the right decision, but the biggest dilemma an entrepreneur faces is which technology will be best suited for the business. For instance, there is Infrastructure as a Service (Iaas) platform where you rent IT infrastructures such as operating systems, storage, networks and more on a pay-as-you-go basis. Also, there is Platform as a service (Paas) where you get hardware/software tools for design, development, testing, and even managing your online store. But, the best multi-vendor platforms available today are Saas-based and Licensed-based eCommerce platforms. Both these options are extremely popular among enterprises to grow their business online.

With multi-vendor platforms, independent sellers can manage their own stocks and the admin collects revenues from direct sales as well as vendors commission. The obvious advantage of a multi-vendor marketplace is:

  • More products
  • More customers
  • More traffic
  • More orders
  • And More revenue

An eCommerce marketplace offers entrepreneurs the resources at low cost to target the larger market, increase sales, quickly adapt to the changing consumer trends and more. By choosing the right technology solution or platform a business can truly become global.

Considering the significance of eCommerce stores, we’ll discuss whether to choose Software as a Service(Saas)-based or licensed based eCommerce platform for your venture. 

Let’s discuss:

SaaS-Based eCommerce Platforms

A comprehensive ready-to-use eCommerce solution with cloud hosting, software, technical support and more; SaaS-based eCommerce platform requires no extensive hardware set-up. It is a subscription-based platform managed by a multi-store vendor for customizations, integrations and internal issues. 

Licensed Based eCommerce Platforms

Also termed on-premise eCommerce solution, a licensed based platform is built by a third-party vendor and self-hosted by business with a fully-owned license. It provides complete control to the business owner.

Since both platforms offer unique solutions for building a reliable eCommerce store successfully, evaluating these two platforms becomes a daunting task. Still, to help businesses make an informed decision we’ve broken down into key characteristics that will define success for the businesses.

1. Integration with existing business applications/system

Business tools and systems are necessary for successful day-to-day operations. These tools may include ERP systems, order management systems, tax tools, shipping platforms, optimization tools and many more. Since an eCommerce store doesn’t run independently from the business tools it must integrate seamlessly with all the existing business systems. Similarly, 3rd party integrations are needed to build a b2b eCommerce platform

Integrations for Saas vs license-based platforms

  • Owners of Saas based eCommerce stores are tied to using Saas APIs for integration with existing business systems. Since the APIs are limited, it is difficult to integrate an eCommerce store with all your existing business applications. Here, the technical support from teams like Shopify is of no use and the only viable option is to outsource or hire developers as is the case with Licensed-based platforms.
  • For Licensed-based platforms, owners have the luxury to get custom integrations generated for the eCommerce store to incorporate existing business systems/tools as seamlessly as possible. Modern licensed platforms like Yo!Kart can be integrated with almost any API. The multi-vendor platform comes pre-integrated with PayPal, Stripe, Google Analytics, Mailchimp and many more APIs. 

2. Ownership cost

To set up and manage your eCommerce store there’s a price to pay known as the Total Cost of Ownership (TCO). This price typically includes the entire upfront cost for development, design, deployment as well as the ongoing maintenance cost for the platform. Estimating the total ownership cost requires a careful assessment of several factors like internal resources, opportunity costs and more. 

TCO for Saas vs license-based platforms

  • Since the subscription fee for a Saas based platform is relatively lower than on-premise license cost, many entrepreneurs recognize on-premise platforms as an expensive option. But, what these entrepreneurs don’t consider are factors like software customization and scalability that can influence the TCO of their purchased software. Yo!Kart, for instance, provides custom design in GoCustom Lite and GoCustom packages which unfortunately isn’t available in any of the Shopify packages. Also, there’s an additional expense of maintenance, support, and training requirements that may become overwhelming for Saas-based eCommerce stores. 
  • Alternatively, On-premise platforms allow you to have full control over TCO i.e. from development to customization and technical support. Here, you may choose to outsource or hire an in-house team to develop and make your eCommerce store future-ready. The flexibility of options available makes license-based platforms suitable for enterprises, SMBs, and large enterprises. 

3. Security

There are three types of individuals that a business encounters:

  1. One who wishes to buy from you
  2. Others who want to steal from you
  3. And third, who want to steal from your buyers

While it’s easy to sense and shut the last two types of individuals at an offline store, online however you lose that intuition. For an eCommerce store, security becomes a primary concern. There are stringent government and company policies that the business must comply with to prevent any security threats.

Security for Saas vs license-based platforms

  • For Saas providers, complying with strict security and government policies is an issue. A Saas-based eCommerce store is hosted on the cloud so it is the job of the service provider to stay compliant with the policies and implement the right security measures. Some Saas providers do offer compliance with the security but you do not enjoy the same control and flexibility as a licensed-based platform like Yo!Kart offers.
  • Extra sensitive information concerning the buyers or your business remains fully protected on licensed-based platforms. Here, the enterprises have complete control and can implement several security measures to prevent any security threat. Also, the licensed-based eCommerce store is on-premise, so staying compliant with the company and government policies isn’t cumbersome at all. 

4. The time required to set up the platform

Implementation time for platform setup is dependent upon several factors like:

  1. Preparing and importing data
  2. Determining process changes
  3. Staff training
  4. Managing configuration
  5. Importation management
  6. Refinement of data and more

These factors take the majority of the time to set up an eCommerce store for both Saas and licensed-based platforms. While the deployment process is unique for both platforms, data challenges remain the same. 

Implementation time for Saas vs licensed-based platforms

  • Saas based eCommerce stores have their resources deployed on the premises of service providers and an enterprise owner could access/use these resources any time they want. While ready-made integrations can be deployed almost immediately, no additional customizations are offered by the Saas providers. So, the time needed to hire a reliable development team and build customizations would drastically increase the implementation time.
  • On-premise platforms deploy resources in-house and within the IT infrastructure of an enterprise. Since the business has full control over the implementation process so the deployment time could be significantly reduced depending upon the resources. Also, the development team is in-house or hired so your requests are met quicker with no delays.

5. White Label

Re-branding or labelling the multi-vendor marketplace as your own while eliminating any traces of the outsourcing partner is termed as a white label. For instance, imagine a business that manufactures and packages perfumes in unbranded bottles. These perfumes are bought by another eCommerce business that adds its own name (white labelling) and sells them online. 

White labelling for Saas vs licensed-based eCommerce platforms

Saas-based platforms like Shopify or Bigcommerce offer no white label programs. So, an owner of the Shopify store will always have a Shopify/Bigcommerce signature on its eCommerce website until he/she switches to a multi-vendor platform that offers white labelling.

In selected licensed-based platforms like Yo!Kart, white-label partnerships are available. Here, the team offers solutions to re-brand and deliver a multi-vendor marketplace without Yo!Kart signature. This puts brands at the forefront keeping Yo!Kart anonymous.

Conclusion

Both platforms have a significant market share with a large number of devoted customers who prefer one over the other. But, the dynamics of the eCommerce marketplace are changing with the emergence of new trends and technologies.

Saas-based eCommerce platforms are more suited for a small scale online store. To start an eCommerce marketplace like Amazon or Etsy you need a platform that offers more control, flexibility and scalability. This is where license-based software like Yo!Kart comes in handy.

With Yo!Kart, enterprises enjoy a self-hosted multivendor marketplace tailored to meet their business requirements. Our Yo!Kart team delivers exceptional marketplace solutions in both B2B and B2C segments with an endless array of customizations. Experience our feature-rich platform through the live demo.

Author: YoKart Chef is an ecommerce guru and knows what startups need to thrive in a competitive market. Entrepreneurs & CEOs can count on YoKart Chef for valuable insights on latest ecommerce trends. Follow Yo!Kart on social media for latest updates Twitter, Facebook & Instagram.

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