Should you develop your own e-commerce platform or rent a commercial one?
Jakob Twedmark
CEO
A strategically central question for your e-commerce development is undoubtedly your technical platform strategy. And by that I don't just mean choosing the right platform, but above all whether you should build and maintain it with your own developers or not, and whether you should base it on a commercial platform or on custom-built code.
So let's dive deep into these two options.
Background
Around 2008, the open source platform Magento saw the light of day. License-free and with a wealth of free or inexpensive plugins, it quickly became a popular alternative for those who wanted to run an e-commerce store and get started at low cost. A few years later, another option emerged in the form of WooCommerce, which had the advantage of being easily integrated with the world's most popular blogging tool, WordPress. In addition to these two, more and more open source alternatives appeared on the market.
For those who didn't have developer skills themselves, there were (and still are) a multitude of consultancy firms and freelancers offering their services to build sites based on these platforms.
In 2018, Magento was acquired by Adobe and what was previously called Magento Plus, a paid version, was subsequently renamed Adobe Commerce. Magento Open Source still exists, however, but has lost some popularity as more and more commercial platforms have emerged.
Note: In 2021, Adobe renamed Magento Enterprise to Adobe Commerce, which may affect the search trends above. However, the open source version is still called Magento, and that is the term many still use.
Today there are of course additional options for those who want to build their own e-commerce site without paying commercial licenses.
Why doesn't everyone use an open source platform?
An open source platform that is to live up to its name needs to become so popular that many want to contribute to its development. To achieve that, the platform needs to meet a great many needs simultaneously, or at least avoid becoming so niche that it excludes a large part of the potential audience. Open source platforms therefore tend to become either very general, or very packed with features that not everyone necessarily needs.
Another challenge has been that a popular platform becomes an attractive target for various cyber attacks. Because the source code is open and accessible, while the number of sites that can be attacked in the event of a security vulnerability is large, open source platforms have historically been more exposed to various hacker attacks than commercial ones.
Does all custom development have to be based on open source then?
No, there are many other ways to build a site as well. Some sites are built entirely on custom-developed code, which for those with very specific requirements for their solution can be the right path. Today, however, there is so much ready-made functionality that this is instead handled through "composable commerce", which can most simply be described as an à la carte menu of subsystems that are integrated to work together.
Those who choose to develop their own solution need to take responsibility for its ongoing development and maintenance, which is usually solved by hiring an in-house team of developers. Having only one developer may cover the needs for the moment, but problems arise as soon as there is illness, holiday periods, or the person in question decides to change jobs. The business then risks standing still if something unforeseen happens. E-commerce companies that choose this path often need to manage that risk by having a group of developers employed.
The advantage is of course that you then simultaneously have a relatively large development capacity available each month, compared to spending the same cost on external consultants.
Some advantages of handling development yourself — and owning your own solution:
- The cost per development hour is lower
- No license cost
- No limitations on how the solution can be developed (but development needs to be done in-house)
Some disadvantages of having a custom-developed platform:
- Usually requires an in-house development team
- Operations-related issues and incident management often need to be handled by in-house staff
- Can be expensive to maintain, as much of the development is customized functionality
- There is no commercial counterpart to make demands of regarding functionality or security vulnerabilities
An alternative to developing your own solution is to rent a commercial platform
For companies that decide not to have an internal IT department, the alternative is usually to purchase both development expertise and platform from an external party. Some platform vendors also offer consulting services for customizations, while others only offer the platform, combined with a partner network of consultancy firms that assist with implementations and customization. We at Motillo belong to the latter category and we build our solutions on the Swedish e-commerce platform Litium.
5–10 years ago, it was common for an e-commerce platform to be purchased at a one-time cost combined with an annual fee to receive updates and support. As the business grew, new add-on licenses often needed to be purchased in various packages. This model, often called "on-premise" because customers were responsible for operations themselves, has today almost entirely been replaced by various forms of subscription models where operations and support are included at a monthly cost that in one way or another follows sales volumes. This makes it easier to understand how costs evolve as sales increase or decrease.
Some reasons why companies choose this path:
- Do not want the staffing responsibility of an internal IT department
- Want to be flexible when it comes to ongoing costs
- There are specific needs that are better met by a commercial platform
- Want to continuously access new functionality without having to specify requirements themselves
Some disadvantages of choosing a commercial platform:
- Dependent on an external party for both maintenance and new development
- Certain functionality in the platform can be difficult to customize
Summary and thoughts
No option is best for everyone, so it is important that everyone draws conclusions based on their own situation. If you know that you will want to develop a wealth of unique features and want to be able to control large parts of the solution yourselves — then it may be justified to develop your own platform that you manage yourselves. The same applies if you see yourselves as a technology company, where development capacity may already exist in-house.
If, on the other hand, you want to focus on your core business, your products and customers, without wanting to build up your own IT expertise, then it may well be better to bring in external specialist expertise in this area. You can then choose both the platform you think suits you best, and the type of partner you want to work with.
