Why SaaS is Risky for Ecommerce

08.8.17 Published by

“Those who fail to learn from history are doomed to repeat it.” – Churchill

Technology changes so rapidly these days that sometimes it’s easy to forget even our recent history. Let me tell you how thousands of merchants, including hundreds of my own clients, were evicted by a tech giant and explain why the same danger exists today with SaaS (software as a service) providers like Shopify and BigCommerce.

Two years into growing my digital agency, we adopted and sub-licensed StoreSense as our preferred platform for building ecommerce websites. That was way back in 1999 when most people were still accessing the Internet with dial-up modems. Needless to say, I’ve been around the block a few times.

StoreSense was similar to SaaS solutions of today in the fact that it was only available to merchants as a hosted solution. Four years running in the early 2000’s, StoreSense won awards by PC Magazine as well as accolades from several other leading publications for being the best ecommerce storefront solution. And it was.  We designed, built and hosted hundreds of sites using StoreSense.

Check out this review from 2004 when Neoverve gave PC Mag a test drive of our StoreSense offering. https://goo.gl/bpmiMA

Large players began joining Neoverve as StoreSense partners, reselling or white-labeling the solution.  More notable companies included: Network Solutions, Intuit/Quickbooks, Homestead, Hostopia and even Bank of America. StoreSense was growing, business was booming and everybody was happy. Or so we thought.

Along comes eBay in 2005 and swallows StoreSense whole. I won’t get into eBay’s reasons for wanting StoreSense except to say they were beginning a spree of acquiring best of breed digital commerce technologies. eBay rebranded StoreSense as ProStores and began offering it as a SaaS.

Fortunately, eBay did not immediately terminate Neoverve’s agreement to continue sub-licensing the solution as ProStores. That came later. But it did begin a period of years where the development roadmap of ProStores shifted in favor of eBay’s ever changing corporate vision, which was not always the best direction for many of my clients.

In 2008, Magento was released into the wild on a wave of new, free, open source technologies. The open source movement was gaining tremendous momentum and Magento soon achieved dominance in the ecommerce solutions space. So in 2011, eBay swallows Magento whole.

“Out with the old and in with the new.” – Unknown

eBay ends the life of ProStores SaaS and kicks thousands of merchants to the curb. One would assume eBay should provide an easy migration path to their new favorite platform.They didn’t. Sorry. Move out and rebuild. Some merchants just quit.

Understandably, my clients and I were upset with eBay. Yet I helped most of my clients migrate to Magento. Despite my fractured relationship with eBay, I recommended Magento CE for two very important reasons:

Reason #1 – Magento is awesome and open source, meaning as innovative solutions developers, we were no longer handcuffed by closed SaaS code. Any brilliant idea to improve a client’s sales, site or operations became an immediate possibility. Marketers and merchandisers no longer need to wait to see if and when a needed feature might be added.

Reason #2 – Magento CE is free to download and use forever. Businesses remove all risk of being kicked off a platform or outrageous price hikes like BigCommerce rolled out in 2016. Companies using Magento CE own their site completely and control their own costs and destiny.

A few of the SaaS options available today look pretty attractive on the surface and might be just fine for some. But like with StoreSense, you never know what might happen. As businesses continue to shift investments more into digital commerce, and the cost of maintaining a site built on newer open source platforms like Magento 2 and WordPress-WooCommerce stabilizes, it’s hard to make a risk-reward argument in favor of ecommerce SaaS versus ownership.

* As of Nov., 2015, Magento is majority owned by Primera, a private global investment group and is once again operating as an independent company.

Opinions are those of the Author.

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