Starting an online shop has never been easier. Dozens of eCommerce solutions can help get your business online in minutes. As such, you must decide if a hosted or self-hosted eCommerce platform is right for you.
Which type of platform you choose largely depends on two major factors, your skill level and the price. In simple terms, self-hosted options are cheaper but require more skill to set up and manage.
Meanwhile, hosted options take less skill and maintenance, but instead, make up for that by being more expensive. There is no wrong answer in these situations, but the advantages of one platform may be more desirable for some.
Today we will compare hosted and self-hosted eCommerce platforms to see which one is right for your store.
What Are Hosted eCommerce Platforms?
A hosted eCommerce platform refers to a site that is built and managed using a third-party service. That third party is responsible for providing support for your store, maintaining the store with regular updates, implementing security measures, and more.
Simply put, a hosted eCommerce solution takes care of the technical aspects of running a store, so you can focus on the more traditional aspects like inventory management, pricing, and store design.
That said, it is also worth noting that store design is typically much simpler with a hosted provider.
These options usually include a variety of templates and dummy content that you can use for your store. In many cases, you’ll just need to change the colors and replace the dummy text. However, this is also a good time to talk about limitations.
While these templates are a great tool for quickly launching a store. You’ll quickly discover that you don’t have complete control over your store’s appearance. The options are limited and there’s nothing you can do to change that.
Naturally, if you are getting more support from the provider, the cost of using a hosted service is typically higher. Not only from a web hosting perspective, but they also include transaction fees as well as fees for using payment gateways.
Advantages of Hosted Platforms
Let’s take a closer look at some of the key advantages of using a hosted eCommerce platform. Here are the top three:
Ease of Use
While building a website has gotten significantly easier over the years, it can still be challenging for someone unfamiliar with web design. Hosted platforms understand this and focus on eliminating the aspect for businesses.
The hosted platform will handle all maintenance of the site like updating software, ensuring the latest security tools are in place, and so on. They will also streamline site creation by offering users dozens of templates to utilize.
As such, it is not a lie to say you could have an online business built in less than a day using a hosted platform.
Access to Support
While many may think of the web design aspect as the hard part, that’s not entirely the case. Learning how to use the eCommerce platform to set prices, schedule when deals go live, manage inventory, create coupons and more is where most of your time is spent.
And while these systems have been streamlined over the years, they can be extremely overwhelming for beginners. Hosted platforms specialize in the eCommerce systems they offer and can help answer your questions and resolve problems quickly.
This support is often a lifeline for beginners who are using an inventory management system for the first time.
Enhanced Security
Naturally, guarding your data as well as your customer’s data is vital, and virtually every hosted environment implements its own security measures that are tailored to eCommerce needs.
These systems will also scale up as your business does as well. They have features like SSL certificates baked into their packages to ensure data encryption and web browser compliance. All of this requires virtually zero input from the site owner.
In the event something does go wrong, the hosted platform can be liable instead of you depending on the situation.
Disadvantages of Hosted Platforms
Like most things in life, there are also several disadvantages associated with a hosted eCommerce environment.
More Expensive
Since hosted environments offer higher levels of support, they often come attached with higher price points. This is because they offer you everything you’ll need to run an online shop in one place.
However, the monthly hosting cost is not the only expense. On top of this, most of these platforms will also have a transaction fee on every order. They vary from platform to platform, but they can quickly eat into your profits.
And just to be clear, these transaction fees are separate from what payment gateways like PayPal or Stripe charge.
Limited Design Options
While the template options offered are quite spectacular, they often lack the ability for further customization beyond simple cosmetic changes like color swapping or selecting a font.
As such, this can make it difficult, or flat-out impossible to get the store to look the way you want it to. This is because these platforms do not allow you to adjust the source code, which means you can only use the tools they allow you to.
For some users who do not have any coding expertise, this isn’t as bad as it sounds, but it does limit what you can do.
Lack of Control Over Vendors or Payment Gateways
In some cases, you may not have the ability to partner with the vendor you want or use the payment gateway you desire. This is because hosted platforms often limit you to using their proprietary system or their partner systems.
As such, this can severely limit the options you can offer customers. On top of this, these platforms may also decide that you cannot sell certain goods on their platform. For example, if you were using Etsy, you cannot sell mass-produced items.
For this reason, you need to carefully examine what each platform supports and does not before you decide if it is right for you.
You Do Not Own Your Site
At any point, the host can choose to remove your site if it violates their terms and services. You can lose all of your data, and even if you make a backup, most of it cannot be transferred to another platform.
This is because hosted platforms have their own software and design options that do not transfer. This is a way to ensure that you are less likely to leave their platform for another.
That said, you can usually transfer the contents of your store to another inventory management system.
What Are Self-Hosted eCommerce Platforms?
A self-hosted eCommerce platform is one in which you rent a server from a web host and build the site yourself using a CMS like WordPress. Naturally, this makes starting an online store, or any kind of website, harder to pull off.
You will be fully responsible for building the site, adding the store functionality (shopping cart, product reviews, etc.), maintaining the site, and everything else associated with owning a website.
With all of this said, these platforms are much cheaper to pay for monthly, and often don’t include transaction fees. As such, you will keep a bigger portion of the sales you make. This makes it a more desirable choice as your store grows.
When it comes to design, you have complete freedom to develop your store from the ground up.
This is as much a blessing as it is a curse. Depending on the CMS you choose, the difficulty can vary wildly. For instance, if you pick WordPress, you can build an online store relatively easily without writing a line of code.
You can even use page-builder plugins which are probably the easiest way to build any kind of site without any limitations. However, other CMS do not have the same options or ease of use.
Advantages of Self-hosted Platforms
Self-hosted platforms have become the most popular option for eCommerce. Here are some of the key advantages why that is the case.
Cheaper
Web hosting is an incredibly competitive industry. As such, the prices are very cheap. You can host an entire site for less than a cup of coffee for a month. While many of these platforms may have additional ways to spend money, they are often optional.
For example, if you choose WordPress as your CMS, it is free to use. You can then use WooCommerce, an eCommerce plugin to build your store for free. And it wouldn’t even charge you transaction fees (not including payment gateways like PayPal).
As such, these platforms are usually the goal of entrepreneurs who want to maximize profits.
More Vendor Options
As a self-hosted eCommerce site, you are free to partner with any vendor you want and sell any kind of product or service you want. You can also find options to implement any kind of payment gateway you desire.
Essentially, you have complete control over what is on your site and how it behaves. That said, it does depend on the platform you choose to build your site. There are some limitations, but you can usually find a paid add-on to remove them.
For example, if you pick WooCommerce, the most popular self-hosted option, virtually everything is compatible with it.
Limitless Design Options
Self-hosted sites do not have any limitations when it comes to design, but the way you go about it depends on the CMS you choose. For example, if you pick WordPress, you will have access to the block-based Gutenberg editor.
This allows you to use blocks to create content, but you are not limited to this. You can install a page-builder plugin of your choice to gain access to an entirely different editor, or you can add your HTML to create pages from scratch.
It’s also worth pointing out that many themes in WordPress have templates that you can use to start your design.
Disadvantages of Self-hosted Platforms
Certain disadvantages might not make a self-hosted platform the right choice for you. Here are some of the biggest issues.
Complexity
Building a website has gotten incredibly easy over the years, but it is still a challenge. You need to add all of the site functionality like a shopping cart, implement security measures to protect customer data, and design a storefront.
While there are easy tools you can use, it is fair to say that it will take time and you need to carefully research each step. And unless you are paying for premium tools, you are typically on your own outside of online tutorials.
While this is not the hardest thing in the world, it is much more difficult than using what a hosted environment offers.
Maintenance
Perhaps one of the most overlooked aspects of web development is the maintenance that your website will require. You will need to keep your CMS and all subsequent add-ons for it up to date. Failure to do so poses a security risk.
While this often can be automated, it is worth noting that many sites choose to do this manually. This is because when an update goes live, there is a chance it can make certain features stop working on your site.
As such, you often need to do a full test of your website every time a new update goes live.
Lack of Support
While there are a ton of resources for building a site with CMS like WordPress, the truth is that it’s up to you to read and understand it. Most CMS do not provide support when you are having trouble. Instead, it’s up to you.
There are tools and themes that may provide support, but this comes as an additional expense, which is why many beginners may opt for the more expensive options to make sure they have a lifeline.
If all else fails, you can hire developers to help design your site or troubleshoot a problem, but they are expensive.
What’s the Difference?
Simply put, a hosted environment offers users ease of access for a higher price tag and fewer options, whereas self-hosted options are cheaper, but in exchange, leave everything up to the site owner to manage and maintain.
When just starting for the first time, a hosted environment is an easier way to enter the market. You can simply focus on the store itself, and leave the more technical aspects to the third party.
However, as your site grows, the transaction fees and limitations on design will lead most online stores to the self-hosted option as it is better value and more freedom for your business.
Which is Better?
Self-hosted eCommerce platforms are better in the long term. They provide more options for the store to create with and have lower fees associated with them, which means you take home more money on every sale.
Generally speaking, most online stores only make a few dollars on every sale after shipping and handling, thus those extra fees can really cut into your profits. While they do have fewer guardrails in place for beginners, the potential is night and day.
In comparison, hosted eCommerce platforms are a great starting point, but ultimately make migrating to your own site far more difficult than if you just started with your own site from the get-go.
However, beginners may find the additional support they offer and limited options more appealing. The simplicity can help you get used to running an online store before you also need to manage your website on top of it.
My final verdict is to start with a self-hosted platform like WooCommerce. Most sites naturally get there anyway, so you are saving time and effort by starting there from the beginning.
Hosted Vs. Self-Hosted FAQ
Comparing a hosted to a self-hosted environment is incredibly complex. There are plenty of other considerations that you need to consider, but those discussions really need to take in the exact platforms you are comparing.
Here are some additional questions you may have with answers.
No. The host can terminate your website at their discretion. If you choose to go somewhere else, the base of your website cannot be transferred. Instead, you have to rebuild from the ground up.
For smaller sites, a shared hosting plan is much cheaper and will be able to accommodate all of your needs, but as your site grows and requires more resources, you will need to upgrade to your own server.
No. Regardless of what option you choose, you do not need to write code. Hosted options typically make this impossible to do, while it is only optional in self-hosted environments.
You can build a website for just the cost of web hosting in most cases, however, it is worth pointing out that many developers can easily spend thousands on a site depending on what features they include and if they choose to hire designers.
Yes. Once you create a site, you can easily transfer it between web hosts. Many will take advantage of this and always hunt down the best web hosting deals they can find due to how easy the process is.
It largely depends on your experience. Seasoned vets can get a site built in less than a day. Beginners could take an entire month. It depends on the complexity of the site you are building, along with personal skills.
Generally speaking, you are on your own when it comes to marketing. While some hosted platforms like Etsy have marketing built-in, it usually has a high price tag. Instead, focus on social media growth and optimizing your SEO for the best results.
Start Building Your eCommerce Store Today
Building an eCommerce site has never been easier and there is a platform for everyone. While I think self-hosted sites are better in the long run, a hosted eCommerce platform is an excellent starting point to test the waters.
The most important part is taking the first step. If you are serious about building an eCommerce site, create an actionable plan that you can follow to get your site online. Once you have a plan, then it is time to start building.
And perhaps even more importantly, make sure you have the funds to support your store for at least six months. It can take a long time before you get traffic. As such, you need to be able to cover the overhead.
I hope you found this discussion helpful when trying to decide between a hosted and self-hosted eCommerce platform.
Do you prefer hosted or self-hosted eCommerce platforms? What is your favorite eCommerce platform?
