When searching for an e-commerce platform there are several options that are available. As Los Angeles e-commerce experts we’ve had experience with e-commerce platforms both custom-built and third-party since our early years (learn more about our e-commerce expertise). This article focuses primarily on two major platforms rather than an overview of all platforms. However, because both have a vast amount of functionality that is similar to other platforms this can also be interpreted as a high-level hosted vs self-hosted comparison.
What is an e-commerce platform?
Essentially an e-commerce platform in this context is a web system that provides e-commerce features to users. Fundamentally this is usually the notion of a product, options such as size, a cart, checkout process, and user accounts. Beyond that, an advanced platform can incorporate all sorts of additional features such as coupons, multi-channel integrations, and extensions or apps.
What are the main differences between Shopify and Magento?
Since both platforms offer many of the common e-commerce platform features, the main difference between the two is that with Magento you own all of the code that runs your site while Shopify you don’t own any of it. The biggest impact that has is by owning the code you are also responsible for finding a way to host it and maintain it, likely by outsourcing that responsibility to another company. For Shopify, they host and maintain practically everything except the third-party apps and how you configure the store.
By now you’re probably seeing one of the main trade offs: convenience vs. lock-in.
Lock-in includes many potential concerns that might be issues for your business. The primary ones are not being in control of the platform’s overall cost, account suspension, prohibited businesses, control of data, and DMCA Takedown Notices. For most businesses though, especially smaller ones, those aren’t a problem. A smaller business’, especially a startup, primary concerns are going to be more focused on time-to-market and initial investment.
Shopify and Magento aren’t the only two platforms: Learn more about our e-commerce services.
How do you extend either platform?
Shopify has a straight-forward way of extending their platform via the use of public or private add-on applications. These applications utilize the Shopify API to perform new functionality within the store that the platform doesn’t have built-in. Such examples would be custom discounts for loyalty programs or adding a new shipping carrier. However, the app can only interact with the store in a manner that the API allows. If you need your store to do something that the API doesn’t support, then you’re stuck. To some degree it also limits the level of integration to the customer experience.
Magento has a similar manner of adding pre-packaged functionality called extensions. It also has an API for external integrations. However, because you control all of the code that powers your store, you’re free to customize it however you need to. You’re not bound to only what the API allows you to do. In some cases that’s a good thing because of the flexibility. In some cases it’s a concern because third-party extensions can affect the store’s security.
These are all important concerns that we try to figure out with our clients in the planning phase so that we can recommend the best platform and apps or extensions (and our platform expertise extends beyond Shopify and Magento!).
Are there any hidden costs?
There can be several hidden costs. Hosted platforms such as Shopify will tend to generate revenue via platform and transaction fees. Platform fees can pretty much be thought of a hosting fee, but with different limits. Self-hosted such as Magento itself won’t have any artificial limits besides what can be accomplished with the hosting environment (learn more about our hosting expertise). For example, if you need more than two staff accounts, you’ll need a plan higher than the “Basic Shopify” plan. However, don’t forget to include application maintenance for keeping Magento and the hosting environment up to date.
We know about hosting costs because we’ve been doing it: Learn more about our hosting services.
With the transaction fees it’s typically the case to get better rates than the hosted platform offers. In Shopify’s case if you use a different payment processor where you could be getting a better transaction rate, Shopify will add-on an additional fee depending on the plan. Chargeback costs are also a commonly overlooked fee, but for Shopify it’s a decent $15. Shipping fees are also an area of potentially cheaper rates on your own.
Fees for additional functionality
Another area of fees is the add-ons. Shopify apps are typically hosted by the third-party provided, so there’s likely a monthly fee. Most Magento extensions are integrated with the store and hosted with it. Take the popular example of gift cards. With Shopify you’d need to upgrade from the “Basic Shopify” plan. If that was the only feature you needed then you’d essentially be paying $50/mo just for the feature.
However, compared to Magento, a popular gift card extension (with customizable branding) costs $130 plus the cost to install it. Excluding the reduction in transaction fees and shipping fees, after doing the mental math, it practically pays for itself after 3 months and the savings continue to keep growing.
Which one should I choose? Should I migrate?
There’s a plethora of different factors that go into such a decision. Additionally, your best option might not even be between Shopify or Magento. Our long term history being involved in Los Angeles e-commerce business, we have a vast amount of experience involving many different business sectors. We strongly recommend that a client consults with us to help determine the best decision going forward because an important initial decision.
Such a consultation also applies to those with an existing store thinking of migrating. Hosted platforms may have tools to help you more easily migrate on your own, but are you going to be saving money? If you have an existing store you have an advantage to already know your expected costs to calculate all the various fees between the two platforms, and we can help you discover the cost to migrate along with executing it.
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Stated prices and fees are current as of Dec. 1st, 2016