The e-commerce industry continues to grow at an unprecedented pace. Experts predict that e-commerce sales will increase by 17.9% in 2021 compared to 2020, resulting in over $933 billion in online transactions.
Subscription services are an integral part of this recent growth. Fueled by the Covid-19 pandemic, subscriptions seem to be reaching into every nook and cranny of the e-commerce space — they are projected to reach a compound annual growth rate of 72.9% by 2028.
Numerous factors and emerging trends are shaping the way that merchants grow online. The backbone of this industry, however, comes down to a good website. Merchants can choose from three main categories of e-commerce platform technologies to create and maintain those websites: Hosted, open-source, and headless.
Even if you’ve been operating online for a while now, it’s important to understand other platform options and keep an open mind to change. Let’s dive into the key pros and cons of each platform so that you can determine the best solution for your subscription business.
Hosted E-Commerce Platform
A hosted platform is a software that hosts businesses online. These platforms provide a one-stop shop for merchants looking to get up and running quickly. They’re great for merchants who have limited coding experience and no budget to hire a developer. Some very well-known brands are on hosted platforms, like Skullcandy or Allbirds.
The most common hosted platforms are Shopify and BigCommerce.
Hosted platforms make website creation easy with drag-and-drop features and a library of pre-built templates to choose from. Myriad third-party applications (apps) provide needed add-ons such as analytics, customer communication services (like email and SMS), payment processing, loyalty point management, fraud detection, customer service solutions, etc.
Hosted platforms take care of the coding so that merchants don’t have to. They also frequently handle customer service, taking yet another load off of the merchants.
The applications required to run a business can become numerous and expensive. Some merchants use more than 20 apps to support their websites, which can create a lag in page load time and negatively affect conversion rates.
If merchants note technology issues of any sort (such as lag time) on their websites, then they need to determine the cause. Is it the hosted platform, an app, multiple apps, or a combination of all three? Troubleshooting usually hinges on the platform itself and thus requires communication with the hosting service.
In addition, working with a hosted platform means that merchants neither own nor fully control the core code of their websites. This means that full customization of the website is impossible. Not owning the code also makes transferring the website to a new host somewhat more difficult should a merchant choose to switch hosts.
Open-Source E-Commerce Platform
Open-source means that the code used to build a website is available for anyone to contribute to or change. This means that companies can hire a developer (or many) to create a fully custom website.
The most popular open-source e-commerce platform for building websites is also the world’s most popular website building platform: WordPress. VUE Storefront, Magento Open Source (now Adobe Commerce), and Drupal are examples of other emerging open-source platforms.
The primary benefit of using an open-source e-commerce platform is that companies own their websites’ code: they can transfer or change it whenever and wherever they’d like.
This affinity for customization is one of the biggest upsides to using an open-source platform. WordPress users all over the world love the control that they have over their designs and user experiences. For example, it’s easy to change the buying experience for a meal box subscription site, allowing potential customers to “build their own box” before checking out.
Furthermore, open-source platforms make it easy to manage multiple storefronts. Merchants can create storefronts for different brands that sell the same products, wholesale sites, affiliate sites, or just different landing pages. All of those storefronts can connect to the same backend, which makes overall management of the business easier.
Depending on the tools and features that merchants need, the resources and investment that they require can range from minimal to complex — and the price will vary accordingly. Merchants should consider options related to features like upsell placement, pricing, payment, shipping, and analytics.
Since there is more configuration and set-up involved, open-source platforms can incur more of an upfront cost than hosted platforms, though this often balances over time.
Merchants are also responsible for ensuring that their sites are up and running as they’re intended at all times. Great hosting providers help with this, but the merchant is still responsible for figuring out site speed and how changes to the site (like adding a cool marketing app, for example) will affect performance.
While this may sound a bit daunting, the combination of a good developer and a good hosting provider can make site maintenance straightforward and reliable.
Headless platforms (commonly known as headless commerce, or just “headless”) emerge to combine the strengths of both hosted and open-source e-commerce platforms.
The headless configuration itself means the storefront (head) is decoupled from the backend software platform. Merchants can then choose from a variety of emerging softwares to quickly and easily manage storefront pages without having to wade through pages of code or interface with a developer.
When the merchant makes changes to the storefront, APIs (messenger programs, essentially) communicate those changes to the backend, which then updates based on the merchant’s requests. APIs also communicate between customers using the frontend storefront and the backend that processes their requests.
Unlike its counterparts (open-source and hosted platform), headless commerce does not have an outright leading platform, per se, since it’s technically a disparate technology. However, Shogun and Fast are two of the best tools to build fast checkout pages.
Going headless usually means faster page load times and user-friendly flexibility over storefront designs. As fast as Shopify and other hosted solutions can be, they still aren’t as fast as many page builders you can find for headless solutions.
So, imagine designing a fast-loading landing page (no code required!) with a streamlined user experience that’s still connected to a robust backend to leverage key features like customer and inventory management: That’s headless.
The headless system is considered by many to be the future for e-commerce. Many merchants, as they scale operations and offerings, often run into limitations with both hosted and open-source platforms — prompting a switch to headless.
With increased marketing costs, larger e-commerce merchants need conversion rates to be optimized and average order value to be as high as possible — and some headless softwares are offering just that.
Headless platforms are not effort-free. They easily accommodate rapid growth and scaling, but they also require significantly more maintenance than do hosted platforms as developers must constantly maintain and update website code behind the scenes.
What to Consider
When it comes down to what e-commerce platform and ecosystem is the best for your subscription business, consider these main factors:
- Where is your business in its lifecycle (startup, scaling, growth, enterprise)?
- What resources (human and financial) do you have available now and what are you forecasting?
- What is the goal of your business (proof of concept, growth, scaling, enterprise)?
- What are the current challenges you’re looking to overcome this quarter?
- What capabilities do you need now and in the near-term and what storefront can provide that?
- Are the features you’re requiring for your business available natively or through an app integration? What are the fees associated?
- Does your platform require specific apps or solutions to be used? Are you assessed a penalty fee for not using them?
Consider the answers to these questions and what they mean for both your business’s needs in a system and what kind of system your business can handle right now.
When it comes to how you should sell online, it’s a good idea to list your subscription’s top priorities. With those requirements in mind, you can effectively weigh your options and pick the e-commerce platform that best fits your business and its goals.
Looking for more ways to grow your brand? Discover the latest trends on how subscription businesses can expand by attending SubSummit!