SaaS-Based vs Licensed-Based: The Right eCommerce Multivendor Platform for Your Business

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Written By Rakesh Jain

Deciding upon an eCommerce multi-vendor platform for your business is no less than finding a partner for your life, after all, your entire future depends on it. 

The growth of eCommerce is praiseworthy as, within a short span of time, it has challenged the brick and mortar stores. Today, every next business idea is about selling online.

Other than eCommerce stores, the one that is rising high in terms of sales and demand is the online multi-vendor marketplace. It is an online business where independent sellers can manage their own stocks and the admin collects revenues from direct sales as well as vendors commission. So, the marketplace owner gets everything more – from products, customers, traffic, orders to revenue.

Rather than selling one’s own products, people are taking interest in setting up an eCommerce multi-vendor marketplace like the greatest revenue-generating e-commerce stores – Amazon, Airbnb, Walmart, eBay, etc. all of which have different business models but are all multi-vendor marketplaces.

Even the stats show that worldwide retail eCommerce sales are expected to reach $4.5 trillion by the year 2021 while B2B eCommerce sales will reach $6.7 trillion in 2020 surpassing B2C sales. 

So, it is clear that investing in eCommerce is the right decision now but, the real struggle is deciding upon the technology behind it as the way it is designed and developed effects the business a lot. There are various types of platforms available upon which you can set up your multi-vendor eCommerce store but the decision can be confusing and so we are here to help you out.

First of all, let us introduce you to the two best multi-vendor platforms available today that are extremely popular among enterprises to grow their business online – Saas-based and Licensed-based eCommerce platforms.

SaaS-Based eCommerce Platforms

Software as a Service or SAAS is a complete package. A ready-to-use eCommerce solution that comes with everything that you need from cloud hosting, software, technical support, and more.

A SaaS-based eCommerce platform is easy to set up as it requires no extensive hardware. It isn’t installed on-premise or maintained by the user themselves, instead, your eCommerce system runs on the SaaS provider’s hosted servers, which means, your 3rd-party provider then is responsible for the security, performance, and maintenance of the application on their servers.

It is a subscription-based platform managed by a multi-store vendor for customizations, integrations, and internal issues, where a user has to pay a monthly fee based on the level of service and number of users. 

Licensed-Based eCommerce Platforms

SaaS-Based vs Licensed-Based eCommerce Multi-vendor 2020A licensed based platform is an on-premise eCommerce solution that is built by a third-party vendor but self-hosted by the business so they are given a fully-owned license.

In short, the complete control lies in the hands of the business owner.

Now, since both serve in their own ways and are popular and suitable for the eCommerce multi-vendor marketplace, let’s peek into both in detail. 

1. Total Cost of Ownership

Did you know that to set up and manage an eCommerce store there is a price to pay known as the Total Cost of Ownership (TCO)?

Yes, TCO is the cost of everything from the entire upfront cost for development, design, deployment as well as the ongoing maintenance cost for the platform which is estimated considering several factors like internal resources, opportunity costs, and more. 

In Saas:

Since Saas based platform charges relatively lower subscription fees than license-based, people consider the on-premise platforms as an expensive option. But the fact is, there are other factors like software customization and scalability that can affect the TCO of their purchased software.

Also, there is an additional expense of maintenance, support, and training requirements that may add on weight to your budget. 

In Licensed:

While the on-premise platforms give you complete control over TCO i.e. from development to customization and technical support. You simply have to decide whether to outsource or hire an in-house team to develop and make your eCommerce store future-ready.

In short, the flexibility of options that you get with on-premise platforms makes it suitable for enterprises, SMBs, and large enterprises. 

2. Integration

There is quite a number of tools and systems like ERP systems, order management systems, tax tools, shipping platforms, optimization tools, and many more required for the day-to-day operation of an eCommerce multi-vendor marketplace. 

Therefore, the platform you are planning to pick must be eligible enough to integrate seamlessly with all the existing business systems for a smooth operation. 

In Saas:

The Saas based eCommerce stores are bound to using Saas APIs for integration with existing business systems, but, due to the limited APIs, integration of your eCommerce store with all your existing business applications can become difficult and you will have to outsource or hire developers for help. 

In Licensed:

In licensed-based platforms, owners can get custom integrations generated for the eCommerce store to incorporate existing business systems/tools as seamlessly as possible. 

3. Installation and implementation

The time consumption of a platform set up depends upon several factors like:

  • Preparing and importing data
  • Determining process changes
  • Staff training
  • Managing configuration
  • Importation management
  • Refinement of data and more

In SaaS:

Although these factors are common for both Saas and licensed-based platforms, the deployment process is unique in each platform.

Wherein Saas based eCommerce stores have their resources deployed on the premises of service providers which an enterprise owner could access/use those resources any time they want, the ready-made integrations can be deployed on the spot.

Please make note that no additional customizations are offered by the Saas providers. So, you will have to hire a reliable development team and get customizations built as you need which would drastically increase the implementation time.

In Licensed:

The on-premise platforms deploy resources in-house and within the IT infrastructure of an enterprise.

Since you have complete control in the license-based platform, the deployment time could be significantly reduced depending upon the resources. 

4. Security

SaaS-Based vs Licensed-Based eCommerce Multi-vendor 2020Security is of the biggest concern in any online business. With an eCommerce multi-vendor marketplace, the need for security doubles as too many people – buyers and sellers are involved. 

In SaaS:

Now, although there are stringent government and company policies that the business must comply with to prevent any security threats, Saas providers may find it difficult to comply with.

A Saas-based eCommerce store is hosted on the cloud so it is the service provider’s responsibility to stay compliant with the policies and implement the right security measures. 

In Licensed:

On the other hand, in the licensed-based platform, the extra sensitive information concerning the buyers or your business remains fully protected.

With the control in hand, the enterprises can implement several security measures anytime to prevent any security threat. In short, for the licensed-based eCommerce store, staying compliant with the company and government policies isn’t cumbersome at all. 

5. White Label

White label is the act of re-branding or labeling the eCommerce multi-vendor marketplace as your own while excluding the traces of your outsourcing partner. For example, a product bought by another eCommerce business is sold adding its own name online. 

In SaaS:

The Saas-based platforms offer no white label programs which means you cannot re-brand or label something as yours. 

In Licensed:

Some selected licensed-based platforms offer white-label partnerships which means you can make the third-party anonymous.

Conclusion: SaaS-based vs licensed-based eCommerce multivendor platform 

As you can see, both platforms are popular and advantageous in their own way and must be chosen, keeping in mind the dynamics of the eCommerce marketplace which keeps changing with the emergence of new trends and technologies.

Overall, Saas-based eCommerce platforms are best suitable for a small scale online store while for something big like Amazon or Etsy you will need a platform that offers more control, flexibility, and scalability like the license-based software. 

Therefore, considering the fame of multi-vendor marketplaces, if you too are among those many ambitious who wish to launch similar stores like Amazon, picking up the right platform and an efficient marketplace development company, is the right thing to do.

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