Platforms & Apps

Ecommerce Know-How: Should You Host Your Own Website?

For some ecommerce businesses, operating an in-house HTTP server and the associated server software can improve website performance, increase data security, and lower overall costs. But hosting your site yourself is not for everyone.

Ecommerce businesses rely on the Internet. It is the primary sales channel, means of customer communication, and marketing vehicle. Therefore, a retail website must be fast, functional, and available 24 hours a day, 365 days a year.

A merchant has two basic options when deciding where that all-important website will reside. Option one is on rented bits in a hosting provider’s server. Option two is on a wholly owned, collocated (meaning that it is located at your place of business not in a data center) server that may be installed in a closet or under a desk.

Within these two options there are a number of possible arrangements. A hosting provider might be offering shared server space, a virtual dedicated server, or even a real dedicated server that you can configure. Meanwhile, an in-house HTTP server configuration could range from partitioning your laptop to investing in a state-of-the-art server rack and enough storage to keep a virtual edition of every book in the U.S. Library of Congress.

What’s the Best Hosting for Your Business?

With such a wide range of possible web hosting options, there is not a one-size-fits-all solution. So, how do you decide what is best for your business? I’d suggest asking a lot of questions. At each stage of growth an ecommerce company is going to have differing server and application needs that deserve a fair evaluation. And, at many of these stages, owning an in-house HTTP server is the option that makes better business sense.

In this edition of “eCommerce Know-How,” I am going to provide you with some of the questions you should ask yourself about how your website is hosted and your email is served. It will be up to you to answer these questions, and, in the end, you may find that you can save money or improve your business with a collocated HTTP server. As a reminder, I’ll generally be comparing an in-house HTTP server to dedicated hosted servers, not shared hosting plans that place dozens of domains on a single server.

You should know that while I have some opinions and some experience with HTTP servers, I also sought expert advice from Rajesh Sukhramani, a manager on the WW System Marketing Team for IBM’s Systems and Technology Group. Most of the intelligent and insightful sections of this article came from Sukhramani’s input, and the rest is mine. I’ve also included a list, below, of some of the resources I used for this article.

Video: Five Questions To Ask About HTTP Servers

Question No. 1: Is Your Ecommerce Operation Big Enough for an In-house Server?

The simple answer is yes. Every ecommerce business is big enough for some form of in-house, collocated HTTP server, but that answer doesn’t really get to the heart of the issue.

In truth, unless you like tinkering around with computers, loading Linux operating systems, or hand-selecting applications, you will be better off using a shared hosting solution until you get about 5,000 or more daily visitors (because of transfer limits), well over $100,000 in annual sales (for security reasons), or have more than two or three employees (for operational efficiencies). Below that threshold, it is just a lot easier to use a shared hosting service like SimpleHELIX, Go Daddy, Hosting4Less, Host Gator, or any of hundreds of other website hosting providers.

If, however, you are a technophile, you can probably host your own ecommerce website on the very computer you’re using to read this article, for nothing more than you already spend with your Internet service provider (ISP). This means that hosting your website could cost you nothing, zero, zilch—except a bit of set up and maintenance time.

Question No. 2: Would It Be Cheaper To Own An In-house HTTP Server?

Shared web hosting is dirt cheap. If fact, in many cases I can host a small ecommerce website and get email service for a month for about what it costs to buy ten plastic clothing hangers at a discount store. But, if my business has grown to the point that I need a dedicated or virtual dedicated server to support my bandwidth, storage, data security needs, or applications, the value proposition starts to change.

For example, a dual-processor, managed HTTP server is going to cost between $400 and $1,000 per month from a hosting renter—or, about $4,800 to $12,000 per year. Purchasing a similar server might cost between $500 and $2,500. If I use a Linux operating system, a free, open source email solution, and keep my server for just two years (which is shorter than a typical server’s operational life), my costs would be considerably lower than the hosted option.

Server maintenance will also have to be considered, and it is very possible to hire an IT professional to help maintain the server. That sort of agreement could cost as little as $100 per month. And, I might also have to pay my ISP an additional fee.

When deciding how much a collocated server will cost your business, compare the following:

  • Server acquisition costs versus two thirds of the cost of two years of hosting;
  • Email software costs versus whatever the hosting provider charges for email accounts (could be included with your hosting plan);
  • Additional software costs versus the cost of applications on the hosted server;
  • Two years of server maintenance costs versus one-third the cost of two years of hosting;
  • Additional ISP charge;
  • Cost to purchase an uninterrupted power supply;
  • Additional cooling costs.

In many cases owning an HTTP server will be less expensive than renting space from a hosting provider. But do the math for yourself and be sure you understand the maintenance aspect of the equation.

Question No. 3: Will an In-house Server Improve Site Performance and Operating Efficiency?

The answer is, probably, yes. There are a lot of factors that go into site performance, including the upload speed of your business’s Internet connection. But having direct control over the server should boost site performance and (especially where email marketing and communications are concerned), you should see a significant increase in operating efficiency.

For a specific example, let’s consider automated order response emails. If you are using a shared hosting service with a shared Internet Protocol (IP) address that is used for several domains, your legitimate order and shipping notices could be getting blacklisted as spam. Writer Eric Geier described just this sort of scenario in his article, “Server Room DIY, In-House vs. Hosted.” Geier’s emails were not making it to their intended recipients.

“I found the shared email server I was using (provided by my web host) had been flagged for sending spam messages so many times it was added to the blacklist of this particular filtering solution,” Geier wrote. “Although I hadn’t sent any spam, I was being blocked from sending to these addresses. This would not have been a problem if I was hosting from my own server.”

A dedicated IP address would fix this particular problem, which is just one example of the dozens of performance and efficiency advantages to operating your own HTTP server.

What’s more, if you have more than a couple of employees working on computers (clients), your server could do double duty serving up your website and managing your business applications, creating dozens of operational efficiencies, reducing software licensing fees, and better securing proprietary business data.

Question No. 4: Will You Need to Do More To Be PCI Compliant?

Yes and no. If you decide to operate your own HTTP server, you’ll need to ensure that you have a good firewall and normal server security. But adding a firewall and securing your server is something that you would do anyway when you configured your HTTP server, and beyond these basic steps you can probably use the same payment gateway and card processor that you use now.

In fact, customer data is probably more secure on your server than it would be at a hosting provider’s data center where almost anyone that works for the host could, in theory, access it. Plus, your single server is less likely to be a target for a hacker. Hackers tend to go after big fish, not minnows.

Question No. 5: Will Your Own HTTP Server Be Harder to Maintain?

Yes, of course. One of the things that you are paying a hosting company for is server maintenance. The expectation is that you spend no time maintaining your hosting provider’s server, so any maintenance you would perform would be “harder.”

As IBM’s Sukhramani put it, “A hosting company specializes in servers, so they are very fast at fixing problems…[often] it is better to have [your website] with the experts.” And remember IBM sells servers.

But, is the “peace of mind” provided by these hosting experts worth what your hosting company is charging you? Maybe not. Once your server is up and running, you will need to keep the operating system and applications updated, ensure your server is safe from viruses, and just generally make sure that all is well. But, in actual effort, this might be no more than an hour or two a month at most. Sure, if something goes wrong, you will need to act fast, but if you keep your server updated, you probably won’t experience major problems.

You can also contract with a local IT professional to provide emergency services. A typical arrangement will have you paying the pro around $100 per month whether you need help or not. If nothing happens during a given month, the professional just smiles and cashes your check. If something goes wrong, he or she jumps in and fixes it even if it takes up to, say, ten hours, for nothing more than the retainer. Additional work is usually charged at an hourly rate.

And remember, we are comparing an in-house HTTP server to a dedicated hosted server. A shared host would be significantly less expensive.

Summing Up

Owning your own HTTP server can boost performance, improve efficiency and security, and potentially cost less, but you need to balance ownership with the easy maintenance and expert service that a hosting provider can provide. As your ecommerce business grows, it makes sense to evaluate your web services, and, at some point, having your own servers will make better business sense. The trick is knowing when you’ve reached that point.


Armando Roggio
Armando Roggio
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