PeC: What are some distinctive characteristics of shopping carts that you might share with a new ecommerce business?
Randolph: I’d say everything has a place. Yahoo! Stores has over 150,000 merchants now so, without a doubt, the hosted solution has a place in the marketplace. There are other solutions out there. The eBay ProStores has a large user base. For certain kinds of merchants, I think they are attractive. Specifically speaking about Yahoo! Stores, I think they make it easy for a broad base of users to get started quickly. They have an attractive fee schedule that, if you’re not selling much, works out well. I think they hit you when you start becoming more successful. Those kinds of solutions become more expensive and tend to be more limited in what you can do with that solution.
PeC: Hosted solutions say users don’t need a lot of technical experience to use their solution and, by default, imply a software solution needs significant technical prowess to use. Is that a fair characterization?
Randolph: Without a doubt, the initial setup of an AbleCommerce store requires a higher sophistication from the merchant than a Yahoo! Store. However, the stuff that’s really more difficult to customize to begin with, you have the same hurdles regardless of whether it’s a Yahoo! Store or an AbleCommerce store, in reality. Once you get the templates designed and the look-and-feel over the top of the store, a Yahoo! Store and an AbleCommerce store are very easy to use. The day-to-day usage for the stores is all very similar.
PeC: What are some factors that separate a software option and a hosted option?
Randolph: I think if you’ve done your homework in regards to your market space, you have a product that you know is going to sell, and you have your shipping pricing figured out so you you’re going to be competitive in the marketplace, then your investment in a software solution is going to pay off quite quickly. If you don’t know how your product is going to sell or the way your marketing is going to work, then obviously the $29.95 per month Yahoo! solution is a heckuva lot safer way to get started.
One of the big disadvantages I see in a hosted solution is when you decide to move forward because you’re unhappy with the performance of the solution; you have to throw away all that investment in time and money that you’ve put forward creating that store. You can’t go buy Yahoo! Store on a CD, take it to Rackspace.com, install a Yahoo! Store and transfer your data. There are many software-based products that allow you to get started in the hosted environment that, should you get mad at us, you can always take your store and move to another server.
PeC: How should a merchant analyze the cost differences between a hosted solution and buying a software license?
Randolph: The cost of the shopping-cart software is really insignificant compared to the rest of building up a successful store. Trying to save $500, by the time your time is involved, just doesn’t make a lot of sense. If you’re going to do that, go with a Yahoo! Store and once you’re paying $100-$200 per month in fees, then go out and look for a real solution. We’ve always loved Yahoo! Stores and MIVA because they get people going. Merchants realize that even though they didn’t do a lot of homework, they’re still selling. Once you get one out of 20 merchants who are successful, they start looking for a product that will carry them through years three through seven. We had one merchant that was paying Yahoo! Stores over $10,000 per month in fees and they came to us and are paying less than $2,000 per month. The fees, once you are actually successful, tend to become rather aggressive on the side of the hosted solution.