Why Are You Still Paying Over $1 Million for an Ecommerce Site? The Answer May Shock You

As a successful ecommerce entrepreneur, do you ever feel like the character Neo in The Matrix?You know there is something wrong with the way you have been conducting your online business. But you just don’t know what it is exactly. Still, as Morpheus explains to Neo in the film, “it’s there. Like a splinter in your mind. Driving you mad.”Perhaps that inkling is what brought you to this blog post. Well Mr. Anderson, let me tell you why you are onto something.Let me show you how deep this rabbit hole goes.

As a successful ecommerce entrepreneur, do you ever feel like the character Neo in The Matrix?

You know there is something wrong with the way you have been conducting your online business. But you just don’t know what it is exactly. Still, as Morpheus explains to Neo in the film, “it’s there. Like a splinter in your mind. Driving you mad.”

Perhaps that inkling is what brought you to this blog post. Well Mr. Anderson, let me tell you why you are onto something.

For years, high volume merchants have willingly budgeted between $500,000 to $1 million for the design, development, project management, supporting applications and content for their ecommerce website builds.

Add to that your needs for ongoing site maintenance and new features and you’re looking at spending upwards of an additional $1M a year to have an enterprise ecommerce service provider support your annual online business growth.

And many enterprise ecommerce software companies and service providers can rationalize those fees by arguing that projects of great scale and sophistication require a large team of consultants, UI designers, web developers, graphic designers and more to integrate and implement all of the software required to build, host, maintain and protect their customer’s ecommerce website from hackers and service outages.

But have you ever stopped to wonder whether all of that would be necessary if the technology was simply more user-friendly and required less coding knowledge?

Consumerization of Enterprise IT: Why It Shouldn’t Cost You That Much Anymore

Let’s consider the tech adoption lifecycle for consumer products for a moment.

Image via Wikipedia

As explained in this blog post by Barry Ritholtz “whether we are discussing washing machines, radios, auto airbags, cell phones, or even PCs — all manufactured goods go through a well-established adoption process. In the classic definition (see chart above), the first group of people to use any new technology are called “innovators,” followed by “early adopters,” then the “early majority” and “late majority,” and lastly, the “laggards.””

He goes on to explain that if you follow the price of technology through the production life cycle, the price decreases as the “status of an object becomes an everyday household product.”

But this hasn’t happened yet with enterprise ecommerce software – mainly because it was never intended to be used like a consumer product. 

As a result, many high volume ecommerce merchants are still paying similar fees to the “early majority” prices that have remained for the past 10 years.

The challenge today is that businesses are demanding better enterprise software tools that are on par with user-friendly consumer IT products. Their employees no longer want to have to “learn how to use enterprise software” and want to work with technologies that are as intuitive as creating and using a Facebook account.

This emerging trend is commonly referred to as “the consumerization of enterprise IT.”

The good news is that there are new cloud-based, software-as-a-service (SAAS) tools emerging in the enterprise space that can give you very similar results as your traditional enterprise IT software for a fraction of the cost – often on a monthly subscription basis.

And there are countless examples like WordPress for blogging and building websites; Freshbooks for cloud-based accounting software; and Shopify's scalable, enterprise grade ecommerce platform for high volume merchants.

These new enterprise software applications are helping businesses to function better, faster and are more cost-effective than they could have been 10 to 15 years ago.

Yet, many companies still allocate unnecessarily large budgets to design agencies and/or traditional enterprise ecommerce platforms to create an ecommerce website for them – using software which often crashes when an unexpected surge of customers visit their sites.

Sounds crazy, doesn’t it?

But this is the way it has always been done. And perhaps it is hard to wrap your head around thinking about spending your ecommerce website budget any differently.

Taking The Red Pill

Image via Wikipedia

Ok, so maybe the psychology of spending a lot for an ecommerce site isn’t the only reason why you and your colleagues aren’t questioning the status quo.

Old school ecommerce service providers have also been validated in charging a lot of money over the years because it takes a lot of talent and time to build what their clients want. And yes, there is a lot of great talent out there to help you build incredible websites.

But if you go the traditional route for building an enterprise ecommerce site, it’s not uncommon to launch your final product up to one year after you have scoped out your project requirements and developed a framework for your website functionality and design.

Just think of all of the potential revenue you are missing out on because it takes so long to actually start selling?  

And a year in the ecommerce space is a VERY long time. Google, for example, releases multiple rule changes to its algorithm within a year. And since no one is psychic and can predict what Google will do next, your only option is to adapt quickly or accept that you will rank lower in search engines results.

Let’s say you were on track to launch your ecommerce website re-design in the spring of 2015. Then, 10 months into your 12-month project development plan, Google comes along and announces that in April 2015, it is officially going to reward mobile-responsive websites in its algorithm.

But more than 12 months ago, your website plans didn’t include a 100% mobile-responsive framework. And the technology you have been using to build the site doesn’t provide you with the ability to turn on a dime.

So what do you do? Do you start over? But what about the past 10 months of work, budget and time that has already been spent on the project? And you already have approvals for the current re-design from your executive team.

While it may be a tough pill to swallow, the truth is that traditional enterprise software and ecommerce website development has always been expensive and time-consuming because you are paying for a huge support system that doesn't easily adapt to unexpected changes.

Let that sink in for a minute.

You are paying a lot of money and waiting a long time for your site to go live simply because you need a big team of consultants, developers, and designers, plus your own web hosting, security management and more to run your own ecommerce website.

But with a scalable, cloud-based, consumerized enterprise IT product like Shopify, a lot of the traditional enterprise support systems are now built right into the platform. 

Likewise, if you need an add-on feature, there are partner applications available that can be easily modified to suit your business needs.

As a result, you need a much smaller team, timeline and budget to build and maintain your ecommerce website. Plus, if an unexpected change arises, you can fix it much faster for a smaller price tag.

So, if you’re willing to accept this new reality by taking the red pill like Neo in the Matrix, then it’s time to start thinking about what you could do with all of that extra money you’ll be saving.

If you choose to take the blue pill and surrender to your present enterprise software experience, then you don’t need to read any further.

Winning in a Digital World

Image via Pixabay

“Any business today that embraces the status quo as an operating principle is going to be on a death march.” – Howard Schultz

Gartner predicts that "by 2017, 20% of all market leaders will lose their number one position to a company founded after the year 2000 because of a lack of digital business advantage."

Having a strong digital business strategy today requires an investment in growth strategies and technologies that help you get up and running faster, stay running at all times, remain relevant to customers in the future.

“We were stuck in an old ecommerce environment. With Shopify, we’re now at the head of the pack and in a good position to stay in touch with the latest development in the field. We cannot afford to have outdated properties and features,” says Martin Lansard, Manager of ecommerce at Google.

If you are a leader in your industry category, you may have a hard time believing this prophecy.

But as I discussed in an earlier post about “getting Ubered,” now is the time to start thinking about how your company can build and maintain a digital advantage over your competitors. Many Shopify customers have already experienced this first-hand.

“Shopify is really scalable. Especially as we started to transition to brick and mortar, the fact that Shopify has a POS system and everything links up — it gave us an impressively slick operation in the shop. People come to the shop and see our POS and how slick it looks and they’re all really impressed by it,” says Neil Waller, Co-founder at Shore Projects.

Another big part of the digital advantage will come from investing in R&D to ensure your business remains competitive. However, this will require you to have more cash flow to invest in your company’s future.

Saving a lot of money on your ecommerce website development, support and maintenance fees is a great place to start.

“Other options we evaluated would have cost us tens of thousands of dollars up front. When we chose Shopify, we were able to put that money into other parts of the business like product development. That meant we could buy sewing machines. We could buy more fabrics. We could hire more people to help sew. That money was so much better spent being allocated to R&D instead of web hosting,” says Cameron Parker, Head of Marketing at BlackMilk Clothing.

Is your business ready for the next step? Or, do you have a question or comment about the high cost of enterprise ecommerce solutions?

Please share your thoughts below or make a request for us to dive deeper into subject areas that can help you grow.

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About The Author

Andrea Wahbe is a freelance B2B marketing strategist and corporate storyteller who writes about Canadian SMEs, marketing and digital media trends. Follow her on Twitter.