Choosing an ecommerce platform: Magento, Shopify or hosted?

Ecommerce is growing fast. US online retail sales passed $165 billion last year according to the Commerce Department, roughly 8 percent of total retail, and are still growing at double digits while store sales are flat. Shoppers now expect to buy from a small business online as easily as from Amazon. At the same time, the tooling has matured: a few years ago the choice was osCommerce, Zen Cart or a custom build. Today a hosted platform gives a small store a checkout, SSL, PCI compliance and a design in an afternoon.

The four names that come up in nearly every conversation are Magento, Shopify, Volusion and BigCommerce. Yahoo Merchant Solutions, 3dcart, osCommerce and Zen Cart are still around, and WordPress plugins such as WP e-Commerce exist, but for a new store the four below cover the realistic range.

Prices are the published ranges as of early 2011 and change often; confirm before budgeting.

Magento Community Edition is free, open source, and the most capable platform on this list. Multi-store from one install, layered navigation, configurable products with many options, tiered and group pricing, and an enormous extension marketplace at Magento Connect. Enterprise Edition adds support, full page caching, private sales and a license fee in the low five figures per year.

The catch is cost of ownership. Magento is heavy. On a $10 shared host it will crawl; plan on a VPS or dedicated server and someone who can tune it. Development rates for competent Magento work run $75 to $150 an hour in the US, and a custom theme plus the usual payment, shipping and ERP connections easily reaches $15,000 to $40,000. Upgrades between versions are not trivial. If you do not have a developer on retainer, you will need one.

Choose Magento when you have more than a few thousand SKUs, B2B pricing rules, multiple storefronts, or a warehouse or accounting system that has to talk to the store. Otherwise its power mostly becomes maintenance.

Shopify is the easiest of the four to set up and the strongest on design. The theme store has professional templates from free to around $150, the admin is clean, and the Liquid templating language makes custom work affordable. Shopify handles hosting, SSL and PCI compliance. The app store covers most gaps: reviews, email marketing, accounting sync.

Watch two things. Plans run $29, $59 and $179 a month, and the lower tiers add a transaction fee of 2, 1 or 0.5 percent on top of your payment gateway charges. On $20,000 a month in sales, that fee alone is $200 to $400. And product options are limited to three per product with 100 variants, which is fine for apparel and most consumer goods but not for configurable industrial products.

Choose Shopify when the catalog is under a few thousand products, presentation matters, and you want to run the store yourself with occasional help.

Volusion has been hosting stores since 1999 and packs a great deal into the base product: a built-in newsletter tool, customer reviews, affiliate program, a CRM-style customer view, and one-page checkout. It does not charge platform transaction fees, and the lower plans are among the cheapest here.

The trade-offs are an admin that feels dated, a template system that is harder to customize than Shopify's, and bandwidth caps on each plan that can push a growing store into a higher tier sooner than expected. Support quality gets mixed reviews. Volusion also offers its own merchant account and SSL, which is convenient but worth comparing against third-party rates.

Choose Volusion when you want the most features included without buying apps, and the design can be a good template rather than a custom build.

BigCommerce launched in 2009 from the team behind Interspire Shopping Cart and has grown quickly. It includes strong SEO controls (editable URLs, titles and meta per page), built-in email marketing, coupon and discount rules, and good integration with eBay listings and Google Product Search. No platform transaction fees; plans scale by product count and storage.

Themes are plentiful but the design quality is a step behind Shopify, and the customization path for anything complex is narrower. Still, for a store that expects to grow from 100 to 5,000 products and wants marketing tools built in, it is a serious option.

• Payment gateway and merchant account. Authorize.net is typically $20 to $25 a month plus about 10 cents per transaction; the merchant account adds roughly 2.2 to 2.9 percent plus 20 to 30 cents per sale. PayPal Website Payments Standard has no monthly fee but higher per-sale rates and sends customers off-site.
• SSL certificate. Included on most hosted plans; $50 to $200 a year on Magento.
• Design. A tweaked template: $500 to $3,000. A custom design: $5,000 and up on any platform.
• Product data. Someone has to write descriptions, take photos and enter weights for shipping. For 500 products this is weeks of work and usually the real bottleneck.
• Shipping. Real-time UPS, FedEx and USPS rates are built into all four. Fulfillment integrations are not.
• Apps and extensions. $10 to $50 a month each on hosted platforms; $50 to $500 one-time on Magento.

1. Under 500 products, consumer goods, you will run it yourself: Shopify or BigCommerce.
2. Under 2,000 products, you want newsletter, reviews and affiliates without add-ons: Volusion or BigCommerce.
3. Over a few thousand SKUs, B2B pricing, multiple brands or stores, ERP integration: Magento, with a developer budget.
4. Selling mostly through eBay or Amazon and adding a store: BigCommerce for the eBay tie-in; otherwise any hosted option.
5. If your margin per order is under $15, avoid platform transaction fees and watch per-transaction gateway costs closely.
6. Whatever you choose, make sure you can export products, customers and orders. Lock-in is the one cost you cannot renegotiate.

Picking Magento for a 60-product store because it is "free." Picking a platform because a friend's developer only knows that one. Ignoring the mobile browser: more shoppers are arriving on iPhones and Android phones each quarter, and most themes still do not handle them well. Skipping Google Analytics ecommerce tracking at launch, so there is no baseline. And launching without a single product page that would convince a stranger to buy.

Discovery first: catalog size and structure, order volume, margins, who manages the store, and what systems it has to connect to. From that we plan the platform choice, the payment and shipping stack, and a product data process that will not stall the launch. We build the store with design, conversion and tracking treated as one job, not three, and we improve after launch with analytics, checkout testing and search work. Brand, growth and the technical build are handled together so the store looks like your business and sells like one.

Our ecommerce work includes a representative engagement for a retailer moving from an aging custom cart to a modern platform: platform selection against their catalog and integrations, a redesigned product and checkout experience, full URL redirect mapping to protect search rankings, and ecommerce tracking from day one so the owner could compare conversion before and after.