You have the finest programmers and developers at your disposal. The logical thing for you to do is to let them build your technology from the ground up, right?
For many online businesses, especially eCommerce stores with plenty of VC funding at their disposal, the prospect of owning proprietary technology is alluring. This is because the technology that you own is an asset, and the value of this asset can help increase your valuation.
But the argument for owning proprietary technology is not just limited to valuations. Owning your technology also means the ability to hold absolute control over the direction your business wants to take. You do not have to worry about a third party server going down – everything appears to be in your control.
However, there are several reasons why in-house proprietary technology can be a headache – at least for eCommerce businesses.
Reinventing the wheel
Many entrepreneurs fail to realize this, but eCommerce is not a technology play. Rather, it’s the expertise you build with logistics, supply chain, and customer support that determines the success of your business.
In other words, you do not have to reinvent the wheel by building your eCommerce software from the ground up when there are plenty of options already available in the market. Depending on your business needs, you could choose either an open-source shopping cart software, a hosted platform, or a licensed software application.
Each of these eCommerce platforms come with their pros and cons and you could pick something that is a good fit for your business.
Another reason why this is a better idea is that all the complexities related to building an online store are already taken care of. You do not have to worry about building a robust and secure payment gateway system. You do not need an expensive tech team to maintain the software and fix bugs.
All this is already taken care of for just a few dollars a month. Platforms like Shopify and WooCommerce offer great control over the theme customizations and content – building something natively could cost hundreds of thousands of dollars.
ECommerce is more than just a shopping cart
As an online store, the job of your development team does not end with building and maintaining an online store. There are several things a business needs to succeed.
Take email integration, for example. You will need an email gateway to send notifications to customers upon successful purchase, or to send them a payment confirmation. The marketing team may want to send emails to re-engage dormant customers and bringing them back to the site. You may also want to keep them updated on the latest status of their delivery.
Setting up an email gateway and making sure it gets delivered without getting blocked is a lot of work that requires a dedicated team of developers.
You can easily avoid this by integrating your system with a third-party service provider. This way, they take care of your email needs while you optimize your budget for things that matter – like maximizing reach and keeping customers happy.
And, the best part – all of this costs way less than building something from scratch.
This idea is also applicable to other aspects of running your eCommerce store like social sales or support. You could integrate your social media accounts with chatbots that can automate your marketing here – and this costs pennies compared to building something like this from scratch.
Bringing down recurring expenses
Launching your eCommerce software is not impossible. It can be done. But building your software is just the beginning. You also need a capable team to fix bugs and maintain the code.
All of this points to high recurring operational expenses that can be better utilized on something more value-adding to your business.
In addition to this, several other expenses are one-off, or at least not recurring. Take marketing for example. Depending on your strategies and budget, you do not need someone to build new creatives for your business all the time.
Instead of hiring someone in-house, it is a good idea to outsource the project. This way, you only spend money when required and do not have to pay someone repeatedly.
Outsourcing is also beneficial for other reasons. An agency that does animations and visual campaigns for a living are better equipped to produce various types of animations and creatives on demand.
Your in-house animator may not be equipped to produce so many varieties of marketing assets.
Opportunity cost
Let’s do some math. Building and running your eCommerce store from scratch can cost you hundreds of thousands of dollars.
Running it over an established third party platform should not cost more than a few hundred dollars.
What do you do with all the money saved? Simple answer – you use it to build more value for your business. You could use the money to market your business. This brings in more customers.
You could use the money to ramp up your customer support. This makes customers happy and makes them want to return. The average revenue per user goes up due to this.
By expanding your customer base and also increasing the average revenue per customer, you are in a position to build a stronger brand that is ultimately more valuable than the asset value you build with in-house technology.
Over to you
Do you have an eCommerce store that is built on in-house technology? What drove the decision to build it from scratch? Share it with us in the comments.
Founder Dinis Guarda
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