4 Types Of E-Commerce: Which One Is The Best For Your Business?

4 Types Of E-Commerce: Which One Is The Best For Your Business?

When a traditional retailer decides to go into e-commerce, they should always start by looking into developing an e-commerce system. Some shops are content to sell on marketplaces or through social media, but they will quickly find themselves in a red ocean of rivalry with other sellers.  This is primarily due to a lack of control over the functioning and structure of the aforementioned eCommerce platform or website, as a result of relying completely on a third-party system. The latter scenario will lead to intense competition among sellers, lowering profit margins.

“Who can assist us build the system?” we wondered. This dilemma is frequently asked by conventional retailers unfamiliar with e-commerce. Without staff with relevant knowledge, businesses must rely on external guidance, which may lead to a misunderstanding between the shop and the technology vendor. Like a physical retail store makeover, an early mistake may necessitate further development work or sales possibilities. So, to choose the best e-commerce system, we need to know a little about them. Here are the typical four types of e-commerce systems available. 

4 Types Of E-Commerce Systems 

  1. In-House
  2. Commercial 
  3. Open-Source
  4. Software as a Service (SAAS) 



Firstly, customized e-commerce systems designed from the ground up by in-house developers for a retail business are known as in-house e-commerce systems. The most significant advantage of developing a system in-house is that it may be created in such a way that it meets all of the requirements of a given organization. The developers will be able to understand every line of code that they generated and will be able to adjust the system’s structure to meet their specific business needs. Although this type of operation is profitable, it comes with a high cost in terms of operating expenses. 

In order to build a comprehensive system, such as an e-commerce system, highly qualified developers will be required, as will a significant amount of effort in maintenance and future improvements. Typically, only large corporations, such as publicly-traded enterprises or online marketplaces, can afford to build a fully customized e-commerce system in-house. It is not possible for the majority of small and medium-sized enterprises (SMEs).


Secondly, in the case of commercial e-commerce systems, the solution provider licenses the system to the store, granting them the rights to use the system’s functionality as well as to make customizations within a predetermined scope. Commerce-oriented systems built on Microsoft or SAP technology are particularly popular among retailers who choose to use such systems. In contrast, the operating costs of modern systems are significantly higher than those of traditional systems, owing to the licensing fees imposed by application developers. 

Furthermore, any type of customization is heavily regulated by the application developers, which will raise the price of long-term development and hence increase the overall costs. Commercial systems may have a significant competitive advantage of security and customer service. Nonetheless, developments in e-commerce technology are occurring at a rapid pace, and some commercial solution providers may not be able to give their clients the most up-to-date technology as rapidly as other systems do.



Thirdly, open-source systems are possibly the most extensively used systems today, owing to the option of creating them for little financial investment. The open-source e-commerce systems such as WooCommerce, Magento, and OpenCart have dominated the market for the past few decades, and they continue to do so now. Developers that know how to customize and maintain them can be found in large numbers in many different communities. Many templates and plugins have been developed to minimize development time, and some of them are even utilized by persons who are not technically inclined. Additionally, open-source technology is frequently on par with developments in internet technology and is able to adapt to change faster than commercial systems (which normally require a great deal of research and quality assurance before new features can be rolled out to the public.

Open-source systems, on the other hand, have some disadvantages, such as a lack of quality control due to the need for rapid development. Furthermore, because of its widespread use and lack of expert assistance, the open-source system is typically considered to be less secure. Some open-source systems, such as Magento Commerce, which is provided by Adobe, have a commercial counterpart that requires a yearly licensing charge. These benefits of commercial systems, such as improved security and customer service, are combined with the cheap operating expenses of this system.



Last but not least is the software as a service system or also known as SaaS. For instance, Shopify is the most well-known SaaS e-commerce system, which charges retailers a monthly membership fee in exchange for the ability to manage an e-commerce site without the need for engineers or server infrastructure. SaaS systems provide the fundamental e-commerce functions, with extra features available for a price through additional subscriptions. Retailers may simply enable a new function with a few clicks and a simple configuration, which is an advantage of plug-and-play technology. Other sorts of systems, such as those that require customization or integration, will necessitate the hiring of developers. 

It is a common misconception that SaaS does not allow for considerable customisation, however, this is not true. SaaS platforms provide access to their network through an Application Programming Interface (API), allowing developers to connect or integrate their own system into it. An excellent illustration is the integration of an Enterprise Resource Planning (ERP) system with Shopify, in which new orders from Shopify will instantly flow into the ERP system. Because of its enormous customer base, the SaaS system, like open-source, is also able to quickly adapt to the current e-commerce technology trends.

Among all types of systems, SaaS is getting more popular due to its affordability, convenience , and security. If you are keen to explore SaaS e-commerce systems for your organization, feel free to reach out to Senwave, for the solutions to all your problems.