U.S. retail ecommerce sales have been growing steadily for over a decade, but the jump from Q1 to Q2 2020 is still staggering — from $160.4 billion in Q1 to $211.5 billion in Q2.
“COVID-19 has forced everyone to operate at a much higher level of digital maturity,” said Sharon Gee Head of Omnichannel Partnerships at BigCommerce. “To succeed today, retailers need to put a stake in the ground and define a unified channel strategy from a digital and physical perspective.”
Customers expect seamless omnichannel shopping experiences. So, today, retailers find themselves adapting to new consumer needs and behaviors and recalibrating their understanding of their target consumer.
The Four Pillar Approach to Omnichannel Commerce
The four pillars of a successful omnichannel strategy include sales channels, marketing and advertising, operations, and fulfillment. All these functions need to work together seamlessly to provide the best possible omnichannel customer experience.
1. Sales channels.
With more sales channels to choose from than ever, you’ll have to carefully evaluate your audience: where they spend the most time, and where products in your category are typically sold.
Channels can include (but are not limited to):
- Online storefronts/DTC
- Ecommerce marketplaces
- Social media platforms
- Mobile channels
- Brick-and-mortar stores — or anywhere you use a POS
- B2B/Wholesale sales
“If you are over-invested in any one channel to sell your goods or products, and that channel goes away for any reason, you’ll be in a tight spot, and that’s what many retailers are experiencing today with the COVID-19 pandemic,” said Gee.
“But the reassuring strength of an omnichannel sales approach is that it’s a risk mitigation strategy at its core. It allows retailers to ask, ‘Where are my shoppers and how can I be where they are?’ and make changes accordingly.”
2. Marketing and advertising.
You need a cohesive marketing and advertising strategy to help drive traffic to your products, surfacing the right message at the right time and in the right place — all tied together by a consistent brand experience.
Operations encompasses everything in your back-office, from product, order, and inventory management to logistics and fulfillment. From an operational perspective, the key to a functioning omnichannel approach is connectivity. Exactly what technologies make up your back-office operations will depend on the scale and sophistication of your business.
Inventory visibility is arguably the biggest barrier to proper omnichannel inventory management. Without it, you can’t access data for accurate reporting or promise customers items will be back in stock on all platforms. And when you’re expanding to new channels, you must have centralized inventory visibility so you never miss a beat between sales platforms.
4. Shipping and fulfillment.
When it comes to shipping and fulfillment, retailers have the option of using shipping software or a 3PL (third-party logistics) company.
Shipping software like ShipStation offers specially negotiated rates with various carriers, visibility into shipping statuses, reporting, and the ability to send orders to fulfillment providers.
3PLs, like Amazon’s fulfillment services, Deliverr and ShipBob also include other logistics processes like inventory management, warehousing and fulfillment.
“Most people see logistics and fulfillment as the technical side of ecommerce, but it’s actually another extension of the customer experience,” said Matt Crawford, General Manager of Shipping at BigCommerce.
How BigCommerce Customers are Assembling Their Omnichannel Tech Stacks
LARQ integrates IMS and 3PL solutions, sells internationally.
“Our information management system Brightpearl highly recommended BigCommerce to us. Their team had a very close relationship with BigCommerce, and BigCommerce provided a great custom solution for them,” said Justin Wang, co-founder and CEO of LARQ.
“It was important for us to have good relationships with our IMS and ecommerce platform to ensure a quick implementation and the ability to develop custom additions I knew we would need in the future, like integrating with our third-party logistics (3PL) and importing pre-orders.
“What BigCommerce is doing with headless was one of the more important factors for us when we were deciding on a platform. With headless, we get more control over our content and customer journey through checkout, which we custom-built using React on the frontend and BigCommerce on the backend.
“We have five regional sites, and currently four of them (US, EU, UK and CA) are live. We had a multi-region need that was solved for with the headless BigCommerce solution, allowing us to combine all of our stores into one single domain, for which we have developed additional features.”
Hickies sells and advertises across channels with a holistic approach to measurement.
“As we grow with BigCommerce, our major focus is being in all the places our customers are and creating marketing strategies that align with the specific shopping behaviors in that market,” said Jonathan Segev, Hickies’ director of technology.
“One of the ways Hickies does that is advertising on various channels. We are big on Facebook, Google, and Bing.”
“We also started on a project this year with TV advertising which, as a traditional form of direct marketing, has proved to be a really interesting opportunity for us. Our partner Tatari basically set up a pixel on our site that measures traffic spikes following a TV ad compared to normal site traffic, which allows us to more precisely figure out what works, what doesn’t, and how to optimize our channel more than standard TV advertising could.”
“Selling on Amazon is also an important part of our strategy to meet customers where they are. We’ve watched the marketplace grow year after year, and for a growing business like ours, it’s become a necessity.
“We take a very holistic approach to our entire ecommerce strategy and understand that, with our marketplace and advertising spend, some of the web traffic will come from Amazon, some of it from Facebook, and some of it from our website.
“Looking at our advertising strategy as a whole as opposed to each individual segment allows us to continue to scale even when one platform becomes more expensive, less efficient, or isn’t performing as well.”
Skullcandy sells internationally and across social channels and integrates an ERP solution for a seamless back office.
“We went live with seven sites, four currencies, and three different languages in six months,” said Mark Hopkins, the audio company’s chief information officer. “In the second month after launch, we integrated BigCommerce’s Facebook Shop feature to meet consumers where they are — allowing for fast purchasing natively on popular social networks.”
“We are really taking bets on social commerce, leveraging built-in BigCommerce integrations to serve product catalogs across social channels where orders start in the social channel, and seamlessly drop into BigCommerce’s control panel for streamlined fulfillment.”
“BigCommerce’s API allows Skullcandy to connect its product information system to capture orders, interface with the credit card companies, calculate tax, and interface all of this information into our ERP system for fulfillment.”
“We see the BigCommerce platform as a major element of our ecommerce ecosystem, because our consumers come to our website to learn about our products, even though they may purchase on a different platform like Amazon or a retailer site.”
Customers expect seamless omnichannel shopping experiences. So, today, retailers find themselves adapting to new consumer needs and behaviors and recalibrating their understanding of their target consumer.
Omnichannel strategy has to be holistic and comprehensive. It depends on a strong foundation, supported by the four pillars of sales channels, marketing and advertising, operations, and shipping and fulfillment.
A comprehensive omnichannel strategy requires a best-in-class partner network to support your needs across different levels of sophistication. It starts with an ecommerce platform that provides the openness necessary to enable extensibility, customization, and integrations for the tech stack you want to build your business.
Learn more about strategically delivering a consistent brand experience and the 4 pillars in our ebook The Omnichannel Imperative for 2021.
Nearly four thousand years ago a Chinese Emperor Shen Nung, also known as the Father of Traditional Chinese Medicine, wrote in his The Great Herbal book that hemp can have theoretical powers for gout issues, rheumatism and absentmindedness among a variety of other ailments.
Fast-forward to present digital-ridden days: you can now purchase a growing lineup of CBD goods both online and in-person, at convenience stores and in luxury celebrity-owned boutiques, all across the US and abroad too.
But, despite a long history of usage and current popularity, CBD and the hemp plant it’s derived from remain largely misunderstood.
So What is CBD?
Cannabidiol, or CBD for short, is a ‘wallflower’ cousin of the more reactive delta-8-tetrahydrocannabinol (THC). These two compounds are found in the Cannabis plant, along with some 100 other types of cannabinoids.
Unlike marijuana, CBD is obtained from industrial hemp — an MJ plant variety that must contain less than 0.3% of THC on a dry weight basis to be cultivated under a USDA-approved license. Meaning that it does not cause the feeling of ‘high’, but instead is said to carry a number of wellness and therapeutic benefits.
CBD Industry by the Numbers
Partially due to the advertised health benefits, partially because of the close affiliation with the cannabis plant, consumer interest around CBD products has been on a steady rise since 2016.
2018, specifically, was named as the “breakout year” for CBD by EAZE, a San Francisco-based cannabis delivery platform.
In 2018, the number of US CBD consumers doubled, from 2.6% to 4.8% with *drumroll*…Baby Boomers leading the pack.
EAZE data suggests that female Boomers were among the most likely CBD users, opting for these products to deal with anxiety, sleep issues and pain relief.
A survey by Consumer Review further states more than a quarter of people in the U.S. say they’ve tried CBD at least once in the past two years.
That makes sense as CBD oil is now infused in loads of products across the board, especially in the wellness, food, beverage and beauty industries. From tinctures and topicals to gummies and even lattes, consumers now have a bevy of CBD products to explore.
So what makes them tick the most? According to Brightfield Group, regular CBD users prefer to use vaping products, followed by the use of high-CBD flower:
Source: Brightfield Group
Growing interest? Checked. Overall consumer awareness? Rising! What about market growth prospects? Well, these seem to be solid too.
By 2025, the retail market for CBD products in the US is expected to hit $16 billion, up from $2 billion in 2018.
Compound the above with the fact that, among those who are familiar with CBD, 80% support its usage (even if they are not personally using it) and it becomes clear that CBD is a very promising niche for starting an online business.
9 Steps for Starting a CBD Business Online
Hyped products often have a short shelf life. But Inferring from above, the interest in CBD is here to stay.
So if are interested in exploring this high-growth niche, here are the main steps for starting an online CBD business:
- Identify your CBD niche and products.
- Understand the laws and regulations around CBD.
- Generate a thorough CBD business plan.
- Get your business documents in order.
- Find your CBD supplier.
- Discover the perfect ecommerce platform.
- Build up your site.
- Determine shipping and payment terms.
- Market your business.
Identify Your CBD Niche and Products
A quick sweep through the (digital) shelves of any wellness store will prove that you can now buy CBD-anything. Creams and ointments, human and pet chewies, hemp clothes and accessories — when the consumer interest is high, loads of entrepreneurs try to capitalize on the hype.
What should you sell then: the trendy stuff or the “classics”? Well, that’s for you to decide. When assessing the overall market prospects, look into the general niches first. Here are the most popular ones:
- CBD-infused foods/beverages.
- Supplements/wellness products.
- CBD-based cosmetics.
- CBD pet products.
Next, you should zoom in on your product types. Most of these differ, based on the CBD consumption method:
- Drops and sprays: The key ingredient in both is CBD oil, decarboxylated from hemp/hemp flowers and mixed with a carrier oil. Drops and sprays can also include flavoring agents and other compounds that make them more pleasant to ingest.
- Pills and capsules: Wrapping a dose of cannabinoid in gelatin or soft gel capsule makes it more digestible. Also, since many people take CBD as an alternative to over-the-counter medicine, this form may seem more familiar and thus appealing, to them.
- CBD vapes and cartridges: Inhalation products tend to be popular among recreational MJ users and people who enjoy the social aspect of vaping. Also, this method is often preferred by consumers using CBD for pain relief as it gets absorbed faster to the blood system through inhalations.
- Tinctures: Just like medicinal tinctures, CBD-based ones are made by combining cannabinoids with alcohol or another strong solvent. Sometimes CBD tinctures also contain extra herbs. While most don’t have great flavor, tinctures are popular with people who want to feel the effects of CBD quickly.
- Topicals and patches: Best suited for targeted action such as joint, back, or menstrual pain, topical ointments and CBD patches appeal to consumers who don’t like hemp flavor or prefer external applications for other reasons.
- CBD edibles: Gummies, candy, chocolate, honey sticks, there’s a huge variety of munchable CBD products on the market. Most of them make hemp look less ‘medicinal’ and more of a wellness treat. In 2019, 3 out of 4 chefs identified CBD-infused food as a hot trend.
Understand the Laws and Regulations Around CBD
The Farm Bill, passed at the end of 2018, legalized the commercial production of hemp in the United States. Specifically, you can grow industrial hemp and then legally sell products containing hemp-derived CBD across the country.
But there are some restrictions too:
- The hemp you are using to produce CBD cannot contain more than 0.3% of THC. Any cannabis plant with a higher concentration of THC is automatically considered a marijuana plant and stronger regulations kick in.
- CBD, produced from marijuana plants, is legal in 15 states for recreational cannabis usage and in 36 states for medical use.
Now when it comes to cannabinoid as a substance, the regulatory matter gets complicated. To date, FDA has approved only one CBD-based prescription drug, Epidiolex. Meaning that no other CBD brand can make health claims regarding their CBD products. Also, the FDA prohibits adding cannabinoids into food, or marketing anything with it as dietary supplements.
Wait, but what about an array of edible CBD products that are on the shelves? Are they illegal? It’s a gray area.
Because the stance on CBD legality status isn’t consistent across federal and state regulators. As PBS writes:
Federal provisions have a blindspot whereby a store can sell as much CBD as it wants, as long it doesn’t make any health claims about its products, put it in food nor add it to dietary supplements.
While FDA doesn’t allow CBD in food, they are not taking any action against CBD sellers either, except for issuing warning letters for falsely-advertised health claims.
Now let’s recap:
1. Selling federally.
Federal laws allow legal CBD sales nationwide. So long as your products contain less than 0.3% THC, you are good to go to market.
2. Selling statewide.
Statewide laws differ. In general, all states should allow sales of hemp-sources CBD with the right THC threshold. But specific favorable or not-so regulations may kick-in in states where recreational marijuana usage isn’t legal. So it’s best to cross-check with a local legal specialist if there are any restrictions regarding CBD product sales in your state.
Create a Thorough CBD Business Plan
Jumping into a business without a solid business plan is like driving without a rearview mirror: you can do it, but you may miss a huge obstacle heading your way.
When it comes to the CBD niche, your business plan is also your navigator for staying atop of changing regulatory policies, conflicting operational priorities and new business opportunities, fueled by the market demand. Plus, it’s the document your financial supporters and other stakeholders will want to see.
Here’s what should go into your business plan for ecommerce CBD operations:
- Start with market analysis: The goal of a market analysis is to supply you with sufficient information about your industry size, customers, competitors and other market variables. So that you could make more informed decisions regarding your product positioning, pricing and overall go-to-market strategy.
- Pick your brand name and confirm product range: Explain how your brand name, along with other brand assets, differentiates you from the competition. Recap which CBD niche you plan to target and why. briefly describe your product range, focusing on the product quality and competitive parameters.
- Determine your financing: Estimate how much cash you’ll need to launch your operations. Break them down as one-time pre-launch investments (e.g commerce website development, inventory purchase, product design/branding) and ongoing monthly costs ( e.g. inventory restock, handling/packaging, shipping, marketing, taxes, etc.). Always add extra padding for ‘unplanned’ expenses because these will surely happen. Then look into how much time and how many sales you’ll need to make to break even monthly. If you are self-financing, estimate how much of a runway you’ll end up having. If you are planning to secure investment later on, prepare more figures describing your anticipated expenses vs profits, plus set targets for CPA (cost per acquisition), AOV( Average order value), sales conversion rates, customer retention rate, customer lifetime value (CLV).
- Include a realistic marketing plan: A marketing plan details your strategy for growing awareness around your CBD brand, acquiring new customers and fostering repeat purchases. It’s a cornerstone document that should be a) data-backed b) realistic c) channel-specific. Yes, writing a solid marketing plan will take a ton of time and research. But this early investment pays off in terms of reduced budget waster and better marketing results later down the road.
You can also learn more about business plan writing for ecommerce from our previous guide!
Get Your Business Documents in Order
To sell CBD online you need to obtain two types of licenses:
- A regular business license: get incorporated and register a business with your state to start operations. Also, request an EIN/TIN for your newly created company from the IRS.
- Reseller license: If you plan to purchase CBD from wholesalers, you may also need to get a Reseller’s license (certificate) from your state. This document is hugely important because it allows you to buy products wholesale without paying sales tax. The license also lets you collect sales tax from your customers afterward.
Find Your CBD Supplier
Arguably, the most important step of your ecommerce operations is finding a reliable CBD supplier. There are a few reasons for that.
First, if you are selling nationwide, you need to ensure that you are selling CBD, derived from hemp plants, not marijuana ones. The latter contains a higher THC dosage, making them legal only in a handful of states. The wrinkle, however, is that there’s no affordable testing for determining the levels of THC in the plant. This can make purchasing raw materials from a farmer challenging if neither you nor they have the capabilities to test the crop.
Reputable wholesalers, on the other hand, typically do lab testing and can provide certificates of analysis (COA), detailing the product content. Not being able to provide one is a major red flag.
(Sample certificate of analysis of a CBD product. Source: Alphagreen)
Apart from the general product contents, you should also ask to see the results of:
- Pesticide testing (you’ll want to have a ‘clean’ product).
- Microbiological testing (showing there’s no bacteria or mold inside the sample).
- Residual solvents testing (prompts if there any stray chemicals remaining from the extraction process).
Secondly, your product quality will impact customer satisfaction and your CBD brand reputation. After all, 24% of CBD users named the ability of the product to generate the “desired effect” as their primary purchase driver. When your product fails to deliver on the ‘effects’ promise due to poor content, you’d struggle to win repeat business. Other buying priorities include ingredients quality, price, concentration and consumption method (e.g. oil, edible, vape).
Considering that CBD production remains underregulated, many ‘fake’ products end up on the shelves: ones containing no cannabidiol inside.
Such sham brands and manufacturers, speculating on the CBD sweeping popularity, are making it harder for the honest CBD companies to break into the industry. As The New York Times feature on the origins of CDB popularity sums it up:
“As a result, the compound is often caricatured as snake oil, a scam, even as promising research into the full potential of CBD is starting to pick up.”
As a new CBD brand, you don’t want to end up on the sham side. Again, this is another reason why you should do careful due diligence when assessing different CBD manufacturers. Beyond requesting or performing an independent certification of analysis, also evaluate a potential wholesaler based on the following criteria:
- Hemp sourcing method and origin.
- Extraction method.
- Reviews from other entrepreneurs.
- Extra services (e.g. labeling, dropshipping).
Discover the Perfect Ecommerce Platform
Apart from finding a trustworthy CBD supplier, you’ll also need to identify the (best) ecommerce platform for your operations. Just like quality products, your tech infrastructure will positively contribute to your customers’ satisfaction with your brand.
But, not every ecommerce platform allows creating an online CDB store due to opaque regulatory status. Still, you have some really good options!
BigCommerce offers a bevy of B2C and B2B ecommerce features for CBD retailers, wholesalers and manufacturers. From drag-and-drop page builders to limitless customization opportunities to 0% transaction fees and 99.9% uptime, we provide global CBD businesses an integrated ecommerce solution they need to start their operations fast and scale without constraints.
Shopify only allows US-based merchants based in certain states to sell CBD or hemp-derived goods on their platform. If you are eligible, you gain access to a nice set of core commerce features for launching your digital operations including design templates, integrated shipping, marketing tools and payment processing. But the proprietary Shopify Payment method isn’t available for CBD products. So you’ll need to get approved by a third-party payment processor.
3dcart is another ecommerce platform that allows hosting digital CBD and vape-related businesses. They offer similar ecommerce solutions — shopping cart software, embedded ‘buy’ button and full-scale ecommerce website builder, featuring themes, unlimited bandwidth, payment processor support and more. However, their website backend comes with a bit of a learning curve, so 3dcart may not be the optimal choice for non-coding beginners.
Build Up Your CBD Website
By opting for an ecommerce platform, over open-source ecommerce tools, or custom development, you reduce the website development timeline. Since the solution provider handles hosting, infrastructure and all that jazz, all you have to do to get your CBD operations off the ground is work on your store design and list products.
1. Customize your design.
Have you ever painted by numbers? Design experience on modern ecommerce platforms is pretty similar to that. Instead of starting with a blank canvas, you rely on a website theme — your set of pointers, pre-mapping the final store look.
You can still be creative though, changing colors, layouts, fonts and other visual elements or even adding new elements to your online store.
When it comes to CBD ecommerce store design make sure that:
You differentiate yourself from the competition. This can be as simple as using blue hues as a dominant color instead of green like everyone else does in the CBD space. Get in touch with a branding professional to work out a signature brand identity that will further extend to your packaging and marketing collateral. Plain Jane, is a great example of creativity and consistency. They extended their teal website color theme to product packaging and use bold typography for accents.
Source: Plain Jane
Key product information has a prominent spot: Most of your customers will want to know the key product specs: dosage/strength, hemp origin, extraction method, and possible benefits. Make sure all of this information is displayed in a digestible manner for each type of product. CBDistillery goes straight to business and highlights product ingredients and suggested use:
- Mind the navigation: Since CBD is still a somewhat new niche, expect to see an influx of first-time buyers. These folks will need some extra hand-holding, unlike regular users. Design your on-site navigation to accommodate their customer journey. Create descriptive product categories and sub-categories, organizing your products by consumption method, strengths, use cases. You can also create a quick self-assessment quiz and place it in the header area, to make more personalized product recommendations.
2. Add products and descriptions.
In the CBD space, your product descriptions should be more than just convincing. They also need to be:
- Accurate and fact-based.
- Devoid of any health claims.
- Cliche- and jargon-free.
When it comes to CBD marketing, FDA does not allow businesses to suggest that any of their CBD products can “diagnose,” “cure,” “treat,” or “prevent” any type of medical condition. Even if it’s tempting, don’t go making any big claims.
What you can do though is reference actual medical research done around CBD usage. Also, you can leverage the voice of customer data — public/private reviews, first-hand accounts/stories, general feedback — in your product listings.
Lastly, don’t write overly complex product descriptions. Not every store visitor will be a CBD connoisseur, familiar with the industry lingo. So while you should always provide ‘technical’ product information, avoid niche chemical terms, industry jargon and odd CBD pop culture references.
3. Shoot and upload product photos.
Ecommerce photos do two important things:
- Act as an extension of your brand.
- Help sway customers’ purchase decisions.
For example, 90% of Etsy shoppers said that product image quality is a purchase trigger for them.
If you have the budget, hire a professional photographer to shoot a series of product-only and lifestyle images for your brand. Those short on cash can also snap amazing ecommerce pictures on a budget.
Determine Shipping and Payment Terms
After you designed your store layout and organized your product catalog, you need to sort out how your products will reach their new owners.
1. Determine your shipping policy.
Shipping is important to ecommerce consumers. So you don’t want to let them down in that department. To work out the optimal shipping policy for your CBD business ask yourself these questions:
- What’s the threshold I set for ‘free shipping’? For 79% of US consumers “free shipping” is a strong prompt to buy online more. But do people get upset when there isn’t such an option? In general, yes, over a third of consumers will be upset if there’s no complimentary shipping for an order valued above £135 ($150). Determine a reasonable threshold for your brand based on anticipated average order value.
- Do you plan to offer a variable fee? Destination-based or weight-based shipping fees can help a smaller retailer reduce logistics costs. But they may alienate some customers too: 50% of abandonments happen when the shipping/tax costs are too high. The fix? Provide estimated shipping costs or a delivery calculator option pre-check out if you plan to use variable fees.
- What delivery timeline is feasible? Most people are spoiled by Amazon Prime next-day deliveries, but few smaller brands can pull off the same levels of service nation-wide. So choose your battles. Limit same-day delivery to your city/state only. Set the right expectations regarding priority/express delivery if you plan to offer such.
- Which logistics carrier works best? Not all carriers have straight policies regarding CBD shipments. Do your research carefully. For example, while UPS allows shipping hemp and CBD-infused products, they also state that “[we] reserve the right to dispose of any shipment containing Marijuana, Hemp or Hemp products tendered for shipment which Shippers are prohibited from shipping, which UPS is not authorized to accept, which UPS states that it will not accept, or which UPS has a right to refuse.” That’s not very reassuring.
2. Select an ecommerce shipping solution.
Your next step is to select supporting shipping and fulfillment software — a tool that will help you set shipping rates, manage logistics, print labels and auto-dispatch updates to customers. To minimize hassle and mistakes, your app should integrate directly into your ecommerce platform. You can discover different shipping and fulfillment apps on the BigCommerce marketplace. Don’t forget to check if your pick also iterates with the carrier you plan to use!
3. Choose a payment processor, fit for CBD.
CBD industry is deemed as “high risk” due to the ongoing regulatory debacle. Thus, many payment processors choose to exclude CBD sellers to minimize their operational risks. But you are not completely out of options. To accept payments from customers, you can work with a specialized payment processor who knows how to handle high-risk business.
BigCommerce, for example, lets CBD businesses choose among 65 payment gateways that can be used to do business in over 100 countries, using some 250 local payment methods. Get to know more about how payment processing works for CBD companies.
Market Your CBD Company
Now that you are up and operational, you need to focus on customer acquisition. While the CBD industry is trendy right now, shoppers won’t flock to you on autopilot. Unless you set yourself up with a solid marketing system.
1. Focus on content.
CBD products are still largely misunderstood often, due to shady marketing from other brands or bogus medical claims made by self-proclaimed gurus. Build your initial customer base by seeding accurate content. Educate the interested, but cautious, buyers about:
- Different product types.
- CBD extraction methods.
- Possible benefits and results.
- Potential side-effects.
- Correct usage/dosage.
- The hemp industry as a whole.
Invite industry experts and use claims from verified sources to create more comprehensive content than your competition. Focus both on your blog and social media especially, as that’s where most younger consumers go looking for both product inspiration and info.
2. Leverage SEO.
Publishing well-research content is key to dominating the search engine results. Especially with the latest Google update called ‘passage indexing’. By honing its AI algorithms, Google now indexes individual passages from a web page (rather than just the entire page) to help users find needle-in-a-haystack info.
So for instance, if I’m googling something like “What’s the best strength of CBD oil?”, I’m redirected to a highlighted result on the page:
Source: Way of Leaf
For CBD businesses this SEO change is a great opportunity to attract top-of-the-funnel customers and convert them with educational content.
Since SEO-competition around CBD-related keywords is pretty intense, going after long-tail, less-searched keywords can help you build the initial traffic, while you work on further optimizations.
3. Partner with influencers.
Much of CBD’s current popularity comes as a direct result of patients’ advocacy and evangelism. First-hand stories from people, whom CBD helped cope with chronic pain and seizures, initially spurred the mass-interest in the plant both for therapeutic and wellness purposes.
Today, a ton of celebs are outspoken fans of the CBD. Some of them even launched their CBD businesses. So finding credible advocates for your brand shouldn’t be an issue. Just ensure that you are partnering with people who share your brand beliefs and can speak about CBD with authority. Also, don’t forget about mandatory FTS disclosures.
Lastly, keep close tabs on the latest FDA regulations (as these change as we speak) to make sure your communication stays in line with the requirements. Also, individual states have different regulations when it comes to CBD advertising. Be sure to verify local rules too.
4 Evergreen Issues CBD Businesses Are Facing
While entrepreneurs in the CBD industry can capitalize on the industry’s rapid boom, they should also brace themselves for a set of unique challenges. With a lack of FDA guidelines and differences in CBD regulations on the state level, running a CBD business can feel particularly gruesome at times. Especially when it comes to:
1. Banking and financing.
Sadly, CBD businesses are considered ‘high-risk’ by many financial service providers due to the aforementioned gaps in state laws and regulations. So prepare to do some walking and negotiating when opening a merchant account. Securing extra financing via business loans can be challenging too, again thanks to the bad rep the cannabis industry has among certain FIs. But don’t despair. There are some hemp-friendly banks and investors in the field too.
2. Payment processing.
Payment processors aren’t making life easier for CBD sellers either. Most wrongly stigmatize such companies, unlike BigCommerce. Since 2019, we are offering our customers access to an array of hemp-friendly payment processors, along with other essential tools for building an ecommerce store.
3. Business insurance.
Insurers are slow to act on the recent legalization of hemp and hemp-derived products. Just like conservative banks, they are often barring CBD companies altogether or burden them with crazy-high premiums. But having a solid insurance plan is crucial for your company’s liability. So don’t skim on getting a good plan from a CBD-friendly insurer.
4. Differentiation from the competition.
With a slew of businesses touting ‘cannabis’ as a customer attractor, it may be difficult to stand out even when you sell genuine, high-quality cannabis products. A 2017 Penn University study, found that 70% of cannabinoid products sold online had issues with labeling. Over 42% of CBD products were under-labeled, meaning that they contained more CBD than stated. Some 26% were over-labeled — they had a lower condensation of cannabinoid than stated.
Such happenings, along with misleading marketing and grossly overstated claims regarding CBD’s effectiveness are making new customers skeptical towards recent market entrants. Gain their trust by being positively different when it comes to:
- Transparency: From telling where your hemp plants grow to display proper certification of analysis, explain to your customers what they are about to purchase and munch.
- Accuracy: Avoid unverified scientific statements (even if they look promising for marketing). Check your sources, invite known experts to help you create content and educational brochures. Make honest, no-nonsense claims to set yourself apart from the sleazier types.
- Storytelling: Some of the most successful CBD businesses were launched by long-term CBD evangelists and regular folks, whose chronic health condition was majorly alleviated by CBD. Your unique story, cementing your brand mission and values, can help you build a stronger emotional connection with your target audience. For example, CBD for Life tells a story of how their founder concocted a CBD cream to help her alleviate the back pain.
Source: CBD for Life
3 Core Tips for Nurturing Your CBD Business
New ecommerce companies are very tender. If you want your CBD business to grow, evolve and always be ripe, here are three things you should consider doing.
1. Ask for help.
Between murky regulations and operational issues, new CBD business owners will have a lot of their platter. While everything is searchable on Google these days, you shouldn’t underestimate the value of a mentor aka someone who already walked the same walk before you.
As Andre Bourque said on Forbes:
“That’s the rub of excelling in the cannabis industry: there’s no model of excellence right now. It’s a fluid and shifting industry that didn’t really exist just a few years ago.”
That makes finding a good industry mentor somewhat challenging. Yet, not impossible. AngelList has 1,210 marijuana investors and that’s just one place. Non-profit organizations such as CBD Alliance, National Hemp Association and Vote Hemp are also great places to find new industry connections and support.
2. Have patience.
Fast traction is often viewed as a given in the ecommerce industry. You sure have heard literally overnight success stories where some “$500 Instagram ad drove $50,000 in sales in a day”.
In the CBD industry, paid ecommerce ads are not an option. Click-bait marketing can cause compliance issues, while content marketing and SEO both take time to work. So take a deep breath and prep several buckets of mental patients to methodically work through the different kinks of running CBD operations.
3. Understand the industry.
Despite (or because of) slow FDA response, the CBD industry keeps evolving in somewhat contradictory directions. While some states e.g. Texas removed the ban on selling edible CBD products in 2019., others banned CBD-infused foods and beverages last year.
Subsequently, market trends and consumer trends change from week to week too. Especially, when some celebrity like Gwyneth Paltrow announces her involvement in a new CBD venture or throws a CBD-themed baby shower as Kim Kardashian did.
For sure, no CBD business can or should stay atop of all the latest trends and fads. But they do need to keep close tabs on emerging tendencies among their clients, changes in compliance requirements, along with other major industry happenings.
CBD is an interesting product to trade. On one hand, you can make a genuine difference by supplying your customers with life-improving goods. On the other, you also need to constantly educate the general public (along with some B2B partners and other stakeholders) about your products’ actual benefits, their legality status and lack of connection with THC-dominant marijuana.
That can be a tough battle. But well worth it when you look at the CBD industry sales prospects again. Grandview Research estimates that the CBD market will swell by a compound annual growth rate of 22.2% between 2019 and 2025.
And you can be part of that revenue pool too if you launch your online CBD business today!
This material does not constitute legal, professional or financial advice and BigCommerce disclaims any liability with respect to this material. Please consult your attorney or professional advisor on specific legal, professional or financial matters.
Opening your ecommerce store is exciting. You’ve created and sourced your products, you’ve built an awesome website, and now it’s time for one of the most important steps — getting paid.
Understanding how ecommerce payment processing works is a crucial part of opening an online business. But let’s be honest, if you’re not a financial wizard or very technical, you might find the whole concept of ecommerce credit card processing complex and hard to navigate. The good news is that we’re here to break it down for you.
In this blog, you’ll learn how gateways and payment processors work together, and we’ll share some examples of payment solutions you can use when setting up your BigCommerce store.
Online Payment Methods
Before we get into how payment processing works, let’s review some of the different payments methods customers prefer for online purchases:
- Credit Cards: One of the most popular and straightforward ways to pay both offline and online.
- Direct Debit: Customers can enter their bank account details, making this the equivalent of paying in cash or by check.
- Alternative Payments Methods: This includes wallets, like PayPal, Amazon Pay, Google Pay and Apple Pay, and buy-now-pay-later solutions, like Affirm, Afterpay, Klarna and Sezzle.
- Digital Currency: A very small number of people do pay with Bitcoin or another cryptocurrency.
There are a few other options you can give your customers for paying online during the checkout process, such as ACH and invoicing. However, as you can see from the chart below, credit cards, alternative payments and direct debit are the ones most people prefer.
Three Elements of Ecommerce Payment Processing
Now that we know what types of payments you can choose to offer on your online store, it’s time to talk about payment processing. While there’s definitely more to it than this, an easy way to summarize the concept is to quickly define each of the elements:
- Payment gateways: act as the courier between your ecommerce website where the customer enters their payment information and your payment processor
- Payment processors: take the information from the gateway, verify that the customer has the funds, and deposit the money in your merchant account
- Merchant accounts: receive the funds once they are processed
Sometimes people use the words gateway and processor interchangeably even though, technically, they do different things, making it extra confusing.
Additionally, payment service providers (PSP), also called merchant service providers (MSP), can manage the complete end-to-end process, from the technical connections to depositing funds. (We’ll provide some example PSPs that BigCommerce merchants can use below.)
How Do Ecommerce Payment Processors, Gateways and Merchant Accounts Work Together?
Now that we’ve explained each element, let’s review the steps for a standard transaction to see how the payment systems work together once the customer is finished adding items to their shopping cart:
Step 1. The customer enters their credit or debit information at checkout.
Step 2. The payment gateway secures the data and sends it to the payment processor.
Step 3. The payment processor checks with the credit card network to ensure that the customer has the funds to cover the purchase.
Step 4. The customer’s credit card issuing bank either accepts or rejects the payment request.
Step 5. The payment processor then sends the results (approved or denied) through the payment gateway, so the customer can view on the merchant’s website if the transaction was approved.
Step 6. The payment processor issues the funds to either the merchant account or the merchant’s bank.
What’s sometimes most surprising is that the whole process takes place in a matter of seconds — even though a lot of things are happening.
Let’s go into more detail about how payment gateways work on your BigCommerce store to collect and secure your customer’s payment information.
Collecting Information with Ecommerce Payment Gateways
As we stated above, the main role of the payment gateway is to connect the customer’s payment information with the financial institutions that are actually processing the payment. For small business owners, there’s four main options for collecting payment details on your BigCommerce store — some more customizable than others.
1. Hosted widgets.
In this scenario, you use an HTML component to display information on your checkout page. And there are two types of hosted widgets you can use:
- Embedded iFrame components: The content displayed on your checkout page is hosted outside of BigCommerce; therefore, you can’t control the look and feel.
2. Hosted fields.
Using hosted fields is another solution to keep your customer on your checkout page while providing an extra layer of security for their credit card information.
With this option, the form fields are hosted outside of BigCommerce but displayed on the checkout page. The gateway tokenizes the shopper’s credit card information once it’s entered into the fields, and then the token is passed to the payment processor. This way BigCommerce doesn’t handle the raw credit card data.
3. Native hosted component.
For this option, the customer remains on the page and the fields are rendered by BigCommerce on checkout. Then, BigCommerce uses a server-to-server (direct) API integration to connect with the PSP. You can make this work with PSPs like Authorize.net and Cybersource.
Important Considerations for Ecommerce Payment Processors
Once you’ve collected and transferred the data, it’s time for the payment processor to actually process the payment. This is where the majority of the activities happen, from checking with the credit card company and authorizing the payment to transferring the money into your account.
Here’s some general things to know about your payment processor:
1. They should be PCI compliant.
Any company that accepts, processes, stores or transmits credit card information must be compliant with the Payment Card Industry Data Security Standard (PCI DSS). This means that you and your payment processor must comply with these requirements.
When reviewing payment processors, make sure you ask them about their approach to PCI compliance. You can learn more about how to achieve PCI compliance from Jon C. Marsella, the Founder and CEO of Jasper.
BigCommerce stores come standard with Level 1 PCI compliance, so you’re covered if you’re working with one of our Partners listed in your Control Panel.
2. They should create tokens for sensitive payment information.
We touched on this above, but it’s worth explaining how it works in more detail. Essentially, to secure your customer’s payment information — especially if you allow customers to save their payment information to use for repeat purchases or recurring billing— your payment processor should use tokenization.
How this works is that the moment the credit or debit card information is captured, the processor converts the account numbers into a token that it can use to identify the specific customer. By doing this, you’re protecting yourself and your customers from hackers that might attempt to steal sensitive payment information.
Depending on your BigCommerce plan and the payment service provider you choose, you can enable stored payment methods for your customers. To learn more about how this works for BigCommerce merchants, visit our knowledge base.
3. The payment methods they accept.
This is probably the most important feature of your payment processor — at least to your customers. Does it allow you to accept the payment methods your customers want to use?
For instance, while Visa and Mastercard are widely accepted all over the world, it’s a very different story for American Express and Discover. Additionally, if your store sells more expensive items, customers might prefer an option, like Klarna, to break up the payments or buy now, pay later. You want to give customers as many options as possible to ensure they complete their purchase.
4. How much they charge in fees.
Now, this is probably the thing you care about most. As a small business, you don’t want to get trapped into paying astronomical fees for your payment processor, but sometimes the fees can be difficult to understand.
Typically though, companies will charge a percentage, as well as a fixed fee per transaction. However, some may charge a monthly fee for a subscription instead of transaction fees. There are also extra fees you might be required to pay for things like chargebacks, disputes and international payments.
Knowing your number of transactions can help you estimate your costs and find the right type of payment processor for your ecommerce business. If you’re a BigCommerce merchant, you can take advantage of our pre-negotiated rates with PayPal powered by Braintree.
Do You Need an Ecommerce Merchant Account?
Between the heightened complexity and modernization of ecommerce, some businesses are recognizing the need for ecommerce merchant accounts to help tailor their offerings to consumers’ expectations.
If you manage payments digitally — and if you’re here, you probably do or plan to — an ecommerce merchant account can help you offer the right digital payment options for your customers.
Merchant accounts can also help you manage and reduce the fees associated with various payment gateways.
Finally, ecommerce merchant accounts are focused on making their services very secure and now use the highest grade encryption when processing payment. This helps you ensure you’re offering customers the most accurate and secure environment for them to complete their card transactions.
6 Examples of Ecommerce Payment Solutions
At this point, you should have a better understanding of payment gateways, payment processors, merchant accounts — and how they all work together. Now, we can review some examples of PSPs that offer payment processing services, as well as gateways and merchant accounts.
PayPal is built on powerful technology that lets you easily accept credit and debit cards, offer PayPal to your customers, and extend buy now, pay later options, including Pay in 4 and PayPal Credit through your online store. Through PayPal, you can also enable payment through Facebook, Pinterest and Instagram.
In addition to offering fast, easy and secure payment acceptance, Stripe works with Google Pay, Apple Pay, and Masterpass to offer your customers even more payment options on cart and checkout pages. Stripe is PCI-certified and accepts international transactions from customers worldwide, ranging from Germany to Japan.
Square enables you to sell online and in-person with two-way inventory sync and provides a robust suite of tools to help you grow your business and improve your operations, including payroll and time management, employee-specific access management, customer engagement, and online invoices.
BlueSnap is a single global platform to accept payments from anywhere and on any device, offering global payment processing and multi-currency support — supports over 100 currencies and shoppers can select from 16 different payout currencies — in just one account.With BlueSnap, merchants can accept major credit card payments, as well as regional cards like China Union Pay. You’ll also get world-class security and detailed analytics and reporting.
5. Amazon Pay.
Amazon Pay simplifies checkout for hundreds of millions of Amazon customers by enabling them to use payment and shipping information stored in their Amazon accounts. According to Amazon, some merchants who use Amazon Pay have experienced increased conversion, reduced cart abandonment and faster checkouts. Amazon Pay offers fraud detection technology and also offers Amazon’s A-to-Z Guarantee on qualified orders. And mobile checkout takes just a few taps.
With Klarna you can offer no-liability financing options at checkout, including build-in fraud protection. BigCommerce merchant PlayBetter partnered with Klarna to offer customers alternative payment solutions with high-ticket items like SkyTrak, a golf simulator unit that costs about $2,000.
“Having Klarna available at checkout and offering our customers the ability to pay over time with little or no interest has been extremely helpful in reducing cart abandonment and increasing conversion.” — Chris Regan, Director of Customer Happiness
Now that you understand the available options to accept payments through your ecommerce platform, you’re well equipped to make decisions about which one(s) you’ll select.
Whether you’re just starting out or a fully established business, payments are a core component of your success. There’s no shortage of options for you to choose from — but you need a payment processor that addresses your specific needs as well as those of your customers. The price you’ll pay as the merchant is important, but it’s not the only factor. Consider all the features you need for your business right now, as well as what you might like to have as you start to scale.
Whatever processing solution you choose, make sure it enables online transactions that are easy for both you and your customers.
At BigCommerce we provide the platform for brands to build, innovate and grow their businesses. However, when they need help with the actual building, innovating or growing in the form of development, design, marketing and more — we have an incredible ecosystem of agency and technology partners who can help.
While we appreciate all of our incredible global network of 2,000 agencies and 800 technology partners, once a year we like to honor the best of the best. The BigCommerce Partner Awards program recognizes top performing agency and technology partners for their extraordinary and forward-thinking work for BigCommerce merchants.
In 2020 — the program’s third year — the BigCommerce Partner Awards featured 17 total categories whose applicants were evaluated by a panel of BigCommerce employees and executives. For the first time ever, the 2020 BigCommerce Partner Awards recognized three winners for each award based on their accomplishments respective to the geographic region in which they operate: Americas, APAC or EMEA.
We want to share the winners of this year’s awards to highlight the stellar work they’re doing in ecommerce. In an increasingly competitive ecommerce landscape, it’s important to have help you can count on. Merchants should feel confident that the following agencies and technology solutions can provide truly exceptional work.
Without further ado, here are the winners in each category, their accomplishments and what each has to offer ecommerce businesses.
BigCommerce 2020 Agency Winners
Best B2B Solution Award
This award is given to agency partners that consistently demonstrate superiority at meeting the complex needs of BigCommerce’s B2B merchants.
Americas Winner: Guidance
This 25-year-old digital commerce company is a customer-centric provider of innovative commerce solutions for both B2C and B2B merchants offering multichannel retail strategies, mobile, customer experience, optimization, innovative design and complex system integration.
They performed a digital transformation for hybrid business Farmer Boy that included important B2B features like account level pricing, while also automating many of their manual processes.
APAC Winner: Moustache Republic
A Sydney-based team of business minds, creatives, and technology junkies, Moustache Republic delivers exceptional ecommerce solutions for businesses through website design and development, ecommerce strategy consulting and conversion optimization.
The team built elegant solutions for a hybrid apparel company, AS Colour. This included two separate journeys for B2B and B2C customers that reflect the different tax requirements, shipping methods, pricing, payment methods and even products between trade and retail shoppers.
Finalist: Matter Design & Digital
EMEA Winner: 5874 Commerce
A global commerce agency and leading solution provider in Europe, 5874 Commerce works with clients to scale their businesses and create success stories through these core services: ecommerce, digital marketing, branding and integration.
Creative Problem Solving Award
This award is given to agency partners with an exceptional talent for using innovative thinking to create powerful online shopping experiences.
Americas Winner: Americaneagle.com
This full-service, global digital agency is based in Des Plaines, Illinois and offers best-in-class web design, development, hosting, post-launch support and digital marketing services.
The agency won the award for providing an innovative logistical solution for a major appliance brand. They have supported other well-known brands like Fin Feather Fur and Face-to-Face Games that enabled them to meet their specific business challenges.
Finalist: Groove Commerce
APAC Winner: 33 Bondi
33BONDI is an innovative design, technology and marketing services company that enable businesses to scale around their brand and customer relationships instead of being bogged down by complexity and IT costs.
Their client Blooms the Chemist required an ecommerce solution to integrate with their legacy POS/ERP and loyalty program. Their custom solution, built on the BigCommerce Cornerstone theme, merged online and offline transactions and allowed for the branded implementation of click & collect, with accurate inventory level and allocation occurring on purchase — creating a seamless customer experience.
EMEA Winner: Like Digital
This London-based studio specializes in global luxury, with extensive expertise in fashion, entertainment and hospitality. Like Digital has facilitated over $100,000,000 in ecommerce transactions, delivering visually rich, engaging solutions for the global luxury customer.
Like Digital leveraged BigCommere’s open API to creatively solve for their client La Perla’s biggest challenges.
This honor is awarded to agency partners who leverage BigCommerce’s open APIs to deploy headless storefronts that power customized and engaging shopping experiences.
Americas Winner: The ZaneRay Group
The ZaneRay Group designs and creates innovative enterprise ecommerce solutions that disrupt the norm. They have significant experience in headless architecture and have built a number of headless sites.
For one of their clients, Yeti Cycles, they designed a headless build with Prismic as the CMS and BigCommerce on the backend. This enabled the brand to put storytelling first and infuse dynamic content throughout the shopping experience on the site.
APAC Winner: Arkade
This customer-focused agency works with consumer brands to uncover, prioritize and implement valuable customer experience opportunities.
With COVID-19 heavily impacting the way customers interacted with their local pharmacies, Arkade used BigCommerce to create a headless solution for an Australian pharmacy brand that could quickly and effectively deliver localized click & collect and delivery to communities Australia-wide.
Finalist: Moustache Republic
EMEA Winner: Calashock
Since 2009, Calashock has offered design, development and optimization services for merchants — producing robust and secure ecommerce stores with beautiful designs and user experience at their core.
The group built a website for their client who needed a website that could be localized for several countries. They used a headless build to ensure the website was informative, content-rich and interactive, without affecting performance or user-experience.
Excellence in Delivery Award
This award goes to agency partners that consistently demonstrate the ability to successfully launch their clients’ BigCommerce storefronts on-time and within budget, with high levels of customer satisfaction.
Americas Winner: MoJo Active
This Pennsylvania-based agency services clients in B2B, wholesale/manufacturing and fashion in everything from ecommerce and marketing strategy to SEO/SEM and web/mobile development.
They have helped a number of well-known clients including Woolrich, Jeni’s and Little League and they are known for their time-proven approach that guides clients through the strategy, execution and marketing of their online stores.
APAC Winner: RANDEM Group
Randem Group is an international ecommerce consultancy servicing clients around the globe. They have multi-language capabilities and work with organizations of all sizes looking to launch, enhance or transform their digital capability across all market sectors.
Their clients like ResMed, Siemens, Mckesson, Caffe Nero, Closet New York, Closet London and Heist know them as a core part of their teams, truly motivated by client success.
EMEA Winner: 5874 Commerce
In addition to the B2B Solution award, this global agency also won this award due to their tireless efforts to create the best outcomes for their clients including Philip Morris & Son and Yumi.
Marketing Solutions Award
This award is given to agency partners that provide outstanding marketing services for BigCommerce merchants, including omnichannel, email, SEO and more.
Americas Winner: Coalition SEO
Coalition’s team of over 120 experts has the talent every ecommerce store needs to thrive. Whether you’re looking to launch a new storefront on BigCommerce, redesign an existing one or needing custom development using the BigCommerce API, their design and development teams will deliver.
Finalist: efelle creative
APAC Winner: Overdose
Overdose provides complete end-to-end commerce services, with a wealth of experience across omni, pure-play, SMB, mid-market, and enterprise clients. Their team provides services in tech, strategy, design, UX, search, data, performance marketing and automation.
Leveraging all layers of the marketing funnel across acquisition, conversion, and retention the team at Overdose delivered a high-value set of user journeys for their client Kitchen Things. The work includes omni-channel, SEO, SEM, landing pages, remarketing, email automation and more.
EMEA Winner: DeeperThanBlue
DeeperThanBlue has expertise in managing high-transactional, high-volume ecommerce websites. Working with world-class technologies, they create highly-successful, bespoke ecommerce solutions, tailored to each merchant’s specific business requirements.
Using BigCommerce’s built-in SEO functions, the agency was able to quickly add keywords and META descriptions to products for their client Car and Van Mats, resulting in quick organic ranking on Google and increased sales.
User Experience + Design Award
This award is given to agency partners who have an exceptional talent for creating beautiful, world-class BigCommerce storefronts that enhance the shopper’s experience.
Americas Winner: Born Group
BORN provides a complete suite of market-leading services, from large-scale image production, digital marketing, custom content experiences, and innovative B2B & B2C commerce solutions.
To support the ecommerce growth of one high-tech client, BORN developed a brand-new online store on the BigCommerce platform with cutting-edge creative design and UX as well as new company logo and branding.
Finalist: Arctic Leaf
APAC Winner: Above&Beyond
This Australia-based design agency has expertise in designing BigCommerce themes. In fact, they have over fifteen years of experience building custom-designed websites and specialize in BigCommerce design.
EMEA Winner: Williams Commerce
This Ecommerce System Integrator specializes in ecommerce, marketing and technology services to a wide range of B2B and midmarket retail customers across the UK and worldwide. They have the online business knowledge, digital marketing expertise and technical depth necessary to deliver cutting edge ecommerce solutions on time and on budget.
Finalist: Xtensive Ltd.
New Frontier Award
This award is given to agency partners who are accelerating BigCommerce’s expansion into new countries through their local domain expertise and successful client storefront launches.
Americas Winner: Wagento
Wagento Commerce is a full-service digital agency and ecommerce solutions provider with a global presence. With over 30 certified developers specializing in BigCommerce, Adobe, Order Management, and HubSpot, the team drives revenue and traffic for B2B and B2C companies alike.
APAC Winner: monimedia
Based in Hong Kong, this agency creates experiences that bring people and brands together for brands in Asia. They partner with the best technology providers in the market to deliver outstanding customer and shopping experiences, that drive traffic, increase sales and strengthen customer loyalty.
EMEA Winner: Thesio Group
With over 10 years experience, Thesio creates successful projects for top companies and thriving new ventures. The Dutch agency has technology at their roots and creativity in their minds as they help with technical challenges and online growth based on the BigCommerce platform.
New Partner of the Year
This award is given to agency partners that have demonstrated excellence within their first year as a BigCommerce Partner and generated the most MRR.
Americas Winner: Mindtree Limited
Mindtree is a digital-transformation-led technology services and business consulting company. They take an ideation to execution, agile, collaborative approach to creating customized solutions across the digital value chain. Their digital commerce services offer experience-driven, frictionless, loyalty-led and disruption-ready commerce capabilities, platforms and systems to help businesses win and retain customers.
APAC Winner: Aligent Consulting
Aligent Consulting has over 10 years of proven experience in creating solutions that are fast, stable and flexible to meet business’s goals, now and into the future. They provide services including consultation and strategy, design, UI, and UX, project implementation, third-party integrations and business-as-usual support.
EMEA Winner: Tryzens
Tryzen’s goal is to accelerate client success and growth across all channels, leveraging their expertise, insights and digital-first principles, to deliver compelling experiences that delight and engage customers. They provide services in strategy and insights; customer experience; build and launch; and optimization of existing sites.
Agency Partner of the Year
This award is given to Certified BigCommerce agency partners that have brought new, high-growth merchants to BigCommerce over the last year.
Americas Winner: Mak Digital Design
For businesses that want more than an out-of-the-box template, MAK Digital can finetune every aspect of your site, following user experience best practices to create a stunning representation of your brand. They also support businesses with development, SEO and digital marketing strategy, integration support and post-launch support to power end-to-end business success and continued growth.
APAC Winner: Matter Design & Digital
Matter is a high-performing digital agency housing a combination of strategic, creative and technical skill sets. For 17 years, they have been partnering with clients to provide design and technical solutions that derive from enhanced idea generation and efficient problem-solving. Their approach is personal and pragmatic, and all of their services are provided by an in-house team of specialists. The agency’s portfolio includes major brands, such as Wittner Shoes, Tradelink & The Upside, making them a key BigCommerce partner in the APAC region.
EMEA Winner: Space 48
This UK-based customer experience and ecommerce platform specialist works with ambitious businesses to transform their commerce experience. They support ecommerce businesses across a number industries including data and insight services, strategy and consulting, commerce experience design, ecommerce technology and managed services and support.
BigCommerce 2020 Tech Awards
Best User Experience Award
This award is given to technology partners whose integration delivers a best-in-class user experience based on simplicity of app install and configuration process, ease of use and beautiful design.
Americas Winner: Atom8
Atom8 is an ecommerce automation app built to optimize a merchant’s BigCommerce store by simplifying and converting manual tasks to automated workflows, streamlining processes and feeding data to other customer-facing applications.
As ecommerce merchants start scaling, systems and business processes become more complex and highly inefficient. Atom8 works as an exclusive integration to optimize BigCommerce stores which focuses on five key areas of automation — ecommerce merchandising, customer management, content automation, store administration and email marketing integration — to solve common problems BigCommerce merchants struggle with.
Finalist: Sales & Orders
APAC Winner: Trustpilot Reviews
Trustpilot is a powerful review platform that helps businesses collect and easily manage customer reviews. Trustpilot gives people a place to share and discover reviews of businesses, while giving every business the tools to turn consumer feedback into business results.
BigCommerce merchants using Trustpilot’s app can automate review invitations after purchase, drag-and-drop review widgets on-site and collect both service and product reviews. Additional features of Trustpilot include: turning a company’s best reviews into attention-grabbing images for social media, earning Google Seller Ratings that increase clicks on Adwords and streaming new reviews in real-time onto their websites with TrustBox widgets.
EMEA Winner: DEITY Falcon PWA Storefront
The DEITY Falcon PWA for BigCommerce is a fully-packed hosted platform that gives merchants the power to create the best front-end experience for any BigCommerce shop. The Falcon Platform is a complete, hosted front-end platform to build the best mobile and desktop shopping experience, with top performance and unlimited flexibility, enabling future growth.
DEITY Falcon’s highly customizable progressive web app offers top performance and many great engaging features (including push notifications and offline modes) to every BigCommerce merchant. Falcon PWA Storefront is enabled for multi-language, multi-currency, multi-platforms and more, so it’s ready to do global business for any merchant, from mid-level to true enterprise.
Customer Growth Award
This award is given to technology partners whose outstanding solution has generated the most revenue growth for BigCommerce merchants.
Americas Winner: Sales & Orders
Sales & Orders has become the go-to integration for thousands of BigCommerce store owners looking to grow their businesses online through marketing and advertising on channels such as Google, Microsoft, Facebook, Instagram and now Affiliate Marketing and Marketplaces. Since they first launched back in late 2017, over 12,000 stores have installed the apps and over 8,700 of them have successfully connected their stores and begun showcasing their products on channels like Google Shopping.
APAC Winner: Vend
Vend provides an easy-to-use, intuitive hub from which to sell, track and manage inventory. The technology allows you to manage stores, sales channels, products, customers and users from one place, and easily add more as you grow. In the past 12 months, Vend retailers on BigCommerce have grown from less than ten integrated retailers to over 550.
EMEA Winner: Linnworks
Linnworks integrates the entire multi-channel sales process – handling everything from order management, stock control, shipping, listing, repricing and much more. Linnworks is a highly-affordable option that gives smaller and medium-sized online retailers the same powerful tools as the big corporations but at a fraction of the cost of custom systems. In the last 12 months, the number of customers using Linnworks on the BigCommerce platform has grown to 250.
Innovative Integration Award
This award is given to technology partners that have built a new integration or feature that solves a critical need for BigCommerce merchants.
Americas Winner: Bolt
The Bolt Checkout Experience Platform consists of a hosted checkout that integrates seamlessly with BigCommerce and a retailer’s backend systems to complement their existing storefront. With Bolt, BigCommerce merchants can consolidate checkout, fraud detection and payment processing under one roof to give their customers a polished, personalized, one-click buying experience. Taking it a step further, Bolt’s offerings for BigCommerce come completely modular, so merchants can create the tech stack that best suits their business needs. At scale, BigCommerce retailers using Bolt’s platform have seen higher order completion stats and improved customer satisfaction ratings.
APAC Winner: Atom8
As explained above, Atom8 is an ecommerce automation app built to optimize a merchant’s BigCommerce store by simplifying and converting manual tasks to automated workflows, streamlining processes,and feeding data to other customer-facing applications.
Officially released in early May 2020, Atom8 has helped a growing number of customers to apply automation for their businesses. Since that launch, 80+ customers have applied Atom8 to their stores to automate their business processes and their customers have applied more than 600 separate workflows to their stores.
EMEA Winner: dotdigital
dotdigital Engagement Cloud enables brands to engage subscribers and customers and drive record ROI across email, SMS, social, push notifications and even live chat. Using the app with BigCommerce helps merchants deliver timely, personalized and intelligent marketing messages to more shoppers. Combined with acquisition tools and shopper insights, the integration lets merchants trigger transactional emails based on BigCommerce store events and key customer touchpoints. The emails are mobile-first, fully-branded, easily customizable and can be enhanced with dynamic content.
Merchant’s Choice Award
This award is given to technology partners with solutions deemed a BigCommerce customer favorite, determined by both the quantity and average rating of its reviews in the BigCommerce App Marketplace.
Americas Winner: Rewind
Rewind gives BigCommerce merchants peace of mind by automatically backing up their most important store data, including: products, product details, product images, themes, customers, orders and more. After installing Rewind, you can quickly undo unwanted changes with just a few clicks without dealing with a time-consuming and complicated CSV export again.
Rewind is the #1 most-reviewed app in the BigCommerce marketplace with a 5-star average and the #2 most-reviewed app overall. Not only has Rewind Backups for BigCommerce seen rapid growth, they have protected the growth of thousands of BigCommerce customers by safeguarding the data driving their businesses.
Finalist: Yotpo Reviews
APAC Winner: Codisto
Codisto Channel Cloud functions as a marketplace listing tool and a fully-featured multichannel solution with real-time inventory and pricing sync directly from BigCommerce. Their average customer review rating is currently 4+ and customer retention is extremely high.
EMEA Winner: Yotpo Reviews
Yotpo helps BigCommerce businesses generate product and site reviews, photos, videos, Q&A and other user-generated content. Merchants can then leverage these assets to drive qualified traffic, increase conversion rates and boost sales.
Yotpo has a growing list of BigCommerce customers across the globe and receives great reviews among SMB and MM/ENT merchants alike.
New Frontier Award
This award is given to technology partners whose solutions have enabled BigCommerce merchants to expand their business into new countries.
Americas Winner: Adyen
Adyen’s solution has a unique approach that enables shoppers to pay with their desired payment methods no matter where they are in the world through a single integration. Together BigCommerce and Adyen make it easy for merchants to offer the best payment experience for shoppers. This includes accepting international credit cards, local cash-based methods and internet banking methods.
Adyen helps businesses to improve conversion rates by allowing customers a quick, easy, secure way to pay, regardless of where they’re located.
APAC Winner: Adyen
Adyen (see above) also won this award for their work supporting BigCommerce merchants in APAC countries.
EMEA Winner: JMango
To meet the demands of today’s mobile-first shoppers, progressive web apps like JMango can deliver the experience customers want through shorter loading times, app-like features (add to homescreen, push notifications etc.) without the need for downloading the app in an app store.
JMango is easily integrated with the BigCommerce backend, provides app success assistance and can help customers go live within a few weeks.
New Tech Partner of the Year
This award is given to new technology partners whose solutions feature a superior user experience, outstanding customer reviews and high install volume.
Americas Winner: Spocket
Sprocket helps merchants enable dropshipping with ease with features like faster shipping, wholesale pricing, auto-updated inventory, one-click ordering, real-time order tracking and more. Businesses don’t have to sacrifice a brand presence and can use branded invoicing to include their company’s personalized logo and messaging as part of the customer experience.
APAC Winner: Klarna
The built-in Klarna integration with BigCommerce makes it easy to seamlessly offer Klarna credit solutions at checkout. Klarna makes things easy for both merchants and their customers by providing easy access to credit for shoppers, payments for merchants and built-in fraud protection for both.
EMEA Winner: Pimberly
Pimberly is a SaaS PIM platform that helps ecommerce and product marketing professionals accelerate online sales. The app’s powerful data management and automation enables businesses to reduce time to market and reach new channels and locales. For merchants, improving the quality of your product information leads to higher conversion rates, improved SEO and fewer returns.
Think Big Award
This award is given to technology partners for their collaborative efforts in driving high-quality referrals that produce the highest average revenue for BigCommerce.
Americas Winner: PayPal
Merchants can increase conversion rates by offering customers more ways to pay with the help of PayPal’s powerful payments technology. BigCommerce has a built-in integration with PayPal that lets you easily and securely accept credit and debit cards, local payment methods, offer PayPal, and even extend buy now, pay later options – including Pay in 4 and PayPal Credit – to customers through your online store. Ultimately, PayPal provides an all-in-one solution for accepting payments online from over 330 million consumers around the world.
APAC Winner: dotdigital
In addition to winning the Innovative Integration Award for EMEA, dotdigital was also recognized with the APAC Think Big Award for their important collaborative efforts in partnership with BigCommerce.
EMEA Winner: Vend
In addition to winning the Customer Growth Award for APAC, Vend was also recognized with the EMEA Think Big Award for their important collaborative efforts in partnership with BigCommerce.
Tech Partner of the Year
This award is given to technology partners whose integration features a superior user experience demonstrated by a high volume of installation and positive user reviews over the last year.
Americas Winner: Shogun
Shogun is a powerful drag-and-drop page builder and visual content management system that is seamlessly integrated with the BigCommerce platform. Its features include: Page Builder + AB testing; landing, blog and product pages; analytics and marketing features; and enterprise grade support. Shogun has an easy-to-use editor and page templates to make it easy to get up and running quickly.
APAC Winner: Comestri
Comestri is a complete and unified commerce solution that allows merchants to optimize retail operations to sell and move their products through sales channels, order fulfillment and delivery. The platform can boost productivity by automating processes, increase conversions and optimize fulfillment.
EMEA Winner: Klarna
In addition to winning the New Tech Partner of the Year Award for APAC, in their first year Klarna was also recognized as the Tech Partner of the Year for EMEA.
The ecommerce industry has been continually growing and changing over the last few decades, and those changes accelerated with the events of 2020.
In fact, estimated US ecommerce retail sales in Q3 increased by 36.7% from the same time in 2019. As the results of the global pandemic and subsequent changes to customer shopping behavior have unfolded, ecommerce has also gained in total retail market share at a rapid pace.
These changes have invited newcomers to online selling and also changed the game for established businesses. They’re facing a competitive landscape with increasing customer expectations. Successful businesses need the right technology to support their online presence.
If you are new to ecommerce or looking for a new strategy for powering your online shopping cart, you may be considering the different options for platforms. You need it to not only power a slick looking storefront with a seamless customer experience, but also connect to any existing systems you have. You may have other more specific needs as well. For example, if you have a CMS (content management system) already in use on the frontend, you might want your shopping cart software to be able to connect with it as well. Or you may need to make sure it can sell on social media if that’s where your audience is. And you will likely want it to be SEO friendly to help reach a new audience.
As you search for the technology that can meet these needs and any other you might have, you will find the options are vast. To help you narrow the field, one of the first decisions to make is: do you want an open source ecommerce platform or SaaS platform.
In this article, we’re helping you make that decision by diving into SaaS vs open source ecommerce solutions. We’ll cover what the two options mean, what the pros and cons are to each and some of the best open source ecommerce platforms and SaaS ecommerce platforms you might want to consider.
Main Differences Between Open Source and SaaS
When you read about the difference between open source and SaaS, you will often see it framed as: do you want to own or rent? Let’s dig into this metaphor and what the practical differences are between these two types of platforms.
1. What is Open Source ecommerce?
Open source software means that the user has complete access to the source code. This means that anyone can adapt and customize the platform to meet their business needs. Although by “anyone,” we really mean anyone with developer resources. Open source platforms are powerful and customizable, but also very complex. Changes are best handled by certified developers. Open source software is often developed in a collaborative way, and there are often communities built around development related to individual platforms. A user might choose an open source platform because they require extreme customization; with open source if a feature doesn’t exist, it can be built by altering the code. To use our metaphor above, open source is like owning a house. You can download it and knock out the walls and add in a finished basement if you want, so long as you have the money to spend on contractors.
2. What is SaaS ecommerce?
SaaS (or Software-as-a-Service) is a different delivery model in which the software is licensed on a subscription basis. Like renting a house, you pay a fee (often monthly) for as long you want to use the platform. SaaS platforms aren’t bought or downloaded by the user, but are instead hosted by the SaaS provider. The provider then does the work of securing, maintaining, and hosting the platform on their own servers, much as a landlord would handle a rental property’s upkeep. With a SaaS platform, the customer doesn’t have access to and can’t alter the source code, just as you can’t decide to add a second floor to your rented bungalow. SaaS platforms are a good option for ecommerce store owners that don’t want to devote time, energy and resources to maintenance.
Total Cost of Ownership: Open Sources vs SaaS
The cost to build and operate your business is always going to be a big factor in the choices you make around your platform. You need a platform that can both support the site you need it to and do it for the price that works with your budget.
1. Open source ecommerce software.
The ethos of open source ecommerce software is that it be open to anyone to modify the source code. Many open source platforms have a free version. Thus, open source software is sometimes free to download and use. However, actually using the software to create a viable ecommerce website does have some costs associated with it.
- Licensing fees: Not all open source software is free. For example, Magento has both an open source version and a licensed Magento Commerce version that requires the user to pay licensing fees. Pricing for Magento Commerce (on prem) starts at $22,000, while Magento Commerce Cloud (which includes hosting) starts around $40,000. Not all open source platforms have a free and paid version, though.
- Hosting provider fees: The cost difference between the on premise and cloud versions of Magento above draw attention to another cost of open source software: hosting. If you download the software yourself, you need to find a way to host it. That can be done by paying a third-party provider, hosting on your own servers or paying the platform provider to handle hosting. Usage and traffic spikes can impact pricing. When choosing a third-party provider to handle hosting, make sure to find that one meets your needs for traffic volume and potential spikes. The cheapest option may lead to more costs in lost business if your site experiences outages at key times.
- Web developer or agency fees: Your site is not going to build and design itself. Open source can be great for achieving the exact customization you need, but it’s also very complex. You will need developer and design resources — whether those resources are internal or from external agencies — to help you achieve the site you’re looking for. These costs can be steep, depending on your needs. For example, building an enterprise-level store on Magento Commerce can easily cost six figures with costs that scale with the complexity of the build, design, extensions and additional integrations required.
- Additional costs to fix bugs and install patches and software updatesAfter you’ve built your store, you will still need developer resources to help you maintain it. You will need to install security patches and updates to make sure you have a secure platform. This is true even if the platform includes hosting. By using open source software, the onus is on the merchant to install updates and security patches.
- Security and PCI compliance costs: Open source platforms will by and large not come with PCI compliance. You can still be PCI compliant on an open source platform, but the responsibility falls on the merchant. PCI Compliance standards must be met to accept payments or you risk being charged fines, termination of ability to accept payments, loss of customer confidence and other fraud-related financial consequences. Magento Open Source does not have PCI compliance, although Magento Commerce does, so long as no changes are made.Customers are responsible for ensuring that their WooCommerce stores are PCI-compliant.
- Apps or extensions: Your platform will likely be the foundation of your tech stack, but not the sole part. You will likely use other software and apps to get the full functionality and features you need. Consider the cost of your total tech stack, not just your open source platform.
- Integration into other systems: You will need to integrate your platform with the extensions mentioned above (or be custom built), which will take additional development resources. You will need to make sure systems like your OMS or ERP can share data with your ecommerce platform.
2. SaaS ecommerce.
Unlike open source, with SaaS, there is a subscription fee attached to using the software. This fee includes the use of the software, hosting, automatic updates that give you immediate access to new features and no-hassle security patching. SaaS platforms like BigCommerce tend to have a lower total cost of ownership than open source platforms like Magento. Additionally, you may be better able to estimate your total operating costs because so many of them are included in the regular monthly fee. However, keep in mind you will still have the following costs to consider.
- Agency fees, if used: Much like with an open source website, you may choose design and development resources to get the look, feel and functionality you’re going for. This can be achieved through internal teams or external agencies.
- Apps or extensions: To get all of the features you need, you will likely need to extend the platform. This is where the choice of which SaaS platform can make a big difference. Make sure to choose one that has many of the built-in features you need to avoid too many add-on costs. For example, the out-of-the-box functionality of BigCommerce can save merchants roughly $5,800 – $30,000+ per year in app subscription costs, compared to Shopify.
- Any integrations into other systems: As with open source software, you will need to consider how you will integrate the platform with your other systems.
Pros and Cons of Open Source and SaaS Ecommerce
There is no one ecommerce platform that is right for every business. The choice between open source and SaaS — and from there the choice between the myriad of options that fall into these two categories — will depend on your budget and specific business needs and challenges. Consider the advantages and disadvantages of each before deciding which might be the best fit for your business.
Open Source Ecommerce Advantages and Disadvantages
Open source solutions have some big selling points. Who wouldn’t want the ultimate power of customization? But it also has some major drawbacks that might make the price of admission too steep.
1. Advantages of open source.
Here are the two biggest pros that open source software can offer:
The biggest pro to open source software is the flexibility it provides. You have control over the source code. If you’re looking to make big changes and have very niche needs, open source might be the way to get what you need. You’re limited only by your imagination and the abilities of your team of developers.
Widespread community support
Open source platforms are built and monitored by the community that forms around them. Developers that specialize in the platform contribute ideas and additions that you can take advantage of. You can visit blogs, community forums related to the platform and Github to plug into the knowledge base around your platform. It’s important to note that how much community support you get will probably vary depending on if you have paid or free licensing.
2. Disadvantages to open source ecommerce.
With great power, comes great responsibility. Here are the downsides of open source:
The more you modify the source code, the more complex you make your system. This can mean it’s more expensive and difficult to make updates. You may find the software itself has a bit of a learning curve.
Not only are open source platforms costly and complex to set up, but they also require a lot of maintenance to keep them up and running correctly. You will need a developer, an in-house IT team and/or an agency to manage this maintenance. This can make it harder to make quick changes to the site to stay current because your marketing team will need developer support to make updates.
We talked about the costs of open source ecommerce above, so we won’t belabor the point too much here, but suffice is to say open source platforms come with a laundry list of costs to consider. Do the math to determine if both the initial build costs and operating costs will work out in your favor long term.
The source code for open source software is open to anyone to download and modify. That’s both a plus for the community of developers who work to make it better…and also a minus when it comes to the bad actors who look for vulnerabilities to exploit. Ecommerce sites are treasure troves of financial data, so hackers are always looking for a way in, making security breaches a real concern. Your open source platform may provide patches for known issues, but it is on your team to be proactive about installing them.
3. When to use open source ecommerce?
So do the pros outweigh the cons? That depends on your business. If your business has a big budget to handle the associated tech debt from setting up and maintaining the open source infrastructure and your business needs are extremely complex, open source may be the best option for you.
Open Source Ecommerce Platforms
If you’re leaning towards open source, you still have a lot of choices to make. Here are some of the major open source players in the market today.
You can’t write about open source ecommerce platforms without talking about Magento. This open source platform is written in PHP and currently powers over 200,000 live websites. Now owned by Adobe, Magento has three distinct versions: Magento Open Source (formerly Magento Community Edition), Magento Commerce (formerly Magento Enterprise Edition) and Magento Commerce Cloud which is like Magento Commerce but with cloud-hosting included. Magento Open Source is free to download but doesn’t offer the same advanced features and ticket-based support of Magento Commerce or Magento Commerce Cloud.
WooCommerce is a free, open-source plugin that can be added to a WordPress site to give it backend ecommerce functionality. Also written in PHP, and over 4.4 million sites use WooCommerce. WooCommerce may be a good choice if you’re looking to quickly monetize an existing WordPress site; however, it may be difficult to scale as adding additional payment, catalog management, and marketing features becomes costly and time consuming on WooCommerce.
PrestaShop is another open-source platform that is free, but you can pay for add-ons and plug-ins to make it work for your business. PrestaShop is written in the PHP programming language with support for the MySQL database management system. PrestaShop currently supports 300,000 merchants globally.
Shopware is an open-source platform under the MIT license. It is written in the PHP programming language. ShopWare powers 80,000 websites, focusing on many brands in Europe.
OpenCart is another PHP-based, open source online store management system. It uses a MySQL database and HTML components and is freely available under the GNU General Public License. There are approximately 400,000 live websites using OpenCart. OpenCart is free to download and use but you can pay for additional themes, plug-ins and dedicated support.
These are just a few of the plethora of open source ecommerce platforms available. Other options you may want to consider for your online business include: Drupal Commerce (a digital experience platform with commerce functionality); Joomla (a content management system and website builder that can achieve ecommerce through an add-on); OsCommerce; Zen Cart; Virtuemart and Spree Commerce.
Advantages and Disadvantages to SaaS: Software-as-a-Service
If, as suggested in the introduction, we think of SaaS as like renting a house, then the pros and cons are fairly similar. You trade the freedom of knocking out walls and doing a complete overhaul. And in turn you get the more reliable monthly outlay and can rest secure in the knowledge that if the plumbing breaks, it’s not your problem.
If, as suggested in the introduction, we think of SaaS as like renting a house, then the pros and cons are fairly similar. You trade the freedom of knocking out walls and doing a complete overhaul. And in turn you get the more reliable monthly outlay and can rest secure in the knowledge that if the plumbing breaks, it’s not your problem.
1. Advantages of SaaS.
Here are some of the reasons SaaS solutions might be the right choice.
SaaS platforms can help brands get to market quickly. However, some SaaS platforms have more included functionality than others, so if speed of launch is a priority, make sure to choose the platform that can manage that. They also typically have user-friendly interfaces and pre-built themes that can get you up and running at speed.
Not only are SaaS platforms often easier to implement, they are also user friendly and simple to maintain. You don’t have to make your own software updates or deal with hosting challenges yourself.
Maintaining security is incredibly important for ecommerce sites to keep the credit card and personal data of customers safe. SaaS platforms not only provide security patches to solve vulnerabilities, but they also apply them for you, so it’s one less thing to worry about. Most SaaS platforms will also provide PCI compliance, so it’s a lot easier for the merchant to manage.
There are many pros to modern SaaS that extend far beyond our housing analogy above. A rental house (or any house) is a finite thing, but your SaaS platform can grow and scale with your business growth. Functionality can be added with new apps; SaaS platforms generally include unlimited bandwidth; and you can add new sales channels (like selling on Instagram or Amazon) when you need them.
While open source ecommerce platforms have a strong community, many SaaS platforms do too. But for those who want more direct, dedicated support you need to spring for either the managed version of the open source platform or go with SaaS. SaaS platforms generally include support as part of the package. For example, BigCommerce offers 24/7, US-based support and most merchants are connected to a live support specialist in under two minutes.
2. Disadvantages to SaaS.
The main difference between SaaS and open source is that with SaaS you won’t have complete control. Not all SaaS platforms are created equal, so to avoid these disadvantages, you need to pick the right one.
Although you can’t alter the source code of a SaaS platform, some SaaS platforms still provide openness through APIs that can give you much of the customization potential of open source. Other SaaS platforms do not. If flexibility and creating an innovative customer experience is important to your business, make sure the platform you choose — whether that’s open source of SaaS — can get you where you need to go.
Some SaaS platforms can lock you into using certain apps or features and make it hard for you to choose the ecommerce solutions that work best for your business. For example, Shopify has a proprietary payment provider. They charge additional transaction fees up to 2% of each sale for using other payment gateways and you lose access to certain features like multi-currency. If having freedom of choice is important to your ecommerce business, you will need to choose a SaaS platform that is open to and integrates easily with the solutions you want.
3. When to use SaaS?
SaaS is a good choice for businesses of all sizes who want to focus their resources on building their businesses and not on infrastructure, maintenance and security. SaaS can support B2C, B2B and hybrid businesses across industries, even those with specific business needs requiring some customization.
SaaS Ecommerce Platforms
Does SaaS sound like the right fit for your business? If so, read on to learn about some of the major SaaS platforms in the business.
BigCommerce is one of the leading Open SaaS ecommerce platforms for mid-market and enterprise brands. It has all the benefits associated with multi-tenant SaaS — ease of use, high-performance, and continuous updates — coupled with platform-wide APIs that enable businesses to customize their sites and integrate with external applications and services. The platform’s drag-and-drop PageBuilder makes it user friendly to edit without coding. Tens of thousands of B2B and B2C companies across 150 countries and numerous industries use BigCommerce to create beautiful, engaging online stores.
Shopify is another popular choice, especially for small businesses and those new to ecommerce. The platform offers a number of themes and can make it easy to get a simple store off the ground quickly. There are over one million merchants using the platform. Those with large catalogs may want to avoid it, as Shopify and Shopify Plus (the Enterprise version) both have a strict option and variant caps per product. By comparison, BigCommerce is built for big catalogs. You can add up to 600 SKUs per product compared to the 100 SKUs per product cap of Shopify and Shopify Plus.
3. Salesforce Commerce Cloud.
Salesforce Commerce Cloud, formerly Demandware, is a highly-scalable SaaS option used by big brands with big budgets. An implementation can easily cost $250K+ on Salesforce Commerce Cloud. Salesforce Commerce Cloud provides a suite of related services that can complement the ecommerce offering. However, merchants face additional obstacles and costs if they choose a third-party over Salesforce’s add-on services.
Making the Final Decision: Open Source Ecommerce or SaaS Ecommerce?
Deciding between open source or SaaS ecommerce is a big decision. You want to choose the right all-in-one platform now — and one that will grow with you — so you don’t have to make a risky migration later. Comparing the two options, side-by-side only works when you consider your individual business needs, budget and resources.
SaaS may well be able to provide the customization you need without requiring open source, but as we’ve said, not all SaaS is created equal. Learn more about Open SaaS and what it can do in this ebook.
The ecommerce space has evolved over the years, but the coronavirus pandemic accelerated our predictions. In BigCommerce’s Day 2 of the 2020 Make it Big conference GGV Capital Managing Partner, Jeff Richards, delivered an engaging session, offering insights into what makes a successful online brand.
Jeff’s Key Takeaways
Jeff Richards, also a BigCommerce investor, has a long history of investing in ecommerce brands. In our conversation, Jeff shared a detailed approach on how to create a winning ecommerce company.
1. The concept of direct-to-consumer (DTC) reshaped the ecommerce landscape
“The concept of DTC really rose up over the last 5 to 6 years as people realized they could sell products directly over the internet, and predominantly through social commerce. If you go back 10 years ago, selling products over email wasn’t a very effective strategy, there was no real way to reach consumers other than display advertising on the internet — which wasn’t terribly effective either. As social propped up with tools like Facebook, Instagram, and other channels, you saw the rise of the DTC brand — like Warby Parker and Allbirds — that really pioneered the space. The advantage for merchants is that you really capture all the margin. The first phase happened 5 to 6 years ago, we’re now really moving into a second phase that is more focused on profitably acquiring customers, how to retain them, and how to create innovative relationships with them over time.”
2. Brands must focus on being profitable from the beginning
“With respect to funding for DTC brands and online businesses, the market as shifted a little bit. We’ve seen a lot of funding come into the space in the last 5 to 6 years. A lot of that capital was willing to fund highly unprofitable companies. It was common to see new brands and companies acquiring users with a CAC:LTV that wasn’t effective. I think the market has since matured to where investors have learned what works and what doesn’t. In turn, they are much more keen on finding merchants who have figured out how to acquire customers, build a long-term, repeat relationships with them, and actually make money with their business. It’s a shift in the market we’ve seen and the good news is that the channels in which you can reach those customers have gotten much cheaper.”
3. Building communities gains importance in the industry
“If you look at the fastest growing and most successful ecommerce companies, they have created really passionate communities around their products and services. We think there is an enormous amount of opportunity there. Pick a demographic, pick a category, build a social following, and integrate that community aspect. It’s one of the things that Poshmark has done incredibly well, and gotten to several billions of dollars of sales on, is building an incredibly passionate community of buyers and sellers. We think we’re going to see a lot more of that as people figure out how to integrate the social experience with the commerce experience.”
In our Day 2 Make it Big session we dove into the following topics:
- Managing customer acquisition costs
- Creating engaging content marketing
- Finding an authentic community
- Building a profitable online brand
This material does not constitute legal advice and is only for general informational purposes. Readers should consult a qualified attorney in the relevant jurisdiction to obtain advice for any particular legal matter.
The United Kingdom has a population of 66.76 million people (as of 2019) and a growing online retail market. Data from Statista shows that the online share of total retail shares in the UK grew to over 26% in 2020. In fact, according to Business Wire, the UK is the third largest online retail market and the largest in Europe.
After four years of uncertainty and confusion, a lot of back and forth and a year-long transition period, Brexit finally occurred on January 1, 2021. The United Kingdom completed its departure from the European Union and is no longer one of the EU states.
What does this mean for your ecommerce store? If you sell goods to customers in the United Kingdom (England, Scotland, Wales and Northern Ireland) from another country (including EU countries), it means quite a bit actually.
Coinciding with Brexit, on January 1, 2021, the government of the United Kingdom implemented changes to the Value-Add Tax (VAT) for goods being shipped into the UK.
If you sell goods to customers in the UK, you may have already taken the necessary steps to adhere to the new VAT rules. However, if you haven’t started, time is of the essence. Read on to learn what changes are happening, what you need to do and how BigCommerce is supporting merchants.
What Is the Value-Add Tax?
A value-add tax is a consumption tax that is added to a product at every stage in its supply chain where value is added.
For example, let’s say you sell a table. The wood is taxed when the raw materials are sold to the factory. When the factory sells the finished table to a wholesaler, it is again taxed. And when the wholesaler sells it to the end customer, it is taxed again.
VAT is usually a percentage of the total cost paid by the consumer of the product. If your store buys wood for $10 and the VAT is 10%, you would pay $11 for the wood. The seller of the wood would then keep the $10 and remit $1 to the government. If you then used the wood to build a table valued at $100, you would charge the customer $110 for the table so that you could pay the $10 VAT to the government.
The United States does not have a VAT, but many countries do have VAT with different rates, including many of the European Union countries. In the UK, the standard rate of VAT (with exceptions for certain goods) has been 20% since 2011.
What Changes Are Occuring with the UK VAT?
With the end of the Brexit transition period finally upon us, many ecommerce merchants are scrambling to make sure they can still serve customers in the UK. Here are the high-level details of the new VAT scheme that the UK government put into effect on January 1, 2021.
For goods imported into the UK in consignments not exceeding £135 in value, VAT is now charged at the point-of-sale (i.e. during checkout) instead of at the point of importation. For the purposes of this policy, a consignment is a group of goods delivered to a person, in this case your customer.
Additionally, the Low-Value Consignment Relief went away. This rule previously exempted goods valued at £15 or less.
The seller may pay the import VAT (and duties) on clearance and reclaim if they have a UK VAT number. Alternatively, the seller may opt to have their customer pay at customs. Only the owner of goods at the time of the import can reclaim the VAT.
To comply with these changes and sell your goods into the UK:
1. You will need a UK VAT Number.
Both B2B and B2C businesses selling goods to the UK will be required to register for a VAT number with Her Majesty’s Revenue and Customs (HMRC). For B2B businesses, this obligation is not required if the UK shopper provides their VAT registration number.
2. VAT will be collected on ALL low-value orders shipped to the UK.
All businesses must collect the 20% VAT at point of sale for orders less than £135 in value. The £135 threshold is based on the intrinsic value of the goods, which excludes transport, insurance or other import taxes, if separately itemized.
For orders over £135 (or consignments of multiple goods with a combined value greater than £135), VAT will still be paid at the time of import with duty.
3. Merchants must remit VAT to the UK.
All VAT collected by merchants under their registered VAT number must be remitted to the HMRC on a quarterly basis. You will submit a VAT return indicating the amount you collected during this three month accounting period.
Am I Impacted by These Changes?
Chances are you are reading this not simply because you are an aficionado of foreign tax law, but because you want answers to the all important question: does this affect my business?
If you are selling low-value (£135 or lower) orders into the UK, including through online marketplaces and B2B sales, you will indeed be responsible for collection of and remitting the VAT.
There are some exceptions for B2B merchants. If you sell goods to a UK business customer, you may not need to collect VAT if your VAT invoice includes the shopper’s VAT number and notes “reverse charge: customer to account for VAT to HMRC.”
To fully understand how these changes may apply to you, you will want to consult HMRC’s guidance or a local tax professional.
What Do I Need to Do as a Merchant?
If you determine these VAT changes do apply to you, there are several things you need to do. And you need to do them very quickly. Keep in mind that not all of these may apply to your specific situation, and we urge you to consult a tax professional for evaluating your specific needs.
Here’s your UK VAT prep checklist:
1. Register for a VAT number
Most businesses will be able to register online by visiting HMRC website. By registering for a VAT number, you’ll create a VAT online account (sometimes known as a ‘Government Gateway account’). According to the HMRC, you should receive your registration certificate within 30 business days, although it can take longer.
2. Re-evaluate your tax settings
Check your tax settings to understand if any changes are required in how you calculate and collect taxes for your UK customers. We recommend consulting with a local tax professional. For more information, check out our Knowledge Base article on Tax Settings and Avalara.
3. Update your shipping invoices
You will also want to update your invoices to include your VAT number, so you can avoid issues at customs and get your goods to your customers on time.
4. Apply for an Economic Registration and Identification (EORI) number
If you do not already have an EORI, you will need this code to identify your business in customs documents. You can apply for one here.
5. Update the ISO Country Code (for Northern Ireland Only)
This one only applies if you are selling into Northern Ireland from outside the UK. As a means to protect the Ireland/Northern Ireland Protocol, Northern Ireland will take on dual status and fall within both the UK and EU VAT guidelines. In addition to the steps above, you will also need to update the ISO country code to “XI.” For more information, visit the HMRC policy paper for Northern Ireland.
If the above are not done and you continue to ship goods to UK customers anyway, the customer receiving the shipment will have to pay to cover the VAT charges that should have been covered by the merchant in addition to the VAT charges they are already charged as a customer. (Remember VAT applies through every stage in which value is added).
Because they are effectively being charged VAT twice, this could result in customers requesting the merchant refund some of the tax they paid. And it’s generally a poor customer experience. Additionally, if the customer refuses to pay the VAT charges, then the product will be shipped back to the merchant with return shipping charges and additional fees levied on the package.
How Is BigCommerce Supporting This Change?
BigCommerce will be making the VAT invoice that was previously exclusively available for merchants in the UK, now available for merchants outside the UK who are selling to customers within the UK. An invoice that displays the merchant’s VAT number will be automatically generated when the merchant’s shipping address is outside the UK and the customer’s address is inside the UK.
While BigCommerce partners with multiple tax services, not all tax services will support the UK VAT changes. If you are interested in a solution that will support these changes, consider Avalara AvaTax. For more information, visit the Avalara AvaTax VAT information page or contact Avalara’s support team. Additionally, if you’re not using AvaTax currently and you decide to do so, see our article on configuring Avalara AvaTax within BigCommerce in the Help Center.
Our approach may evolve and change over time. As we continue to learn more about how these and future changes impact our ecommerce merchants, we will share what we learn.
Brexit may have been a long time coming, but the time to take the necessary steps to be in compliance with these changes is quickly running out. Even if you apply today, it can take 30 business days (or longer) to receive your VAT registration. Compliance with the law was expected starting on January 1, 2021.
While the ideal time to prepare for the VAT updates was several months ago, the second best time to prepare is right now. We hope this article has helped you understand the VAT changes and given you a better understanding of what you need to do.
We also recommend checking out the following resources for more information:
This material does not constitute legal advice and is only for general informational purposes. Readers should consult a qualified attorney in the relevant jurisdiction to obtain advice for any particular legal matter.