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The Top Five Hidden Costs of Going It Alone

Posted on April 22, 2014 by Shannon Madlin

Top 5 Hidden Costs of Going it Alone

Need to build or re-platform an online store? You may be thinking that the best way to connect the storefront to its backend business operations — like accounting and fulfillment — is to code the connections yourself. Developers and store owners sometimes think that by coding it themselves they’ll save money in the long run, by avoiding monthly SaaS fees. But just because your software is custom, doesn’t make it free. You need to account for the costs that are hiding in the background, ready to take an unfair share of the store’s hard earned revenue.

Here are the top five hidden costs of going it alone.

1. Initial Buildout

Whether it’s an in-house developer’s time or the outside fees paid to a consultant, this generally runs between $10,000 and $20,000, which doesn’t include ongoing maintenance. This is just the initial backend system to handle the retail store’s connection to the logistics applications at the time of launch.

2. Total Cost of Ownership

If you’re a typical online retailer, as you grow, your needs change. You’ll switch or add new backend systems. You’ll change your shipping vendor one year, your accounting system the next. And you’ll add a new analytics system some time in between. If you have a custom solution, you’ll need to break it apart, and rebuild it, every time you make a change. You’re looking at $15,000 a year for that ongoing maintenance.

3. Lost Productivity

It’s hard to find good developers. Once you manage to hire them, don’t you want them to work on new and innovative ways to sell your products, not fixing broken back ends and cleaning up messes that they didn’t make in the first place? Have your developers do what they do best — creating and optimizing the best possible storefront experience for your customers. Don’t waste their time — and your money — by having them focus on your store’s backend plumbing.

4. Lost Revenue

Did you know that for a retailer that ships 1,000 orders a month, even a relatively effective custom backend will still result in an average of 10 lost orders every month? The average online purchase is $184, which means that you run the risk of losing close to $2,000 a month in lost revenue.

5. Bad Customer Experience

Even if your backend is working effectively, it’s the customer’s experience that is key. Without the burden of having to fix and replace broken systems, you can come up with new ideas to give your customers a memorable experience. And remember they will – good or bad. 81% of US shoppers said that a social media post directly influenced their purchase decision. That could mean the difference between making a purchase or NOT making a purchase. It’s a domino effect in this social media savvy world, and the customer is king.

Click here to download the Top 5 Hidden Costs PDF