Why The Software As A Service Business Model Makes Sense For e-Commerce

By LaGarde eCommerce Solutions

Software as a service (SaaS) is an application delivery model where a software vendor develops a web-native software application and hosts and operates the application for use by its customers over the Internet. One of the biggest distinctions about this business model is that customers do not pay for owning the software itself but rather for using it.

Although the SaaS model can benefit any business system, it is particularly well-suited for eCommerce solutions because by their nature, they have to be delivered across the Web. A customer relationship management system, on the other hand, typically runs behind the firewall and doesn't need to be delivered to unknown users in all corners of world.

The SaaS model allows one vendor to oversee all of the solution's elements. The vendor maintains that breadth of industry knowledge and maintains the operations of the merchant's website on a continual basis. This is feasible through economies of scale—the vendor has multiple customers using its platform.

There are two dimensions involved in delivering eCommerce solutions. The vertical dimension consists of the solution stack—the hardware setup in the data center, as well as professional services, such as design, online marketing, site optimization and implementation. The horizontal dimension is the ongoing delivery of the service. eCommerce solutions support virtual showrooms. They need to be dynamic so they can handle new inventory, specials and promotions as well as seasonal items.