Difference Between a Cloud-Based eCommerce Platform & On-Premises (2024)

Until fairly recently, the only available option for hosting an eCommerce platform for online shopping was to build one on-premises, relying on an in-house IT team, a server, and hope that its storage capacity will not betray you.

In the past decade or so, cloud-based eCommerce platforms became a hit, offering the option of someone else doing the “heavy-lifting” jobs and allowing you to easily create an online shop for your business.

Both options are still widely used, as both have certain advantages and disadvantages. This article will shed some light on the benefits of cloud computingand on-premises platforms to host eCommerce software, including the eCommerce functionality each provides to reach the sales growth you want.

The Difference Between Cloud-Based and On-Premises eCommerce Platforms

Where will your digital commerce store live? Let's take a look at why you might choose one over the other for an eCommerce store.

What Is a Cloud-Based eCommerce Platform?

Similarly to storing your photos on the cloud, cloud hosting your eCommerce platform implies no physical existence, at least not within your business's premises. Cloud-based platforms offer “off-the-shelve” solutions to easily set up an e-shop, where you choose the options that represent your brand best from an array of pre-made products, and the host of the cloud takes care of the rest.

There is no need to worry about maintenance, storage expansion, security, updates, or anything else, the only thing required is being prompt with the payment plan. Cloud-based platforms go hand-in-hand with SaaS (software as a service) licensing to allow for data accessibility.

What Is an On-Premises eCommerce Platform?

Contrary to the cloud-based option, an on-premises (sometimes called on-premiseor on-prem) platform requires the existence of a server within the premise of your business, ideally at the headquarters.

Hosting youreCommerce solution on-premises indicates a usually hefty investment of money and time, in order to acquire a suitable server, build the platform, as well as keep it constantly updated and well-maintained. In return though, you have full control and ownership of your product.

What Are the Benefits & Disadvantages of Different Platforms?

The best eCommerce stores on platforms can be found on both on-premises and cloud, so why would an online business choose one over the other? Let's take a look.

Why are Cloud-Based Platforms So Popular?

As mentioned earlier, one of the main advantages of cloud-based platforms is that everything is pre-made for you, you only need to choose the font of your own eCommerce website. OK, this is an exaggeration, but cloud-based options are highly preferred by business owners without a solid IT background, or the funds to support an IT team.

Using a cloud-based or SaaS eCommerce platform for eCommerce sites is quite easy and fast, and generally cheaper than building a platform from scratch, as the hard work has already been done.

Nowadays there are several companies offering cloud-based options, targeting different business sectors with their specially developed characteristics. Some popular names are Shopify, Volusion, Magento 2 (recently renamed to Magento Commerce (Cloud) or Magento Enterprise Cloud Edition), NetSuite, Big Cartel, BigCommerce, and Goodsie, without this list being exhaustive.

Another important advantage of cloud-based platforms is their easy scalability. If your business is rising and you want to expand your services, or there is increased traffic for other reasons, there is no need to worry, cloud-based platforms offer the option of expandable data storage, to keep your business flourishing, without any unforeseen thorns.

Why Do Some Still Prefer On-Premises Platforms?

Despite cloud-based platforms being an easy and quick option for digital commerce, many online businesses are still loyal to the good, old, on-premises model. Having your platform developed and hosted on-premises allows for full control, without third-party companies being involved and possibly compromising security or data visibility.

When no one else is imposing rules, you can customize your product as much as you want, until you are fully content with it. Building a platform means that there is no set list of features to choose from, you can create your own product.

Another major advantage of hosting an eCommerce platform on-premises is the performance of the platform. Depending on the competency of the people responsible for building and deploying the platform, performance can be much better compared to that of cloud-based platforms.

Adding to that is the ability to incorporate updates or proceed with maintenance whenever you want, not relying on the maintenance schedule decided by the host company as in the case of cloud-based platforms.

General Rules When Shopping for a Suitable Platform

When finding a platform for your digital commerce needs, what should an eCommerce business watch out for both cloud andon-premises?

What Do You Need to Watch Out for in Cloud-Based Platform Options?

While there are benefits of cloud hosting, it's important to talk about one place where they can fail: security. Many business owners prefer to be solely responsible for the security of their data (including the valuable data of their customers), so handing over permission to someone else to handle their business is a no-no.

Another disadvantage of cloud-based platforms is the absence of total control from the business owner end (now a customer of the cloud hosting company). There are options for personalization, but there are not infinite. You can access your platform from everywhere (using a stable internet connection), but you will not be the only one.

What Do You Need to Watch Out for in On-Premises Platform Options?

Cost is one of the two major disadvantages of hosting enterprise eCommerce platforms on-premises. You will need a strong IT team to develop, deploy, and maintain the platform, and that translates to human resources, time, and inevitably, cost, on top of the cost of the server.

Depending on the balance between sustaining a team and paying a monthly fee to a cloud-based provider, budgeting for the initially substantial cost of the on-premises option might be worth it, especially given its other advantages.

Another big issue that on-premises platforms face is the difficulty in scalability. If data storage runs out due to increased traffic, business expansion, or anything else, it can be tricky to scale up, and there might be required to even purchase a new server. In comparison, scaling up a cloudplatform is quite easy, as all you need to do is purchase a larger plan.

Should You Go For On-Premises or Cloud eCommerce Platforms?

The honest answer is: It depends!

Both options offer several advantages for eCommerce websites, but also hide culprits that could make their use potentially cumbersome. It all depends on what the company is looking for, the available resources, and the time, effort, and money available for investment. It also depends on what one might be willing to sacrifice.

For example, going for a cloud-based solution might compromise the available options to choose from, but it can allow for customer data storage expansion in one click.

Where Will You Keep Your Online Store?

Choosing an on-premises platform means granting sole responsibility for data and information security, which can be a blessing and a curse at the same time. Usually, big, established companies and companies with B2B clientele tend to choose an on-premises platform, whereas smaller companies that offer a limited range of products, might find a cloud-based eCommerce platform more suited.

Clarity would love to talk to you about your needs for eCommerce on cloud servers for your own online store. We offer a complimentary discovery session so get in touch for a no-hassle plan on how you should move forward.