What Is SaaS Ecommerce? Advantages Over On-Premise Solutions Explained

Oct 14 2022

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SaaS vs On-Premise: Which Is the Best Fit for Your Business?

Whether you’re starting a new online store, or planning to invest in new sales channel to double your revenue growth, you need a fully-fledged eCommerce platform to do so. However, to ensure that your business stays ahead of the curve, you must make an informed decision about the eCommerce platform, which will be your business's foundation. If you select the wrong platform, it impacts your brand reputation and incurs heavy costs in setup and eventual migration to a modern platform. While many different types of eCommerce solutions are available in the market, deciding the right one for your business needs careful evaluation.

Read on this blog to understand what is SaaS-based ecommerce and how SaaS solutions outweigh traditional on-premise solutions.

Understanding SaaS and On-Premise Software

Ecommerce platforms are divided into on-premise and SaaS (Software-as-a-Service). On-premise refers to a solution that is installed directly on your website, while SaaS refers to a solution that runs in an offsite data center. Some examples of on-premise solutions include Magento, WooCommerce, etc. while, SaaS eCommerce platforms include Shopify Plus, Salesforce Commerce, Sitecore, etc.

Before we dig further, let’s understand both of these models and then will go in details what makes one popular for SMEs and enterprise businesses.

On-Premise Ecommerce Solution

An on-premise solution is one that you purchase from a vendor and install it on your own server or intranet. This means that all the data will be stored in your own servers and maintained by you, which gives you complete control over the data. You can decide how much space and resources will be allocated for this purpose as well as how much security should be provided for it.

If you choose on-premise ecommerce software, you will have to install it on your own server or computers at your business location. This means that there is always a possibility that something could go wrong with the system and cause all of your data to be lost. In addition, if you need upgrades with the system or extra features, they can often take time and cost money.

SaaS Ecommerce Solution

Software as a Service (SaaS) is a software delivery model in which the software and related data are centrally hosted on servers owned by the vendor, and customers access the application online through a thin client interface such as a web browser. The consumer does not have to install or update any software, but uses the service as an external application. The consumer also does not need to be familiar with the internal structure of the application, because the vendor maintains it.

SaaS appears to be capable of reaching even greater heights in the next few years. By 2026, the SaaS industry market size is predicted to reach $280 billion, according to the Digital Economy Compass report.

How SaaS Ecommerce is Different From On-Premise Solution

The eCommerce industry is growing by leaps and bounds, and this growth is expected to continue for the foreseeable future. The problem with this growth is that not all companies have the resources or expertise to handle it independently. They need a solution that can scale with their business as it grows, and they need it now. That's where Software-as-a-Service (SaaS) comes in.

It is estimated that 85% of business applications will be SaaS-based by 2025. - State of SaaSOps

With SaaS eCommerce, you don’t need to spend money on purchasing and managing infrastructure. You can get access to a lot of features without having to invest in expensive software licenses, which can be difficult for small businesses. With SaaS, you pay-per-user so you only pay for what you use, which is perfect for growing companies who don’t have the budget for high initial investments. The main disadvantage with SaaS solutions is that they can sometimes be more expensive than on-premise solutions, as you have to pay for them monthly. However, this cost can often be offset by lower maintenance costs and fewer problems due to bugs or incompatibility issues.

With an on-premise solution, you may not be able to change things like your site design or add new features without investing significant amounts of time and money in upgrades or customization projects. With a SaaS solution, however, you can easily make changes whenever necessary by logging into your account online and making adjustments directly from within the system (with no coding required). On the other hand, if your business has unique requirements or wants total control over its technology stack then an on-premises solution might be better suited for them.

SaaS Solutions Outweigh Traditional On Premises. Here's Why?

SaaS solutions have been gaining market share over traditional on-premises software due to their flexibility and reduced cost of ownership. SaaS solutions also reduce legacy costs, are faster to deploy, and enable continuous innovation through rapid additions of new features.

There are several advantages of using SaaS ecommerce over on-premise solutions including:

Cost Savings

Hosted solutions typically cost less than self-hosting your own solution because you don't have to pay for hardware and software maintenance. And since SaaS providers handle most of the day-to-day operations of managing the website development, you'll also have fewer IT resources to allocate to maintenance tasks.


Suppose your business grows rapidly or suddenly sees a surge in sales volume. In that case, a hosted solution gives you the ability to scale up quickly without having to invest in additional hardware or software licenses. This helps prevent downtime during busy periods when demand spikes or during unexpected spikes in traffic that may result from negative publicity or other factors beyond your control.

Better Performance

Cloud platforms typically perform better than on-premise solutions because they're built to handle large amounts of traffic at once. They also offer more scalability options so that you can grow your business without buying more servers or upgrading your infrastructure regularly (though this can come at a higher cost).

By 2026, 50% of organizations using multiple SaaS applications will use a SaaS management platform (SMP) tool to centralize management and usage metrics.


SaaS Ecommerce is built to sell any type of product, so your store doesn't need to be limited by the products you're able to offer right now. If you want to start selling different products later on down the line, it's easy enough to change the types of products available in your store without having to incur additional costs or hassle. This means that even if you're starting out as a small business with limited resources and capital, it's still possible for you to grow your business without needing an upgrade in software or hardware equipment anytime soon.

Enhanced Security

Security is one of the biggest advantages of SaaS eCommerce platforms as compared to on-premise solutions because they're hosted in secure data centers instead of your own office space or home office. This means fewer security threats when hackers attack —because they're attacking a hosted solution instead of your own servers. Security is also easier to manage because you don't need to hire an IT professional to keep your software up-to-date on patches and other security measures.

Access From Anywhere

With SaaS, you can access your store from anywhere with an internet connection, so you don’t have to worry about maintaining servers or keeping them updated with security patches. You also don’t have to worry about having enough storage space for all your customers’ data because it’s stored on a central server instead of locally on their devices.

Easy Integrations

SaaS eCommerce platforms are easy to use and integrate into your website. With API first approach, your integration with existing backend systems is never compromised. On the other hand, extensive versioning on on-premise may impact your integrations and can cause lengthy & costly delays. With SaaS, you’re always on the latest version and have latest features and functions available. In addition, you don’t have to wait for years to get bugs and security holes fixed due to version migration like in on-premise systems.

Easy Installation and Setup

Most SaaS eCommerce platforms make it easy to install and set up your store within minutes using a simple wizard interface. This eliminates the need for technical knowledge or training because most platforms come preloaded with all the features you need to run an eCommerce store. Using a simple drag-and-drop interface, you can also easily add new features and functionality as your business grows.

The Future of Ecommerce

With massive growth in the B2B software market, it makes sense for businesses to invest more into SaaS eCommerce solutions. But what does that mean for the future of on-premise software? Well, simply put, it's that—for better or worse—the on-premise software market may be in decline phase.

The days of having to commit to a big investment in hardware, software, and technical support are gone. It's much faster, simpler and cheaper to get your business up and running quickly with SaaS eCommerce. As SaaS products continue to evolve, it won't just be small businesses that will benefit; larger companies will now be able to host their own eCommerce stores more efficiently.

With Software-as-a-Service solutions, companies benefit from the fact that they don't have to pay for additional storage, software licenses, or hardware. Plus, there's no need for expensive maintenance contracts or staff training. When you add it all up, SaaS solutions are a wise investment for businesses of any size that need to scale their operations. To know more about different commerce solutions, explore Icreon’s Ecommerce Services