Why Not Shopify?
Shopify is hands-down the #1 shopping cart software out there right now, both in number of users and in buzz. They have beautiful templates, tons of apps, a huge amount of cash to invest into the platform, and a robust community of developers and designers. So why don’t you see it as a supported cart here at Ryan Design Studio? Quite simply, it just isn’t a good fit for most of our clients. Here’s why.
While it may seem like a great deal at $29/month, that number can be deceiving as it doesn’t include everything. There are some very basic and important e-commerce functions missing in the base version including:
- Real-time USPS, FedEx and UPS shipping rates. If you want those, you need to go with the Advanced plan at $299/month
- Abandoned Cart reminders – you need to upgrade to the Shopify plan at $79/month to get those
- Gift Cards – also only in the Shopify plan and above
- Sales reports – no reporting until you get to the Advanced plan
You also have to factor in the cost of credit card processing. Shopify has their own payment processing system that uses Stripe. While Stripe is great, it isn’t the processor many people want to use. Gateways like PayPal Pro, Braintree and Authorize.net offer things like tokenization and more robust anti-fraud tools, as well as negotiable rates. However, if you want to use your own processor, Shopify will take up to 2% of your sales as a ‘transaction fee’. That is in ADDITION to the actual credit card processing fees, which are typically 2.9% or so. If you are selling $100,000 worth of goods a year, that’s an additional $2000/year just to use the processor of your choice.
Shopify has a TON of apps you can add to your store, everything from reward points and third party shipping vendors. But many of those can cost over $100/month to use. Notice a trend here? The monthly costs of the site can easily go over $1000 before you even start selling anything. Here’s a quick cost comparison of Shopify vs Pinnacle Cart assuming $100,000 in yearly sales:
Initial cost: +/- $4000 (includes a custom design, not a template)
Monthly Hosting Cost: $35
Monthly License Fee: $25
SSL Certificate: $75/year
Payment Gateway: $30/month
Transaction fees (other than what your gateway charges): $0
First Year cost: $5155
Recurring Yearly cost after the first year: $1155
Initial Cost: $150 (a premium template from their store)
Monthly Cost: $299 (to get all the base functionality Pinnacle has such as real-time shipping, reporting, abandoned cart reminders)
SSL Certificate: $0
Payment Gateway: $30/month
Transaction fees: $500
First Year Cost: $4598
Recurring Yearly Cost after the first year: $4448
While Pinnacle Cart may seem more expensive at first, just look at those recurring costs after year one. By year three you are saving over $3000/year, and that is just comparing the $299/month plan with no-add-ons! You also get a custom design with Pinnacle, whereas you are using a stock template with Shopify. Adding a custom design to Shopify would add $1000 to $5000 in initial cost depending on who you hire. Also keep in mind that SaaS platforms can, and do, raise their prices at will. What costs you $29/month today may suddenly cost you $100/month tomorrow. You have no control over this as they control your data. With a self-hosted cart like Pinnacle Cart and no monthly fees, you can rest assured that your operating costs won’t suddenly double out of the blue.
Shopify and Wholesale
The biggest hurdle for most of our clients though is the lack of wholesale functionality in Shopify. Want to offer different payment methods for your wholesale customers like PO or Net 30? Sorry, can’t do that. Want to offer free shipping to retail but not wholesale? No can do. Want to offer freight or LTL shipping methods for your large wholesale orders? Nope. Want to have different order minimums for your wholesale customers? Can’t do that either. Need quantity break pricing or tiered pricing for your wholesale members? You’ll need an app for that. Want to sell different products for different membership types (pro sizes, case packs, etc)? Guess what, you can’t.
If wholesale is a big part of your business, your only option with Shopify is to run a completely separate storefront which is far from ideal. The rumor is that they are working on adding wholesale functionality, but it sounds like it will only be for their Plus plans, which are insanely expensive.
One of the limitations with SaaS carts like Shopify is the inability to access some areas of the code. This is done so that Shopify can easily upgrade and maintain the software and maintain PCI compliance, so it is a good thing. However, if you want to do anything custom with the checkout or tie in third party systems using Shopify’s API, you will need to upgrade to their Plus plan which starts at a whopping $2000/month. That’s $24,000/year! In addition, if you start selling more than $800k/month, they will start charging you .25% of your revenue. That is just too big of an operating cost to justify. With Pinnacle Cart, we can easily custom-program any functionality you need. Just take a look at our add-ons page to see some of the features and functions you can add to your store. There is no additional monthly cost to add these, just a one-time programming fee. Why would you want to spend thousands of dollars a month when the EXACT SAME functionality can be had for under $100/month? It just doesn’t make sense.
Third Party Apps
One of the big selling points of Shopify is the robust ecosystem of apps and app developers. Many of the features and functions that are not part of the core Shopify platform can be added by installing an app. Sounds great right? Not so fast.
First, many of the apps in the store are poorly coded, or even malicious. There was a story not too long ago about a third party app that was harvesting user information from the stores it was installed on, and then using that information to market directly to those customers. Scary right? While Shopify does a pretty good job of policing their app store, there is always the risk that you’ll end up with a rogue app, or one that causes major problems with your site. There are plenty of crappy developers out there looking to make a quick buck by selling their app to thousands of Shopify users, so you always run the risk of installing something that causes harm to your store, or worse, your customers.
Then there is the cost factor. Looking through the app store you can probably find 10 or 20 apps that look like something you really need for your store. When you start adding up the monthly costs of all of those apps, your monthly bill suddenly starts looking like your mortgage payment.
So Why Not Shopify?
Don’t get me wrong, Shopify can be a great platform for many businesses. We often recommend it if Pinnacle Cart or Spark Pay are not good fits for our clients. It is also great for businesses who are just starting out as the lower-tier plans are inexpensive and the start-up cost is very small. A typical Shopify customer is a bath and body company or ‘maker’ who has been selling on Etsy or at trade shows for a while and wants to get serious about selling online. However, I always caution store owner to plan ahead and think about where their business will be in 1 year, 5 years and 10 years. Will Shopify still be a good fit for you then? Are you planning on selling wholesale? Do you envision needing the features of Shopify Plus? For large stores, or stores planning on doing a lot of wholesale business, Shopify just isn’t a good solution from an economic or functional standpoint.