An introduction to ecommerce platforms: Definition, types, & options explained

Did you know that, according to Adobe Analytics data, shoppers in the U.S. spent a whopping $11.3 billion on Cyber Monday 2022? That wasn’t just the biggest shopping day of the season or the year. It was the biggest shopping day ever!

And it’s all because ecommerce platforms like Shopify, Magento, and WooCommerce have revolutionized how we buy and sell goods and services.

Ecommerce platforms have empowered small businesses to sell globally and even created billion-dollar enterprises like Amazon and Walmart by helping them increase their global reach.

But what is it about them that made them such a game-changer for businesses all over the world? More importantly, what are the different types of ecommerce platforms, and which one should you choose for your business?

I’ll answer all that and more in this guide.

First, I’ll explain what an ecommerce platform is and its types, share features to look for and give tips to choose the right one. Then, I’ll talk about the evolution of ecommerce platforms over the past several decades and share my predictions on where they’re headed over the next decade.

Sounds interesting? Let’s get straight to it.

What is an ecommerce platform?

An ecommerce platform is software that enables you to sell products and services online. It provides the tools to build an online store, such as shopping cart functionality, payment processing, and inventory management.

In today’s digital age, ecommerce platforms have become an essential tool for businesses all over the world. They’ve made shopping online easier and more convenient for consumers and provided businesses with a new revenue-generating channel.

So much so that it’s become challenging for businesses to thrive in today’s competitive environment without an online presence, that’s how important ecommerce platforms are today.

I’ll explain how that’s happened over the years in a bit. First, let’s talk about the different types of commerce platforms available today.

Types of ecommerce platforms

Ecommerce platforms are categorized based on many different factors such as hosting, functionality, pricing, and deployment. But those approaches lead to a lot of overlap.

The best way to classify ecommerce platforms is based on their source code license as follows:

1. Open-source ecommerce platforms
2. Closed-source ecommerce platforms

Let’s look at the differences between them.

Open-source ecommerce platforms

Open-source ecommerce platforms, such as Magento and WordPress, are free software that anyone can use, modify, and distribute. Typically, these platforms are developed and maintained by a community of collaborative developers.

Open-source ecommerce platforms are generally licensed under licenses, such as the GNU General Public License (GPL), the MIT License, and the Open Software License (OSL) version 3.0.

The GPL, which WordPress and WooCommerce use, requires that any software derived from the original be released under the same license. In contrast, the OSL v3, which Magento 2 uses, provides more flexibility to use and distribute the software with attribution.

The biggest benefit of open-source ecommerce platforms is their flexibility and customizability. You can modify an open-source platform’s code to add new features or customize existing ones using your own code or third-party extensions.

Plus, because they’re free to use, open-source ecommerce platforms are excellent for startups and small businesses with limited budgets.

I’m a big supporter of open-source software and actively contribute to a community-driven platform, Mage-OS, in my free time.

But I’ll be honest: Open-source platforms have some weaknesses.

Perhaps the biggest weakness of open-source platforms is that there’s limited support available since they’re mostly developed and maintained by a community of volunteers. Another issue is that they’re often difficult to maintain and upgrade.

There are ways to work around those limitations. But you’ll need some technical skills to work with open source ecommerce platforms vs. SaaS platforms.

Want to learn more about hosting for ecommerce platforms? Read my detailed guide on ecommerce hosting to understand how it works and the top three choices on the market.

Closed-source ecommerce platforms

Closed-source ecommerce platforms like Shopify and BigCommerce are proprietary software, meaning their source code is not open to the public. They are typically easier to use and more convenient but are less customizable than open-source platforms.

Closed-source platforms require a license to use and are usually offered as a monthly subscription. The licensing terms and pricing vary depending on the platform and its included features.

For example, Shopify offers a Software-as-a-Service model with different pricing options. Its cheapest ecommerce plan starts at $39 per month and includes basic features, while other plans can cost as much as $2,000+ per month and offer enterprise-level functionality.

One of the benefits of closed-source platforms is that they are user-friendly, and you don’t have to worry about hosting, securing, or maintaining the platform. The platform usually manages upgrades and gives you access to different levels of support when things go wrong.

The downside is that you don’t have the same flexibility or control as with open-source software. There’s no access to the code, and you have limited customization options at your disposal. Plus, you risk getting “locked in” and might find it difficult to move to a different platform.

Closed-source platforms give you helpful defaults to make it easy to sell online. For example, Shopify has its own payment gateway to help you accept payments easily. But the problem is that Shopify charges you extra if you want to use any other payment processor.

Plus, you’ll find that important features are often paywalled. So you’ll need to upgrade to a higher plan based on your business needs, like with Shopify, or you’ll be forced to do it when your turnover exceeds a specific limit, like with BigCommerce.

But despite the tradeoffs, given their convenience and ease of use, closed-source platforms are still an excellent option for most small businesses.

How to choose an ecommerce platform: A brief overview

Now that you understand the basics of ecommerce platforms let’s look at some tips to choose the right platform for your business.

Here’s a brief overview of my tried and tested 10-step process for choosing an ecommerce platform:

1. Identify your business needs: Think about what you need to succeed. Is it support for a specific payment gateway, a platform that supports integrations, or one that doesn’t need any technical skills to manage?
2. Determine your budget: Outline how much you’d like to spend on your ecommerce website. Consider initial store setup costs and ongoing maintenance and subscription fees.
3. Consider the features you need: Write down must-have features for your ecommerce store. Maybe that’s a specific type of ordering grid or support for custom swatches. When setting up an online store for a friend recently, I knew they needed custom swatches, so we chose Magento.
4. Evaluate the ease of use: Choose an ecommerce platform that matches your technical skill level. Do you prefer a no-code needed solution or prefer a more hands-on approach? Shopify might be a great fit if you want a code-free platform.
5. Check the level of customization and flexibility: Some businesses need more customizability than others. Check what the platform offers by default, how you can extend it, and how easy it is. For instance, installing a WooCommerce plugin is easier than a Magento extension.
6. Determine the level of support and service available: You might not need much help if you have an in-house dev team. On the other hand, you might need lots if you’re a solopreneur.
7. Research the security and reliability of the platform: Look for platforms with a proven track record of reliability to ensure that your business is always up and running. SSL certificates, Two-factor authentication, and integrated payment gateways are essential features to look for.
8. Assess the scalability of the platform: Evaluate how well the platform can handle sudden spikes in traffic and how easy it is for you to scale it with the changing needs of your business.
9. Consider the integration capabilities: Reliable API support is essential if you want to integrate your store with a CRM or ERP system. Both Magento and Shopify have great APIs.
10. Check the availability and average pricing of its apps and add-ons: Choose a platform that offers affordable apps and extensions. That’ll help you customize your store without going over budget. For example, Magento extensions are generally more expensive than WooCommerce plugins.

Read my article on how to choose an ecommerce platform to learn more about the process and discover exclusive tips for choosing the best platform for your store.

Popular ecommerce platforms: Top 5 choices for businesses

Finding the right ecommerce platform can be overwhelming, especially with so many options.

Don’t worry! You don’t need to sort through a hundred platforms to choose one.

Here are the top five ecommerce platforms to simplify your choice.

Shopify

Shopify is one of the best ecommerce platforms for businesses of all sizes. It offers a user-friendly interface and a code-free setup process that allows anyone to build a professional-looking online store in a few hours.

Plus, with its massive selection of design templates and a large ecosystem of apps, Shopify offers flexibility and customization as well.

However, it has expensive pricing plans and charges you extra fees for using third-party payment gateways like PayPal and Stripe.

Best for: Anyone who wants to build an online store without the hassles of installing and maintaining an ecommerce platform.

Shopify price: Online store hosting plans start from $39 per month.

WooCommerce

WooCommerce is a plugin for WordPress that adds ecommerce functionality to a website. Despite this, it’s incredibly user-friendly and popular.

WooCommerce offers flexible checkout, easy product management, and integrated payment gateways.

And thanks to WordPress’ massive plugin ecosystem, there are thousands of plugins available to customize your store.

That said, WooCommerce is extremely basic by default. You also need to host and secure the software, which can be time-consuming.

Best ecommerce platform for: Small and medium businesses with existing WordPress websites.

WooCommerce price: Free plugin for WordPress. Managed WordPress and WooCommerce hosting plans start from $5 per month.

Magento

Magento is one of the best open-source ecommerce platforms on the market. It gives you complete control over your online store and offers several ecommerce-friendly features to help you sell online quickly.

Magento can handle unlimited products and offers built-in support for powerful caching technologies like Varnish and Redis.

But it requires some technical expertise to set up and maintain, so you should only consider it if you have the technical knowledge to manage it.

Best ecommerce platform for: Businesses that need comprehensive ecommerce functionality.

Magento price: Free to use but needs hosting. Managed Magento hosting plans start from $50 per month.

BigCommerce

BigCommerce is similar to Shopify in terms of user-friendliness, code-free content management, and fully managed hosting and security.

But unlike Shopify, BigCommerce doesn’t force you to use a payment gateway and even offers better functionality and customizability.

BigCommerce is an excellent alternative to Shopify. But it isn’t as beginner-friendly.

BigCommerce takes an “Open SaaS” approach. So you need to be a bit more hands-on when using it. Plus, they force you into upgrading plans based on your annual turnover.

Best ecommerce platform for: Small and medium businesses that need more than Shopify’s defaults.

BigCommerce price: Starts from $39 per month for up to $50,000 in annual sales. BigCommerce plans scale up based on your turnover.

Wix

Wix is a great option for small businesses looking for an easy-to-use, all-in-one ecommerce website builder with essential features.

It lets you create professional-looking online stores in no time and offers a user-friendly drag-and-drop tool to customize your store as you see fit.

Wix is one of the best platforms to upgrade from Etsy and is perfect for building a simple store that supports up to 100 products.

But there are limits to what Wix can do for online businesses. For example, it isn’t optimized for large catalogs and offers basic SEO features. 

Best ecommerce platform for: Etsy sellers looking to start their own store and businesses who want a simple ecommerce platform.

Wix price: Starts at $27 per month for ecommerce.

Need more details or options? Read my guide comparing the 10 best ecommerce platforms for 2023.

How to start using an ecommerce platform: A simple 5-step plan

Starting to use an ecommerce platform might seem daunting, but don’t worry — it’s easier than you think!

Here’s a simple five-step plan to help you get started:

1. Sign up for an account: Choose an ecommerce platform that suits your needs, and sign up for an account. Most platforms offer a free trial period, so you can try them before committing to a paid plan.
2. Set up your store: Start setting up your online store. Choose a design that fits your brand, customize it to your liking, and add products and payment options.
3. Configure your settings: Configure your store settings, including shipping rates, taxes, and other options. Optionally, integrate your store with other tools, like email marketing or accounting software.
4. Launch your store: Once you’re done setting up, it’s time to launch your online store! Don’t forget to test everything to ensure it’s working smoothly.
5. Manage your store: After launching, you’ll need to manage your store regularly. That includes adding new products, updating your site design, processing orders, and analyzing your sales and data to identify areas for improvement.

These are only the basics to give you an idea of the overall process. If you want more specifics, I recommend reading my guide on starting an online store to learn more.

How ecommerce platform needs differ between businesses

Every business is unique. As a result, the needs of every business are unique as well. Let’s break down how the needs of ecommerce platforms differ for small and large businesses.

If you’re a small business or solopreneur, your biggest challenge will be resource management. Your goal might be getting up and running rather than worrying about optimizing conversion rates, the customer journey, or the sales funnel.

That’s why you’ll need a platform that’s easy to set up and has all the essential features necessary to start an online store — like Shopify.

On the other hand, large businesses already have an established brand and reputation that they need to live up to and improve.

They’ll want a platform that supports large inventories, better customizations, and easy integrations — like Magento or BigCommerce.

It goes without saying that no matter your company size, you can still choose Magento or Shopify.

What’s important is that you choose a platform that is reliable, secure, scalable, and capable of addressing your business needs to ensure long-term success.

The evolution of ecommerce platforms: A quick look at the past and present of ecommerce platforms

English inventor Michael Aldrich was one of the first creators of an ecommerce store. In 1979, when mail and phone orders were the go-to options, Michael Aldrich created the first version of an online store by connecting a television with a domestic phone line.

After that, the Bost Computer Exchange launched in 1982 selling used computers followed by the Electronic Mall in 1984.

But it was only after 1994 that things fell in place to shape the ecommerce landscape as we know it today.

The Netscape browser launch in 1994 laid the foundations for ecommerce. And as access to the internet grew, so did technological innovations giving rise to businesses like Amazon in 1995, PayPal payments platform in 1998, and Alibaba in 1999.

As the internet became more accessible and marketplaces grew, so did the demand for online shopping.

The earliest ecommerce platforms, like Drupal, Magento, and OpenCart were built as monoliths — a single deployable package that let you create an online store quickly.

That empowered small businesses across the world to start selling online and compete with giants like Amazon and Walmart.

The only problem was that monolithic ecommerce platforms weren’t easy to maintain and upgrade.

This problem gave rise to SaaS platforms like Shopify and they made ecommerce even more accessible.

SaaS platforms fueled the growth of the ecommerce industry but they didn’t offer the same customizability or control as open-source platforms.

That led to the development of microservices and headless platforms and made them the go-to solution for large ecommerce businesses like Amazon and thousands across the globe.

In recent years, leading ecommerce platforms like Shopify and BigCommerce have introduced headless and microservices-based solutions, and Adobe, the company that owns Magento, recently shared its vision for a microservices-based future for its platform.

Which brings us to the question: Are microservices and headless platforms the future of ecommerce?

I don’t think so. Here’s why.

The future of ecommerce platforms: What’s in store for the next decade

Headless ecommerce platforms solve a lot of problems for small businesses and help them future proof their operations.

However, there is a big challenge to using headless ecommerce platforms: affordability.

As of 2023, headless and microservices-based stores are only suitable for medium and large enterprises.

According to estimates, implementing a headless solution might cost between $68,000 and $128,000, on average.

That’s nowhere near being affordable for the average ecommerce business. That’s why the future of ecommerce isn’t headless or microservices, at least not for the next decade.

That brings us to the original question: if not headless, what is the future of ecommerce?

The answer — SaaS-based ecommerce platforms.

With ecommerce growing to new heights every year, businesses no longer want to deal with mundane tasks like platform maintenance and upgrades. They want to focus on innovation and growth.

And that’s only possible with a fully managed ecommerce platform.

Despite the tradeoffs, SaaS ecommerce platforms solve real problems for ecommerce businesses. And that’s what matters at the end of the day.

Headless platforms and microservices won’t see mass adoption until their costs are a tenth of where they are in 2023.

Until then, you’ll see the likes of Shopify and WooCommerce dominate the charts.

Another trend I see emerging over the next decade is the integration of artificial intelligence into ecommerce.

The release of OpenAI’s ChatGPT and GPT-4 has given the masses a taste of artificial intelligence for the first time. And they love it.

Beyond AI-powered integrations for writing product descriptions and website copy, I see online business owners using AI for personalization and automating customer service interactions.

The basic chatbots we’ve all become familiar with over the past decade will be replaced by more dynamic and helpful AI chatbots.

Find an ecommerce platform that’s right for you

I’ve shared everything you need to know about choosing an ecommerce platform and how to start using one. I’ve also explained how business needs vary for different businesses and shared my top five platform picks.

Here’s a quick rundown of how to choose the best ecommerce platform for your business:

1. Identify your business needs.
2. Determine your budget.
3. Consider the features you need.
4. Evaluate the ease of use.
5. Check the level of customization and flexibility.
6. Determine the level of support and service available.
7. Research the security and reliability of the platform.
8. Assess the scalability of the platform.
9. Consider the integration capabilities.
10. Check the availability and average pricing of its apps and add-ons.

It’s your turn now. Choose a platform and take the first step toward growing your online business.

Wrapping it up

Ecommerce platforms are essential for businesses looking to sell online. Whether you’re a small business owner just starting out or a large enterprise looking to expand your online presence, there’s an ecommerce platform out there that’s right for you.

And once you’ve found that platform, the sky’s the limit for your business’s online success!

If you have any other questions or suggestions, leave them in the comments below or send them through our contact form. And make sure you sign up to our newsletter so you don’t miss out on the latest developments in the ecommerce industry.

Frequently asked questions about ecommerce platforms