How retailers ruin their shop system budget

Most selection processes for shop systems suffer from a shortened horizon. Retailers compare one-time license and implementation costs, but systematically ignore the expenses that become decisive over a lifecycle of three to five years. Shopmacher has developed a TCO calculator that supports online retailers in working out the actual costs.

Three shop systems, three price tags: 40,000 euros, 90,000 euros or 150,000 euros in license plus implementation. For many online retailers facing a shop system switch, the decision seems clear: whoever goes for the cheapest option saves six-figure sums.

But what often looks like a no-brainer at first glance is frequently the most expensive of all decisions, says Sabine Götz, Lead Consultant at Shopmacher, who supports online retailers in optimizing their tech stack. Because to determine the actual costs, retailers have to consider not only one-time license and implementation costs but also the expenses that become decisive over a lifecycle of three to five years.

This includes, for example, the integration effort when connecting ERP, PIM, CRM, payment or logistics systems. On top of that come so-called technical debts, which arise when updates are complicated or carried out only rarely. Operations and infrastructure, from hosting to security to monitoring, are also frequently underestimated. Another question is scaling: what happens when the business grows faster than planned? And finally, support and downtime play a role too: even short outages during peak periods can lead to substantial costs.

The flaw in this thinking becomes especially clear when comparing classic on-premise solutions with cloud offerings. On paper, on-premise appears cheaper at first. But the supposed savings melt away over the years: every major version jump requires expensive and elaborate relaunches, while cloud systems are updated continuously and without any interruption to operations. On-premise also has to be sized large from the very start, expensive, inflexible and often beyond actual needs. Cloud solutions, by contrast, grow with the business. And not least, on-premise systems lag behind on innovation speed: new features reach the cloud immediately, while traditional systems often take years, a massive opportunity-cost risk.

"The price tag triggers the savings reflex", says Sabine Götz. "But to really find the individually cheapest solution, you need a holistic view."

Sabine Götz, Lead Consultant New Business

Missing TCO considerations lead not only to budget overruns, but also block retailers' strategic agility. Anyone who does not factor in integration and scaling costs will find, when entering new markets, that expansion takes longer and gets more expensive. Anyone who underestimates maintenance and update effort builds up technical debt, and thereby endangers customer experience and conversion. And anyone who leaves out operating costs like hosting, support or downtime calculates the ROI too optimistically and, by the third year at the latest, hits nasty surprises.

A holistic total cost of ownership analysis forces retailers to think through the entire lifecycle. To support online retailers in this sometimes elaborate process, Shopmacher has developed an internal TCO tool that systematically maps all cost blocks over three to five years. "For us this is not a sales argument but a mandatory instrument", Götz emphasizes. "Because only those who honestly calculate their total costs can, in the end, make the right platform decision." Anyone who does not do this not only pays more, but loses time, opportunities and competitiveness.

Anyone who wants to calculate the total cost of ownership (TCO) for their e-commerce platform seriously should consider at least these points. The following checklist helps you identify the truly relevant cost drivers.