As retailers adapt their ecommerce platforms to market trends, hidden costs often lurk beneath the surface of monolithic ecommerce platforms. These “invisible” expenses stealthily take away from your profitability. To address these issues and significantly lower the Total Cost of Ownership (TCO), retail companies are increasingly turning to modern ecommerce platforms.
Understanding Ecommerce Total Cost of Ownership (TCO)
Firstly, what is Total Cost of Ownership (TCO)? Total Cost of Ownership is expressed as a percentage of gross merchandise volume (GMV). TCO includes software licensing, hosting and maintenance, payment processing, software development, data security (firewalls, SSL certificates, and cybersecurity insurance), and other expenses. Understanding your TCO is a crucial part of navigating your entire ecommerce strategy.
Calculating Ecommerce TCO
Calculating the Total Cost of Ownership includes measuring all expenses, both direct and indirect, linked to the procurement, utilization, and eventual disposal of an asset. Retailers can calculate their ecommerce TCO by using the following formula:
For many, discovering the true TCO of their ecommerce solution is an eye-opening experience. Over time, the direct and indirect costs of maintaining legacy platforms can dramatically overshadow the actual cost of the ecommerce solution. Not only are these costs often higher than anticipated, but they’re also rising faster than ever before.
The Hidden TCO Costs in Ecommerce
Data Integration Issues
Legacy platforms often struggle with efficient data integration across multiple retail tools and channels. This not only creates operational inefficiencies but also results in hidden costs associated with maintaining multiple fragmented systems. The consequences include increased IT expenses, data synchronization difficulties, and time-consuming manual interventions.
Ineffective promotions can drain your marketing budget without delivering the desired results. Traditional ecommerce platforms often lack the tools to run successful, hyper-personalized campaigns. The inability to engage customers with tailored promotions can hinder long-term customer relationships and customer loyalty, ultimately impacting your customer acquisition costs and your profit margins.
Read More: UpStart Commerce’s Solution to Capture Customers
When your ecommerce platform isn’t up to par, you risk potential revenue loss due to customer frustration, downtime, and missed sales opportunities. Downtime and technical glitches not only impact your sales revenue but also harm your brand’s reputation, making it more challenging to retain existing customers and attract new ones.
Read More: Embracing the Future of Retail with UpStart Commerce
The Time to Act is Now
The rising TCO of ecommerce solutions shouldn’t scare retailers. Replatforming with the right modern ecommerce platform can lead to an efficient payback period, boosting margins and improving profitability faster than expected.
With commerce shifting increasingly online, UpStart Commerce empowers retailers to deliver outstanding ecommerce experiences at scale. Here’s how our platform is transforming the retail landscape:
Composable Commerce
UpStart Commerce excels in bringing all your retail tools under one unified platform. This integration streamlines operations by eliminating the need to manage multiple disparate systems. Unified commerce paves the way for seamless data sharing, centralized inventory management, and comprehensive reporting capabilities. This means you can make data-driven decisions with ease, significantly reducing the TCO associated with data integration issues.
Adaptability and Agility
Adaptability is key. UpStart Commerce equips retail companies to respond promptly to market shifts and changing customer demands, positively influencing revenue and reducing the TCO associated with rigid, outdated systems. This enhanced agility positions your business to leverage new market opportunities, keeping you competitive in an evolving retail landscape.
Read More: Microservice-Based Solutions for Scalable Retail Agility
Enhanced Customer Experience
UpStart Commerce ensures a unified and personalized customer experience across all channels. This consistency enhances customer satisfaction and drives brand loyalty. The platform’s advanced capabilities include personalized product recommendations, tailored marketing communications, and an intuitive, user-friendly shopping experience. By focusing on the customer journey, UpStart Commerce not only cuts costs associated with customer churn but also maximizes customer lifetime value.
If you’re eager to learn more about how UpStart Commerce can help your business lower its TCO, increase profitability, and scale as you grow, we’d love to speak with you.
