1. Security - With hosted eCommerce platforms, the merchant's online store's security is managed by a group of trained professionals. With non-hosted eCommerce systems, the store's security is the merchant's responsibility. Security is the single most important aspect in running an online store.
2. Redundancy - Most hosted eCommerce software environments are setup to use an entire network of servers, thus providing redundancy. Most non-hosted systems are installed on one server. Should that server have an issue, the merchant is put in a bad spot.
3. Backups - With hosted eCommerce platforms, backups and data recovery are managed by the software vendor. With non-hosted solutions, backups and data recovery are the responsibility of the merchant.
4. Maintenance - With hosted eCommerce software, all maintenance (including bug fixes, security updates, etc) is managed by a group of IT Professionals. With non-hosted eCommerce systems, all software and system maintenance is the responsibility of the merchant. Many merchants are afraid to upgrade their systems for fear of breaking them.
5. Installation - With hosted eCommerce systems, installation is a non-issue. With non-hosted solutions, installation of the software is the responsibility of the merchant and often very challenging.
6. Feature Upgrades - Most software companies are continuously upgrading their products. With hosted systems these upgrades are managed and released by the vendor. The code all lives in one place making it easy. With non-hosted systems, the responsibility falls on the merchant. If the merchant has made any source code changes, such upgrades can be almost impossible.
7. Initial Cost - Most hosted eCommerce platforms have a low entry cost. Some non-hosted platforms also have a low cost (or are even free). However, the time spent installing, configuring, and customizing non-hosted systems is significant, costing the merchant thousands of unexpected dollars.
8. Time - With hosted systems, the merchant does not need to spend any time researching, maintaining, or implementing hardware or software as it relates to their business. Non-hosted systems on the other hand are just the opposite.
9. Support - Most hosted eCommerce systems come with unlimited support. Ironically, most non-hosted systems require more support and it is often less available or only available for a fee.
10. Consistency - With hosted or Software as a Service Applications (SaaS), the vendor will always be there. Revenue is predictable. With licensed systems, revenue is less predictable and there is a greater likelihood that the vendor may not be around in several years. Additionally, many merchants have their webmasters install and customize their non-hosted system. If they sever ties with that webmaster, they are at a loss as to where to begin with managing the technology.
Popular hosted and non-hosted eCommerce solutions:
Yahoo Merchant Solutions
WebStore by Amazon