All too often in this day and age of hosting it’s a drive to the bottom price wise. This may work in traditional website hosting where support is entirely up to the customer and the hosts only job is to make sure the servers or cluster are up and serving up it’s html, etc…
E-commerce hosting is a different beast all together, it’s a lot like being a SaaS service provider, like SalesForce.com than it is being an infrastructure provider which is how most hosting companies operate these days.
The first question you have to answer is do you want to go into e-commerce hosting at all? And if so, why? This may seem silly but providing a mission critical application solution that is often a significant or primary source of revenue for the client at the end is far different than traditional mass market hosting.
In the traditional model you look for ancillary services that you can provide without a significant support burden that will pad your bottom line.
However offering a e-commerce platform (and being great at it) requires a mix of items, it’s part e-tailer university, spending some time either via the web or in person explaining the universe of e-commerce and how all the parts interoperate and more importantly how that matters in a day to day sense to the customer.
It’s one part highly available superior service that’s built on top of sufficient non overloaded hardware. You may be only put a few hundred customers on a very high end box that costs over $10,000 but these customers have 2 things that your average hosting customer does not. First, as long as you don’t break their store and it’s performance is reasonable, they’re some of the STICKIEST customers you’ll ever meet. It’s not uncommon to find these customers lasting 6 or 7 years or longer once they’re up and running. Second they pay A LOT more than the industry average for hosting. You’ll find average revenue in the e-commerce space at 10 times or more a traditional $6 per month hosting account. So even though the box may cost $10,000 and you can only put a fraction of the clients on that same box as you normally would, remember each e-commerce client is probably worth 10 normal clients per month and they’re average customer life will outlast normal clients 3 or 4 times. So for your bottom line cash flow and value of your hosting business, e-commerce clients are a huge homerun. They take more care to build and grow, but the payoff far surpasses a business built on only tons of the little accounts.
Lastly it’s about understanding that rarely are two given stores, running the same e-commerce platform on the same hardware going to run their business in the same way. This goes back to treating this like a SaaS business and not a infrastructure business. In order to be successful in this business you’ll have site one on the server selling a clip on cell phone holder that is a workaround for the hands free laws around the country, next to site 2 that sells restaurant supply equipment and they sometimes need to freight a stove, have a fulfillment house ship bowls and they mail chopsticks, all to the same customer all from the same order. Just having a UPS module that treats all stores like everything is under 70 lbs, in one box and shipped either ground, 2 day or overnight won’t cut it.
If you understand those 3 parts:
1. Taking the time during the upfront sale to train the customer and explain what they’re getting
2. Offer superior support on good or better hardware
3. Understand that your customers website is part of all of their lifeblood and their business is as unique as they are
And you combine that knowledge with the dedication and willingness to grow that business carefully, you may never have 100,000 hosting clients, but the 1,000 – 2,000 e-commerce ones you have will be worth equal or more to your competitor with 100,000 people paying $1 a month.
Good luck out there,
Rick
