In working out the cost to run eCommerce in South Africa we compare the running cost of Shopify and WooCommerce taking into account the distinctly South African conditions.
Part 3 - Running Costs
What About Build Cost?
For a very basic WooCommerce site along the lines of a basic Shopify site the build costs are a bit more than it would be with Shopify due to the added overall functionality of the solution that needs to be considered. Setting up a default WooCommerce store is quick, but the added functionality and customisations do take a bit more time than the one-size-fits-all solutions on Shopify.
For more detail, please read: Comparing Shopify and WooCommerce in South Africa Part 3 – Build Costs and Considerations
What Difference Is There In South Africa?
South Africa has very tight foreign exchange controls and as such overseas payment gateways simply do not work in South Africa.
Paypal is supported if you have a RICA’ed FNB Account linked to Paypal. Paypal however have a 3.5% + US$0.30 per transaction fee, and if converting from say US$ to ZAR, a further 3%. So it all gets a bit costly.
But other than that, all the main international payment gateways like Stripe are simply unusable.
This means that South African businesses need to use a local payment gateway like Payfast, Yoco or Paygate. These payment processors charge around 3% of the value of the sale, no matter if you are using Shopify or WooCommerce.
But on Shopify, an extra 1% or 2% is added to the transaction fee depending on the monthly subscription you are on because you are not using the Shopify Payment gateway. For the Basic Shopify Subscription of US$29 (Approx R 425 at time of writing) per month the transaction fee is 2%. On the main Shopify package at US$79 (Approx R1,200 at time of writing) per month, the fee is 1%.
WooCommerce does not have any fees other than the Payment Gateway’s 3%, although we recommend some budget is put towards maintenance of the site.
Breaking Down The Running Costs
If we exclude build and functionality costs and use a simple ecommerce site with less than 20 products, based in South Africa, we can work out the running costs of the two platforms.
For WooCommerce we are using our basic Management Service as a cost for the maintenance, and including hosting at standard rates, increasing processing power as turnover gets higher.
We already know that whether on Shopify or WooCommerce, the payment processor takes 3% of each transaction, so we can leave that out of the equation.
We are left with the following as running costs:
- Transaction Fees
Shopify Basic vs WooCommerce
US$29 per month
2% Transaction Fee
What is best for my business in terms of cost to run eCommerce in South Africa?
This all depends on the business model.
If the business has a small customer base and a high margin, Shopify is simple enough to use without assistance although the running costs get high. If the margin can absorb the costs, it is a great fit for many small businesses.
For a business that wants a scalable solution with many options, WooCommerce along with our Managed Service provides a far more effective solution at reduced cost. Our Managed service incorporates the benefits of Shopify’s solution – that it is Managed and the user does not have to worry about technicalities – at a fixed rate.
One also needs to consider build costs of the two solutions as this has a bearing on the overall cost of ownership.
This is Part 3 of a 3 Part series of Articles - A Business comparison of Shopify and WooCommerce in South Africa
DISCLOSURE: Our core business is managing WooCommerce stores, providing customers with a similar solution to Shopify at a flat monthly rate.
We are not against Shopify, after all it provides one of the most robust builder type ecommerce solutions to small business far exceeding its nearest competitors, but we are exploring the cost of the solutions in South Africa, and as such local conditions around availability and cost of technical resources do define the overall solution cost.