E-commerce start up strategy
 

Would it makes sense for an e-commerce start up to invest in their own phone lines and servers and associated software or would it be better to utilize these features offered by a web hosting service?

Are you talking online sale of products? With the cheap hosting solutions out there, unless you plan on being Amazon.com in the first 6 mos, I'd rent rather than buy...

Go with a web hosting service like Rackspace. They have onsite tech support 24/7.

Rackspace is pretty pricey.

Are you just doing transactions or are you offering downloadable goods.

If just transactions then Rackspace will be overkill to start with.

If you want the security of a dedicated server then look at 1&1. You can get a managed dedicated for ~$100 per month that will probably be overkill.

I have 4 dedicated servers and a couple of VPS's spread over a couple of different ISP's all doing Ecomm.

You are concerned about 4 things, bandwidth, security, monitoring and flexibility.

I would get a managed Linux box.

Rackspace isn't cheap, but if you wanna be big, they can grow with you. Changing colo providers is Not Fun.

I've had way too many lower cost providers fail to deliver or be absorbed by a larger, low-service organization to recommend shopping too aggressively for price.

Wheel Enhancement, who I advise on this stuff, is on their fourth hosting co. which they share with Disney. Sure, it's overkill, but its up 99.999% of the time.

Other than intial investment of hardware whats the biggest downside to having ones own servers?

Upkeep, updating software, incompatibility with the client (workstation) on the server's network. You can run into a whole host (no pun intended) of problems.
Plus, you're the one on call when the network needs rebooting.

Using a web hosting company alleviates many of these problems.

you are in the business of e-commerce, not maintaining and troubleshooting servers and software. I would outsource this, esp. when you are proving your business model. If you have growth and the funds/people to support it, you can bring it "in-house"

Kevin,

You DO NOT want to run your own servers for ecomm. If you are accepting credit cards you do not want the security risk.

Tech, it's not all about saving coin but there are other ways to deal with uptime that can be cheaper, more flexible and more reliable than Rackspace.

One of my fav's is DNS hosting. Most people make the mistake of using the ISP's primary and secondary DNS servers only.

I run 6 DNS entries for every domain. I keep the servers mirrored and they are grouped at different ISP's and also geographically separated.

If I keep 2 servers at an ISP on the east coast and 2 on the west coast I limit susceptibility to network outages. If a piece of hardware goes down (which has happened only 1x in 12 years) I don't sweat it because the boxes are mirrored and DNS hosting gives me fall over.

Traffic on the boxes is not consistent, the products have a season and the TV advertising reflects that. We regularly get pieces on Good Morning America and I know the traffic will spike. So again since the boxes are mirrored I can run load balancing scripts instead of paying for a full time hardware load balancer that I would only need 20 days out of the year.

The real answer to the question is what is the product and how will he drive demand to the site and what kind of traffic does he expect. No reason to go in the hole by spending more on servers that he will make from sales.

Put another way if he is delivering single pizzas to houses he only needs a car, not an 18 wheeler.

The servers are cheap.

Go price out a T1 and a real Firewall appliance.

Your cable modem and a Linksys ain't gonna cut it. Besides most home broadband providers either block or monitor for excessive port 80 activity and will shut you down if they think you are running a web server.

call some network guys and ask what they charge per hour for service calls. that oughta convince you to use somebody else's equipment;)

Kevin,

Pretty much what everyone here said is valid. You can always bring it back in-house if you want, but moving it to a provider after is a lot harder. It depends on what your business model is and how you are going to support it; UPS with generator backup for 7x24x365 access for example. Be careful though there are a lot of "rack space" companies that charge you for everything, power, circuits to your rack, etc. etc.

I would start with a hosting ISP that offers ecommerce as part of their package and try it out for 6 months to a year. You can definitely get in cheaper this way than hosting your own systems.

Ask Wayne his thoughts as well. Good Luck

OK I'm convinced in house is not an option right now. I'll look into Yahoo or some of the other hosting services.
Thanks for all the input.

Yahoo may be a bit too far in the other direction.

Check out 1&1.com, pair.com.

We've had good experience with HostMySite. Cheaper than RackSpace but good service. I also have a server at Rackspace. They are top notch but expensive. As said previously go with a managed plan. You don't want to be troubleshooting your own hardware at 4 in the am!

+1 for HostMySite.com. I have been using them for 10+ years and have over 100 hosting accounts with them currently. Top notch support & they always answer the phone. Reasonable prices, too.

Have a look at a product called Netsuite. Very good ecommerce capabilities, and full suite of financials and CRM, all integrated. There is a starter small business version which offers a pile of capability. You simply subscribe to it.