Cloud-based vs. on-premise

The cloud's silver linings: Why cloud-based solutions are better than on-premise for eCommerce

Diya Bag
Senior Content Writer, commercetools
Published 12 April 2023

When it comes to eCommerce architecture, there are many options. But the two main options you'll probably have to choose between are cloud-based and on-premise. In this article, we'll take a closer look at the difference between on-premise and cloud options, as well as explore the benefits the cloud can offer businesses looking to improve their online presence, from increased scalability and flexibility to better security and cost savings. 

Cloud-based vs. on-premise

Let's start off with defining what exactly comprises on-premise and cloud-based eCommerce.

On-premise infrastructure refers to a software solution installed and running on a company's own servers, typically located on their premises. This means that the company has full control over the solution and can customize it to their specific needs. However, this type of architecture is generally considered to be inflexible and unscalable.

In contrast, cloud-based infrastructure refers to the use of cloud computing infrastructure and services to host many types of solutions. In this architecture, the eCommerce application and data are hosted on cloud servers provided by a third-party cloud services provider, such as Amazon Web Services (AWS) or Google Cloud. It typically consists of several components, including web servers, application servers, databases and storage systems — all hosted on the cloud. 

The main perks of this architecture is the fact that it is designed to be highly scalable, flexible and reliable, allowing eCommerce businesses to quickly and easily expand their operations as needed. Additionally, cloud-native architecture can improve the platform's resilience and reduce downtime through automated failover and disaster recovery mechanisms.

Now, let's take a closer look at how each architecture compares with each other in specific areas.


In an on-premise eCommerce architecture, scalability can be challenging since the hardware and software resources are fixed and limited. Scaling up an on-premise eCommerce system often requires purchasing additional hardware, installing new software and configuring everything correctly. It can be time-consuming, expensive and may require significant technical expertise. Scaling down an on-premise eCommerce system is also challenging since it involves decommissioning hardware and may result in wasted resources.

On the other hand, cloud-based solutions are designed for scalability. Cloud service providers offer various options to scale resources up and down quickly and efficiently, such as auto-scaling, load balancing and elastic computing. These options allow eCommerce businesses to dynamically adjust their resource allocation according to the changing demands of their customers and always be prepared for shopping peaks like Black Friday and holiday-season shopping without ever worrying about a website crash.  


On-premise solutions carry a significant drawback in terms of upfront costs. Installing and maintaining these solutions on a company's own servers can be prohibitively expensive, given the responsibilities that come with maintaining both the hardware and software. Additionally, businesses must hire IT staff to manage the solution, adding to the initial expenses. These costs can be a major barrier for many companies considering an on-premise solution.

Cloud-based eCommerce solutions are provided by a third party and can be accessed via the internet. The provider manages all the maintenance and upgrades, and businesses can access the solution through any device. Such a move to the cloud offers significantly lower TCO to businesses as they can invest in less hardware or software and do not need such a large IT team to manage internal infrastructure. Moreover, cloud providers offer pay-as-you-go pricing models, meaning businesses only pay for the resources they use, incurring fewer upfront costs.

Security considerations

Security is a major concern for businesses when it comes to eCommerce solutions. While on-premise solutions may seem more secure since they are hosted on the company's own servers, they come with a number of security risks. For example, if the company's servers are hacked, the entire eCommerce platform can be compromised.

However, cloud-based systems are hosted by third-party providers that are 100% focused on security. These providers invest heavily in security measures, such as encryption, access controls, backup and disaster recovery and more,  to protect their clients' data. Additionally, since the solution is accessed through the internet, it can be protected by firewalls and other security measures that are not available with on-premise solutions.


Another concern for businesses is the ability to customize their eCommerce platform. While on-premise solutions offer a high degree of customizability, cloud-based solutions are often seen as less flexible. However, this is not necessarily true.

Cloud-based solutions can be customized to meet the specific needs of businesses. Providers offer a range of options for customization, including the ability to add or remove features, change the look and feel of the platform, and integrate with other systems. And since cloud-based solutions are updated regularly, businesses can take advantage of new features and improvements without having to invest in additional hardware.


Another advantage of cloud-based solutions is accessibility. Since a third-party provider hosts the solution, it can be accessed from anywhere with an internet connection. This means businesses can manage their eCommerce platform from anywhere, whether they are in the office or on the go.

Additionally, cloud-based solutions offer greater accessibility for customers. With on-premise solutions, customers may need to download a specific software or app to access the platform. With cloud-based solutions, customers can access the platform from any device with an internet connection.

Support and maintenance

Another advantage of cloud-based solutions is support and maintenance. Providers such as Google Cloud and AWS offer a range of support options, including phone and email support, live chat and online forums. This means that businesses can get help when they need it, without having to hire additional staff or rely on internal IT teams.

Since the infrastructure vendor is responsible for maintenance and upgrades, businesses can be assured that their platform is up-to-date and secure. This frees up time and resources to focus on their core competencies, rather than managing an eCommerce platform.

The winning choice is clear

Cloud-based eCommerce architectures are the better choice for businesses, offering flexibility, scalability and cost savings. It's no wonder that leading analyst Gartner® predicts that in 2023, worldwide public cloud spending will grow 20.7% to total 591.8 billion USD, up from 490.3 billion USD in 2022. As eCommerce continues to grow, businesses need a solution that can meet their needs now and in the future — and cloud-based offerings offer the flexibility and functionality that companies need to soar to new heights in the digital age.

Read real commercetools customer use cases about cloud migration and its benefits in the blog posts Cloud-native commerce in action: 3 success stories with Google Cloud and Shopping experiences on cloud nine: 3 prerequisites for retail success powered by commercetools and AWS.

Diya Bag
Senior Content Writer, commercetools

Diya Bag is a Senior Content Writer at commercetools. Previously, she has worked as a Copywriter in advertising for a wide range of brands, as well as an Editorial Manager in publishing for magazines and both fiction and nonfiction books.

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