Groupon says its focus is on the bottom line, rather than top-line growth.
With an open source framework, ReturnBuy skips software licensing fees – and gets more flexibility to plug in tools of its own design, including a program that flags potentially fraudulent transactions.
Faced with beginner-sized platforms and applications they’ve outgrown on one hand and software licensing fees that can climb into the millions on the other, a number of mid-size e-retailers are finding a solution in between. They`re working with web developers who use open-source software–-available for free with no attached licensing fees--to get the functionality they need at far less than the cost of commercial, off-the-shelf software.
Liquidation site ReturnBuy.com would have spent perhaps $700,000 initially and another $150,000 annually for at least five years in commercial software licenses and annual maintenance fees to get the features and functionality it gets from the open source platform it created at less cost, CTO Greg Scharer tells Internet Retailer. ReturnBuy re-launched last October on an e-commerce platform created with the help of web developers Zeneski, Jones & Associates on the Open for Business Open Source Project framework. Scharer says that going the open source route cost ReturnBuy $200,000 to $250,000 initially. That includes about $100,000 in new hardware–-a cost the company also would have borne in using licensed software--and consulting and support costs to the web developers.
“With each year going forward, we will save about $150,000 in maintenance costs,” says Scharer, who notes that annual maintenance fees on licensed software typically run 10% or more of the cost of the initial license. Scharer adds that ReturnBuy is budgeted for a certain number of hours of consulting fees per month, but that the company’s in-house staff, which ultimately did about half the actual work of building the platform using open-source tools with the web developers’ support, is equipped as a result to handle most issues that arise.
Scharer also counts as savings going forward reduced chargebacks on fraudulent charges. Such charges are now more easily identified thanks to a fraud management system built by ReturnBuy, which developers were able to incorporate into the new open source e-commerce platform. “We’d built it internally already, but it was not easily plugged into any existing off-the-shelf products,” say Scharer. “An important capability of the open source platform was its flexibility in allowing us to incorporate our own technology components such as the fraud management system. We estimate we’ve saved $50,000 to $100,000 in just the last three months in credit card charge backs and related charges for fraudulent transactions.”