Magento reacts incredibly well to opcode caching (e.g. APC) which isn't possible under most shared web hosting setups where PHP is run as suPHP. Using LiteSpeed Web Server, or mod_ruid2 with Apache, this is actually possible to do in a shared hosting environment with suPHP. That said, good quality shared hosting with non-oversold servers with good I/O (e.g. RAID 10 SAS drives) should give adequate performance until your budget can accommodate a good quality, well optimised virtual server. A virtual server isn't really necessary for good performance, you can definitely get good performance for Magento out of shared web hosting. Whether it is appropriate to be within shared hosting will depend on your catalog site and traffic received on the site as well. For the example given by the OP, it sounds like it would probably be fine under shared hosting (given an average/reasonable amount of traffic). Of course, performance can be bad in a shared environment with heavily overloaded/oversold servers, but if you choose wisely this won't be a problem. Quality shared Hosting is oftentimes > VPS...it's really the host that counts more than the platform. The same can be said if you get a budget dedicated...quality shared web hosting may be able to outperform that too.
Magneto is certainly a worthwhile eCommerce platform. Running it on shared hosting or cheap VPS installations may be possible but this type of thing should only be considered for testing, evaluation, minor development, etc. The minimum requirements take all but the best shared or VPS hosts out of the water and security / compliance issues would seem to remove the rest of these. What is the point of going through the setup, knowing that you will not be able to support the vendors and customer base required to make a profit. As it has been mentioned, low-end eCommerce has several applications for users in this market. If you have VPS or dedicated server you will be able to run that with no problem. But some hosts in marketing goals mostly optimize their servers for that application.
Magneto is certainly a worthwhile eCommerce platform. Running it on shared hosting or cheap VPS installations may be possible but this type of thing should only be considered for testing, evaluation, minor development, etc. The minimum requirements take all but the best shared or VPS hosts out of the water and security / compliance issues would seem to remove the rest of these. What is the point of going through the setup, knowing that you will not be able to support the vendors and customer base required to make a profit. As it has been mentioned, low-end eCommerce has several applications for users in this market. If you have VPS or dedicated server you will be able to run that with no problem. But some hosts in marketing goals mostly optimize their servers for that application.
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