Any company choosing an e-commerce platform is faced with a bewildering number of choices. Determining which of these solutions best fits your needs is no longer as simple as having your local Internet provider develop a Web page with navigation and some type of shopping-cart functionality.
E-commerce solutions have evolved to include core functionality for navigation, shopping cart, checkout, shipping and handling, and taxes and some level of integration to an order management system (OMS), an enterprise resource planning (ERP) system, or a warehouse management system (WMS). Then there are the Web 2.0 options: rich media with audio and visual tools, customer product reviews, social networking, blogs. Newer technology also provides functionality for options such as mouse-over (move the mouse over an image and the description will display without the user’s having to click on the image), drag and drop (simply drag the item to the shopping cart without leaving the current page), and one-page checkout.
Given this array of possibilities, how do you determine the best e-commerce platform for your business? Here are a few guidelines:
Treat your search as a system selection project. Too often companies have viewed e-commerce as a separate part of their business. In reality e-commerce has become integral to multichannel marketers. Today multichannel companies report that on average 35%-45% of their business comes through the Web.
You should view your search for an e-commerce platform the same way you would a search for a new OMS or WMS. Spend time up front to understand what the e-commerce solution should provide, determine the project team, and develop a budget and a timeline.
Develop your vision. Before you can determine what the e-commerce platform should provide, you need to know what you want your Website to do and how you want to use it from a conceptual standpoint. The project team needs to have a clear vision of how the site should look and function, what the growth objectives are, and who the target customer is.
To develop the conceptual vision, you’ll need to involve user management from all departments, including the contact center, merchandising, and the stores in addition to marketing, IT, and online. As a management team, what is their collective vision for the Website and how it should serve the customer? How do they want your customer to view the business? If you have stores, do they want site visitors to feel as if they’ve entered one of them? What types of marketing efforts need to be included? How do you want to display merchandise? These are just a few of the questions that go into developing a vision for an e-commerce platform solution.
Define your requirements. This is a natural extension of developing your vision. What do you want the site to do? What type of functionality do you want? Everybody has shopping-cart technology — is there anything in particular that you need yours to do, such as personalization or cross-selling? What sort of Web analytics features do you need?
Determine the degree of customization and flexibility you may want. Customization may take the form of something as simple as the ability to change promotions — offering a special discount on a given day, for instance. Or you might want to be able to change elements such as site navigation. How flexible does the solution really need to be? Don’t get mired in jargon and functional possibilities. Concentrate instead on how your new site will produce sales or increase inquiries that lead to sales.
Keep integration requirements in mind. Implementing an e-commerce platform with all the bells and whistles will fall short if your OMS or ERP system can’t effectively communicate with the site.
Decide whether you want to build or buy. Building your own e-commerce platform historically provided a competitive advantage in the marketplace, as packaged e-commerce solutions were expensive and basic. Many companies viewed their online business as different from anyone else’s and thought their uniqueness required a homegrown platform.
Times have changed, however, and companies now realize that the real differentiator for their Website is the look and feel, the effectiveness of its onsite search, and its merchandising (the presentation as well as the actual goods). Today many e-commerce platforms offer similar basic features and functionalities.
While the build solution ultimately offers custom fit and control, using resources to build basic functions such as product catalog management, merchandising features, campaign management, and shopping-cart functionality can put a company at a disadvantage because of the amount of time needed to develop the underlying technology layers for functionality and the integration points to your existing systems. It commonly takes 12-24 months to design, develop, and build an e-commerce solution from scratch. Then there’s the matter of finding and keeping experienced staff to build the solution. The question arises whether your company is better off using its resources to support its core competency rather than to develop a solution that already exists.
As the second generation of e-commerce evolves, more marketers are opting to buy packaged or custom software. Platform programs generally encompass features such as visualization (product rotation and zoom), merchandising (marketing products based on customer preference, past history, or best-sellers), and personalization (offering the customer marketing opportunities based on purchasing patterns). Vendors have built more functionality into their platforms to handle the basic online selling features for product catalog management, merchandising, campaign management, and shopping-cart functionality. Another advantage to using a packaged solution is that the vendor provides upgrades to the core functionality.
Some vendors are incorporating Web 2.0 features into their solutions while at the same time offering integration to third-party software (best-of-breed solutions) that can handle a more in-depth customer interaction. Buying an e-commerce platform that provides all the required core functionality as well as the ability to use best-of-breed applications and custom services is generally considered the optimal solution. The goal is to achieve a balance between the e-commerce solution and the number of best-of-breed applications, since maintaining multiple applications for the long term can increase maintenance costs.
If you decide to buy, choose between a licensed solution or software as a service (SaaS). With licensed software, you purchase the e-commerce software package and host the solution internally or externally at an outsourced hosting facility.
Licensing for a packaged software solution is normally structured on a per-user or per-CPU basis and typically requires an up-front investment of $400,000 and up. Annual maintenance costs usually fall in the range of 15%-22% of the license cost. The license model also requires an investment in server hardware and database software.
Vendors offering packaged e-commerce solutions have built core features and functionality into their solutions but provide the flexibility to customize a Website’s look and feel. The licensed model is typically used by midsize and large multichannel companies wanting absolute control of their e-commerce platform. Benefits include the ability to make changes as required, reduced time to introduce new features, and the ability to integrate with best-of-breed technologies.
Purchasing licensed software is the more common solution. The SaaS, or on-demand, model is gaining in popularity, however, especially among businesses that do not want to commit the large up-front investment required by a licensed model. This is particularly true of small and midsize companies that don’t require complete control of their platform.
An on-demand e-commerce platform provides a company with the use of a vendor’s solution for a flat monthly fee or a percentage of revenue. The vendor owns and hosts the software, which may exist on a shared or nonshared environment. In a shared environment there is one version of the software, and all clients share the code and server resources. In the less common nonshared environment, the resources are dedicated to a particular client.
Up-front setup fees for an on-demand solution can range from $50,000 to $400,000, depending on the complexity and size of the client’s business. The flat-fee or revenue model is typically set up with a tiered structure based on online revenue, site visits, or order volume. Fees are typically 1.5%-3% of sales.
Look at the pros and cons of hosting and managed services. Hosting means that you buy a solution and the necessary hardware and pay the vendor to put the hardware in its facility, where it will reside. In the managed-services model, you buy the hardware and the software, the vendor hosts the hardware, and you contract with the vendor to maintain the operating system and e-commerce software application.
Before you decide which model you want to use, you need to understand the vendor’s concept of maintenance and updating; you also need to know your IT staff’s ability to support hosting the solution internally or externally.
Seek a vendor you can partner with. When you’re researching e-commerce companies, you want to find a vendor that will work actively with you. It’s crucial to have that kind of relationship in order to be sure that you will have the support and maintenance you need.
Tocky Lawrence is vice president of F. Curtis Barry & Co., a consultancy specializing in Internet platforms, order management systems, fulfillment, and contact centers.
|A SAMPLING OF e-commerce platform providers|
There are many e-commerce platforms from which to choose — so many that we can’t possibly compile a comprehensive list here. Below is information on some of the major providers.
|ATG (Art Technology Group)|
ATG offers a large suite of modules that complement its core ATG Commerce solution, including ATG Merchandising, ATG Campaign Optimizer, and ATG Outreach for e-mail and Web marketing. ATG offers both a licensed solution and an SaaS model, as well as hosting as an option.
One of the newer players, Demandware offers an SaaS model that includes installation, upgrades, and scaling. The solution gives marketers and merchandisers the ability to maintain promotions, site content, product information, and analytics. Demandware Studio provides the client the flexibility to customize the creative and functional design aspect with full control of design templates, business logic, and page flow.
Fry offers its Open Commerce Platform (OCP) as a paid-services engagement: Clients own the code, and Fry performs site development and maintenance. Fry’s strong background and expertise in Web design along with OCP as the foundation provides a client with a highly customized solution.
GSI Commerce Core Technology Services is a combination of proprietary and third-party applications built to flexibly support features and functions on a common infrastructure while allowing each partner’s solution to be customized to fit individual business needs. GSI Commerce allows partners to maintain the e-commerce solution through the use of promotions management, search management, catalog management, and content management. Along with its e-commerce platform, GSI offers an end-to-end solution including technology services, customer care, and fulfillment.
IBM’s Websphere Commerce comes in three variations: Websphere Commerce Enterprise for large, high-volume b-to-b and advanced b-to-c global businesses; Websphere Commerce Professional for online selling that incorporates personalized and cross-channel shopping; and Websphere Commerce-Express, which provides core capabilities for smaller companies.
MarketLive’s MarketLive5 e-commerce platform is an end-to-end solution containing marketing, merchandising, customer loyalty, product management, site management, and order processing. It can deploy as a subscription-based, customizable shared-instance solution; as a hosted solution; or as an on-premises solution.
Microsoft’s Commerce Server 2007 is designed to fully leverage ASP.NET 2.0. It has merchandising, catalog management, order processing, and .NET smart client user interfaces.
Prosodie Commerce includes a merchandise tool and search engine optimization, affiliate marketing, loyalty program, and promotional options. It is available as a hosted dedicated solution or in a shared-server environment.
Vcommerce’s eCommerce Storefront, an SaaS solution, provides merchandising, integrated analytics, search and guided navigation, predictive merchandising and personalization, and A/B testing. Vcommerce also offers order management, service, and fulfillment options.
Venda’s e-commerce solution is an SaaS solution that includes product and catalog management, merchant content management, self-service promotions, e-mail marketing campaigns, affiliate marketing, natural-language search engine functionality, and personalization.
Additional solutions to consider:
Competitive Computing 802-764-1700
Digital River 952-253-1234
eOne Group 402-970-6701
Warp 9 800-508-9339
Yahoo! Small Business 866-781-9246
|SIX TIPS FOR avoiding common pitfalls|
Put your requirements in writing. Too often e-commerce solutions are built or customized based on verbal agreements — but what the vendor provides and the customer expects don’t always match.
Conduct a request for proposal (RFP) process. This identifies to the vendor what your requirements are and establishes initial pricing.
Develop a three- to five-year budget scenario with up-front or startup costs, initial year investment, and subsequent years’ investment. Include annual maintenance fees for hardware and software support. It’s important to understand the total investment to determine which solution is best for your business.
Define a schedule or timeline. Many companies underestimate the time it takes from establishing requirements to implementation.
Formalize a project plan.
Be sure to schedule status updates on regular intervals.