PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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One of the challenges that that new reality imposes on retailers is the challenge of making their web site content accessible to shoppers. E-retailing sites today host thousands of products, forcing customers to search for the right product. "As a result, the abandonment rate on web sites is typically high," Marrah says. "New technologies such as guided selling have emerged to address this issue." Guided selling technology walks a consumer through an interactive product recommendation and selection process to present a targeted view of a product catalog on the web site. "Innovative retailers are increasingly asking for guided selling as a part of the overall e-commerce solution," Marrah says.
Besides offering deep inventory, web sites in today`s market need to be able to handle a variety of transactions, not just a sale. For instance, many retailers want their customers to be able to initiate product returns through their web sites. Others want customers to be able to schedule service or installation appointments online. Consumers are also changing in what they want from a web site, van Hilten says. "Customers don`t want transactions, they want interactions," he says. "They don`t want only content; they also want contact."
The choice imperative
Among the functionality that retailers must be prepared to offer today, van Hilten says, is the ability for the consumer to choose multiple shipping addresses and shipping options, gift wrap or no gift wrap, order online-pick up in the store, and so on. "It sounds easy but it`s quite complex," he says. "Then you have to determine if you want everyone to have all that capability or if you want to present it just to certain customer segments." Whatever the retailer decides, choice is imperative, he says. "The moment a web site does not provide a sufficient level of choice, cart abandonment goes up," he says.
BroadVision, which participated in a high-profile, successful relaunch of Circuit City Stores Inc.`s web site last year, provides such flexibility, van Hilten says, and its customers take advantage of its expertise. "Our customer base is ample proof that we have a personalization product that works," he says.
These are all functions that retailers didn`t necessarily recognize five years ago when they made their initial investments, van Hilten says, so the capability isn`t there in many systems. But many retailers don`t want to start all over. "You don`t want to overhaul the entire e-commerce infrastructure as new requirements come along," van Hilten says. "That`s risky. You want to be able to just add capabilities to a web site."
BroadVision addresses that issue through its Total Agility Suite. Implementation starts with understanding a retailer`s objectives and building from there. "We model the complexities that a retailer needs and add to what they already have," van Hilten says. "We understand what you want to do and where you want to go."
Ultimately, a web site must create relationships with customers and successful retailers understand that that is where differentiation resides, van Hilten says. "In a market where everything is commoditized, a competitor can copy everything you do except the relationship with your customer and your level of adaptability," van Hilten says. "If you` re adaptable, it`s very difficult for a competitor to copy you."
Fry, which was started 11 years ago as a web site development company, approaches retailers` challenges with its Open Commerce Platform, an open-source e-commerce system that meets the bulk of retailers` needs right out of the box and can be easily modified to meet the balance, Fry says. The Open Commerce Platform replaces traditional e-commerce software that has two drawbacks, Fry says: Developers charged ongoing licensing fees and as much as 30% of the code had to be replaced with new code to meet retailers` specific needs. On top of that, Fry says, such software is often difficult to integrate into existing systems.
With a shopping cart, a content management capability, the ability to provide targeted content and other basic functionality, "the OCP has 80% of what a retailer needs; we build the other 20%," Fry says. Such customization meets the needs of retailers as they define them, not as some software developer defines them. For instance, the Fry Open Commerce Platform comes with a core shopping cart, but retailers can change how certain customer options are displayed. In the case of Fry client Kmart Corp., the retailer allows shoppers to specify shipping and delivery instructions on the product page, while client Lillian Vernon chooses to offer those options at checkout. Both are built on the Fry core. And that makes the customization process easier, Fry says. "Rather than build on top of someone else`s platform, we build on our own framework," he says.
A package deal
Fry says the company has adopted an open platform for a simple philosophical reason: "The intellectual asset of software development is going down in value while the expertise around the software is going up in value," he says. He notes that the prices of much e-commerce software have declined in the past few years as competition has increased. "The licensing cost was not tied to the value of the software but to what the market would bear," he says.
Fry doesn`t re-invent the wheel with every application, however. It has integration agreements with technology vendors in rich media, search and navigation, analytics and others. "We incorporate best-of-breed components," Fry says "We don`t want to re-create what other people do well."
He adds, however, that Fry continues to work with retailers who have built their e-commerce systems on other platforms, such .Net and J2EE. Fry notes that his company`s approach has been successful, with $1 billion of e-commerce flowing annually trough Fry platforms.
With all the complexity that retailers face today, Marrah says they should seek out an integrated e-commerce, e-marketing and analytics solution that can scale as the business grows and support peak buying periods. "They should try to buy a packaged application, rather than either trying to build such a solution themselves or buying components from multiple vendors and integrating such components themselves," he says. That, in fact, is what is happening, he notes, citing a recent Gartner study that reports a shift in the market from e-commerce toolsets to packaged e-commerce.