In its second-largest acquisition, Amazon buys the company for $970 million.
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An integrated platform
SAP can now offer in a single integrated platform the ability to manage customer and product data at both ends of the scale, from suppliers to customers in any shopping channel, Chavie says.
Moreover, SAP will leverage web-based service-oriented architecture to let retailers use either an entire enterprise suite or pick out only what they need from solutions like Khimetrics, Chavie adds. “We’re looking at what our retail customers need,” he says.
At the same time, other vendors like Lawson, Manhattan Associates, ATG, Demandware, Venda Inc., Ecometry and others are likely to continue building on their own expertise as well as their ability to integrate through open web standards with Oracle, SAP or whatever enterprise software a retailer chooses, experts say.
For now, Oracle is betting that it will win its fair share of the market-and then some-with its unique mix of enterprise software, integration technology and cutting-edge point solutions like ProfitLogic’s markdown optimization software. ProfitLogic has earned high praise in recent years from retailers and analysts, attracting even retailers like Anchor Blue, which won’t consider incorporating ProfitLogic into its Oracle suite until a later date. “We have to walk before we can run,” Bush says.
But a need for constant innovation could be Oracle’s downfall, experts warn. Some have expressed doubt that an innovative company like ProfitLogic can remain on the cutting edge within a major corporation, where it could get lost in bureaucratic battles and budget plans. “That’s the big question for Oracle, if it can keep its innovative products as well as its enterprise software over the long term,” says Langdoc, adding that the same kind of innovative environment that supported ProfitLogic will undoubtedly cultivate future stars. “If Oracle’s not careful, another startup company like ProfitLogic could pop up and the take the lead with new technology.”
SAP, for one, says it’s already planning to extend the optimization capabilities of Khimetrics to include product assortment as well as pricing optimization, to help retailers plan mixes of products by seasons and stores, Chavie says.
Oracle insists that it will stay on the cutting edge with ProfitLogic and other parts of its retail suite, which cuts to one of the main reasons it formed Oracle Retail as a distinct unit, Lau says. ProfitLogic will keep its own R&D; unit in Cambridge, Mass., and 360Commerce its R&D; in Austin, Texas.
What ultimately wins over retailers, of course, is how effectively it helps them win over customers and boost sales and profits. “If we can do a better job of retailing and fully use the capabilities of our new system, we could increase another 15 to 20% in sales, or another $65 million to $80 million,” says Anchor Blue’s Bush.
That kind of performance upgrade will not only further hike profits, but also provide more of the capital Anchor Blue needs to fund its aggressive multi-channel expansion plans. In addition to rolling out more stores, the retailer expects to also develop AnchorBlue.com-now a playful site designed to draw the retailer’s teenage customer demographic into it stores-as an e-commerce destination, possibly with a complementary catalog-with all three channels benefiting from an integrated enterprise system, Bush says.
Bush’s goal is to keep the move toward profitability that has occurred since Anchor Blue started working on the fundamentals of retailing two years ago. He expects his new software will help him do more of just that-sticking to the fundamentals of retailing and giving customers what they want.
“Customers don’t care about the back-end,” Bush says. “They just want a great store experience.”