PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
In the rapidly changing world of Internet retailing, e-commerce platforms become outdated within a few years. As e-retailers look to enhance the customer shopping experience and deepen customer relationships, many are realizing that simply modifying their existing e-commerce platforms will not be enough as any such fixes are apt to be short-term.
Besides, e-commerce platforms that are cobbled together tend to be built on closed architecture, which creates the risk for increased incompatibility with new applications as the platform ages. Hence, retailers opting to maintain an outdated platform end up shoehorning in applications that are not necessarily compatible by rewriting some of the code in the application. The result is often a decrease in overall performance of the platform, costly maintenance schedules, and in the worst case, lots of downtime. Plus, aging components of an e-commerce platform can leave holes that expose the retailer`s database to intrusions from hackers.
For many retailers, the solution is to install a new open architecture e-commerce platform that can provide the flexibility and scalability needed to stay current with changing e-commerce technology, without limiting performance during the upgrade period.
Keep the vision
"E-commerce platforms are complex and there is no way to anticipate future needs so choosing a flexible, extensible, open platform allows for growth without sacrificing performance and stability," says Cliff Conneighton, senior vice president of marketing for e-commerce platform provider Art Technology Group Inc. "Upgrades are inevitable, so retailers need to keep the vision of their business in mind when selecting an e-commerce platform."
In addition to allowing for easy growth, some retailers stress the ease with which open-architecture platforms can be modified. For instance, Junction Solutions builds its e-commerce platform around Microsoft Corp.`s Dynamics AX (formerly Axapta). In building off the open architecture in Dynamics AX, Junction Solutions provides retailers with advanced decision support tools, allowing them to leverage operational research techniques such as linear programming, integer programming, and constraint propagation.
Microsoft Dynamics AX is designed to scale real-time connectivity across different locations using a common database. Language and currency capabilities for over 30 countries are also included, opening the door for retailers to expand internationally. "We provide retailers with the ability to be in control of their platform, not the IT department or the solutions vendor," says Holly Haines, product manager, multi-channel retail for Junction Solutions. "This allows retailers to make quick changes in real-time without having to reinvent the wheel every time."
In other words, e-retailers need to select a platform that not only is built to enhance the strengths of their business, but also that can grow along with their business instead of having to be replaced every three to four years.
Another way that retailers can address that problem is by choosing a vendor that offers software as a service. "One of the benefits of software as a service is that upgrades are made at no incremental costs," says Stephan Schambach, CEO of e-commerce platform provider Demandware Inc. "Manual upgrades can slow the process of adjusting to meet changes in the market and even prevent retailers from implementing the next change because of extended technical difficulties due to the prior upgrade."
Because providers of hosted solutions and software as a service upgrade their e-commerce platforms constantly, retailers are able to use their e-commerce platform proactively. That can make the difference between attracting and keeping new customers and losing existing customers to retailers that offer more advanced functionality.
"Retail is a fast moving environment and retailers can`t wait for a vendor to schedule a change to their platform that may cost them a market opportunity in the meantime," says Haines of Junction Solutions. "Retailers want to be able to run their business using their e-commerce platform, they don`t want their e-commerce platform running their business."
Choosing the right platform is difficult and the path can be strewn with unexpected obstacles. Retailers, therefore, need to look very closely at what they`re trying to achieve, then find a platform that can help meet those goals.
"An e-commerce platform is part of the puzzle that is the retailer`s business, so a retailer does not want to just put one in place and feel they`re done," says Scot Wingo, CEO of ChannelAdvisor Corp., which provides technology and expertise to retailers seeking to grow.
In addition, they must focus on the basics that will help them get the job done. "Retailers need to avoid going for the glitz in their e-commerce platform and focusing on making the most of features that can help them meet the demands of the marketplace," says Ken Burke, president of e-commerce platform provider MarketLive Inc.
Furthermore, retailers need to think about how the web channel fits other channels. "Retailers need to look at how they can take their online strategy and turn it into a business that maximizes return on investment across all channels," explains Robert Wight, CEO of Channel Intelligence Inc. (see accompanying story, p. S4).
To help retailers think differently about how their business is structured, Channel Intelligence recently added several client service representatives who work with retailers more along the lines of a consultant than a service representative. Among the topics the client service representative discusses with customers is adding new products in data feeds and how to more effectively monitor changes in the performance of the e-commerce platform. Providing such information allows retailers to analyze profit on a per item basis inclusive of all touch points on the front-end and back-end.
"It is important to get retailers to ask themselves `What is the focus of my business and how can we allow customers to move through the site in a way that reflects that focus?`" says Wight. "Retailers need to look at taking their online strategy and turning it into a profitable business that delivers the greatest return for the marketing and advertising dollars."