In its second-largest acquisition, Amazon buys the company for $970 million.
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To verify the flexibility of an outsourcing partner’s platform and justify the expense of their fees, consultants recommend that e-retailers request a demo and look into any guarantees the provider may offer.
“There is no substitute for trying out an e-commerce platform in a live environment,” says Jeff Zimmerman, vice president of product management, e-commerce and online marketing for e-commerce platform provider Network Solutions. “Customer expectations of the web store are changing so fast that retailers without much technical expertise need assurances their outsourcing partner can deliver a flexible platform that will drive sales as markets change.”
Network Solutions, which provides its software on a hosted basis, offers a full money-back guarantee if a retail client is not satisfied with the e-commerce platform for any reason within 30 days of installation. “This helps put the retailer at ease, especially if it’s a small retailer with a limited budget that wants to compete with the big boys,” adds Zimmerman.
Finally, retailers ought to avoid being a guinea pig for a service provider. “No retailer wants to be the first to deploy a platform if they can avoid it because there is no track record with it,” says Scot Wingo, CEO of ChannelAdvisor Corp., which helps retailers sell online in various venues and offers marketing services.
This is not to say that any new service provider does not have worthwhile technology. In fact, new entrants in the market can be hungrier and have cutting edge applications that can more easily be integrated with applications from other vendors than established players.
But anyone testing a new platform for a vendor needs to be cautious. “If a retailer is going to be among the first to deploy, they need a contingency plan in place that gets them back on their old platform if need be,” says Wingo. “You don’t want to get caught short if the outsourcing relationship does not work out.”
Once these questions have been asked and answered, retailers can take a hard look at pricing. Advancements in web technology have brought standardization to much of the functionality being offered. As a result, application costs are being reduced.
“As the core e-retailing technology gets standardized, there is less room for opaque pricing today, because vendors are offering the same core functionality,” says Venda’s Max. “Retailers want a true fix on their core technology costs because money they save there can be applied to marketing and merchandising.”
As best practices spread throughout the industry, platform providers are offering more standard features. With little differentiation in their technology, platform providers must compete on price.
“The top-end platform providers pretty much offer the same core functionality,” says Max. “This is making platforms more interchangeable so that retailers can add what features they want from the platform provider of their choice. This level of standardization is placing more importance on pricing.”
The growing emphasis on price is expected to create a clearer picture of the cost to build and modify an e-commerce platform. “There used to be a lot of smoke and mirrors around pricing,” Max says. “But that is going away just as it has in other areas of e-retail technology, such as CRM, because once the core technology is standardized, the cost of the technology gets driven down and price becomes more of a differentiator. The platform providers that can’t deliver their service at a reasonable price will fall away.”
Price is only part of the equation. Some retailers are also placing a higher premium on support and service by retailers. “A good outsourcing partner will have global reach and the resources to provide top-flight service 24/7,” says Max. “Outsourcing lowers the I.T. expertise a retailer needs on staff so they must validate that the outsourcing partner can support the functionality of their platform.”
One question retailers ought to ask an outsourcing partner is whether the platform is proprietary or if the partner uses preferred software developers for add-on applications. If it is the former, it creates a barrier to doing business with other best-of-breed application providers, Max notes. “Retailers don’t want to be locked into a relationship with their platform provider,” he says. “What retailers want is more flexibility and control over their e-commerce platform without the technical headaches.”
After all, marketing and merchandising are the core strengths of any e-retailer, which is why they are more inclined than ever to turn over the management of their e-commerce platforms to a third-party so they can focus on doing what they do best.
Enriching the shopping experience through better customer interaction
With Web 2.0 technology, the sky is the limit for creating a more satisfying shopping experience
With each generation of web technology online shoppers are becoming more discerning about the shopping experience. Today, online shoppers expect not only richer graphics and easier navigation, but also more payment options, customer reviews, more detailed product information and the opportunity to have friends and family participate in the shopping experience by showing them outfits created in virtual dressing rooms.
The move toward creating a richer shopping experience is being driven in large part by consumers’ desire for a more interactive shopping experience, similar to what they experience in a store. At the root of this trend is the wholesale adoption of broadband Internet connections which make it practical for retailers to support the new generation of web applications-and for consumers to experience them.
As consumers become more exposed to the new generation of web technology through such sites as the video web site YouTube.com, they expect other sites to provide the same level of engaging visuals and deeper content delivered in unique ways, such as videos of customer reviews as opposed to words on a page.
Whether a retailer meets these expectations directly affects conversion rates. As a result, retailers are adding features and functionality that enrich the shopping experience, and not just glitz that dazzles.