PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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The company surveyed some 50,000 customers and found their desires for the site focused on three specific areas: easier and more simplified navigation, more product detail and description, and the ability to see products so closely that they could better understand the attributes of what they were buying online.
Under Armour had a wish list of its own. Any changes had to integrate easily with its operating system and offer the flexibility to be able to represent its dynamic brand and products in a controlled way. It wanted the ability to control any new platform solution from a central location but distribute it globally across the brand’s other regions. Finally, Under Armour was looking for speed in serving up and delivering on the online shopping experience.
Through 2006, Kuhns and his team looked at ways to meet these objectives with technology and reviewed the options. They ruled out a completely outsourced solution because they concluded it likely would require too much customization, time and cost. Since the internally developed operating system was working well, the platform didn’t need a complete rebuild, though the team did wind up building some new pieces including a global site management tool giving greater control of the site directly to marketers and merchandisers.
In the end, the company settled on a build-buy hybrid. “We focused on best-of-breed solutions to enhance the consumer experience,” Kuhns says. Based on what they had learned from customers, he and his team focused on acquiring technology for image management, search and analytics, eventually partnering with Scene7 for imaging and Omniture for analytics. While still looking for the right vendor for search, Under Armour already has seen a lift in sales. From enhancements to its site so far, sales are up 70% year over year, Kuhns says.
Charming Shoppes Inc. runs a huge e-commerce operation on a platform which, like Under Armour’s, is largely internally built. With recent acquisitions, its e-commerce platform now supports 16 web sites and millions of visits each month.
When the company’s first e-commerce platform went up in 2003, its projected volume already exceeded the abilities of on-demand or packaged software platform solutions available at the time, according to Joe Hardiman, chief technology officer. The company did use as a foundation an enterprise resource planning system from a company now owned by Microsoft, building onto it its content management, merchandising, reporting and analytics, and other site functions.
The new kid’s platform
With the acquisition of merchant Cross Town Traders two years later, Charming Shoppes got even bigger. Because Cross Town Traders’ internally developed e-commerce platform had capacity exceeding that built by Charming Shoppes, Charming Shoppes decided to move all of its brands onto the platform of its new acquisition.
In making that decision, Hardiman says the company never looked at the hosted option as it couldn’t scale to the needed volume at the time. However, it did a full request for proposal process with vendors of licensed software.
“There was nothing we could use off the shelf,” he says. “We would have had to enhance it just to get the functionality we were getting out of our existing system. There is always an element of risk when you enhance anything over and above a basic implementation, and we had to manage that. We had to get the new platform up in time for the holiday last year.” Hardiman’s team, however, did spend almost a year adjusting features on top of the platform build by Cross Town Traders; for instance, adding merchandising functions that the system didn’t have.
All of the retailers interviewed are satisfied they’ve found the right answer to the question of whether to build, buy or outsource their e-commerce platforms. Satisfied for now, that is.
Already, some see where gaps might arise between current capabilities and future opportunities that could make them consider the platform question all over again. Hardiman, for example, says that while licensed software wasn’t able to deliver what his platform needed at the time of the last platform upgrade, it’s a more attractive option now as licensed solutions become sufficiently robust to handle higher volumes of activity. In fact, Charming Shoppes is actively investigating licensed software for its next platform upgrade, he says.
If anything is a constant in the fast-moving online retail environment, it’s change. But as technology advances and e-commerce platform options evolve, the core considerations that start merchants down the road toward any new solution will likely stay the same. “Any online merchant needs to ask themselves, what are their core competencies? And if they have finite capital to invest in e-commerce, where is their best spend?” says Venda’s Max. “Those are the two key questions.”
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