July 30, 2008, 12:00 AM

Crafting a web business

(Page 2 of 3)

Choosing the right e-commerce platform has become increasingly complex as web retailers ponder whether to integrate multiple legacy systems or consolidate into a multifunctional package. As in the 2007 edition, Microsoft Corp. was named most often this year, including 27 companies using .NET web services architecture in some capacity and 13 using the company’s Commerce Server platform. Top 500 clients include Best Buy Co. Inc. (No. 12) and Costco Wholesale Corp. (No. 18). IBM Corp. was cited by 30 e-retailers, including Sears Holdings Corp. (No. 8) and Follett Higher Education Group (No. 68); Yahoo Inc. was used by 29 retailers, including The Vermont Teddy Bear Co. (No. 179) and OpticsPlanet Inc. (No. 220). Follett’s e-commerce site migrated to an IBM WebSphere platform early this year as part of a major upgrade, a spokesman says. “The biggest enhancement is the migration to the most current version of IBM WebSphere to offer enhanced functionality and stability for the site.” The number of retailers who developed their own e-commerce platforms climbed by 29% this year to 194, compared with 150 in the 2007 edition.

E-mail Marketing

Refining the focus

E-mail marketing is undergoing a transition as a marketing channel. As ISPs begin scrutinizing e-mail senders’ reputation and consumers complain about inbox overload, many e-retailers are looking at ways to segment recipients. The goal is moving from general to specific consumer targeting, using shopping history and message testing. The top three vendors served 104 retailers this year, compared with 140 retailers who use internally developed applications. CheetahMail, a subsidiary of Experian Co., led the way with 64 retailers, followed by Responsys Inc. with 21 and Yesmail with 19. CheetahMail customers include Office Depot Inc. (No. 3) and Sears Holdings Corp. (No. 8); Responsys’ client list features Musician’s Friend Inc. (No. 39), and J.C. Whitney & Co. (No. 111); and Yesmail customers include HP Home & Home Office Store (No. 5) and HSN (No. 25).

Fulfillment

Global reach

Retailers are becoming more interested in global e-commerce and some are turning to experienced providers to handle fulfillment. For example, Casual Male Retail Group Inc.’s reach into six European countries last spring was made easier because its e-commerce platform vendor, GSI Commerce Inc., has experience operating online stores in the countries, says Dennis R. Hernreich, executive vice president. In addition to fulfillment, GSI is handling site design, order processing and call center services for each of the six web stores. GSI and Escalate Retail were the top fulfillment providers among Top 500 retailers, with 22 customers each. CommerceHub, a part of Commerce Technologies Inc., was next with 13 Top 500 merchants, followed by Manhattan Associations with eight. Escalate customers include Urban Outfitters Inc. (No. 77) and Abt Electronics Inc. (No. 157). In addition to Casual Male (No. 254), GSI Commerce clients include Aéropostale Inc. (No. 203). CommerceHub’s clients includes Staples Inc. (No. 2) and Sears Holdings Corp. (No. 8), while Manhattan Associates’ features Recreational Equipment Inc. (No. 62) and The Parent Co. (No. 117).

Order Management

Technology upgrades

A survey of larger retailers in 2006 by AMR Research found 61% planned to evaluate a new order system by 2008, and 10% already were implementing a new one. A June 2007 survey by Internet Retailer found 30% of smaller retailers said they planned to replace their order management system within a year, and 14% within two years. Escalate Retail was cited as order management provider most often, by 36 Top 500 retailers. Customers include Nordstrom Inc. (No. 32) and American Musical Supply Inc. (No. 205). GSI Commerce Inc. was next with 24. Clients include Zale Corp. (No. 170) and The Hershey Co. (No. 304). MICROS-Retail and Stone Edge Technologies Inc. followed, each named by 11 retailers. MICROS clients include Abercrombie & Fitch Co. (No. 54) and Army & Air Force Exchange Service (No. 66); Stone Edge Technologies’ clients include OpticsPlanet Inc. (No. 220) and Beauty Encounter (No. 335).

Payments Processor

Global considerations

E-retailers are looking to expand internationally, but doing so requires an effective payments and fraud detection strategy. On the payments side, e-retailers need to tailor payment options to those of individual international markets, experts say. Fraud detection includes closely tracking the behavior of customers to understand their shopping and purchasing patterns. The top three payment systems providers in this year’s Top 500 served 231 retailers. Chase Paymentech was the leader with 110, followed by PayPal Inc. with 77 and CyberSource Corp. with 44. Chase Paymentech clients include Amazon.com Inc. (No. 1) and Dell Inc. (No. 4). PayPal merchants include SonyStyle.com (No. 13) and Bidz.com Inc. (No. 74), and CyberSource’s list includes Overstock.com Inc. (No. 30) and Nike Inc. (No. 47).

Rich Media

Form meets function

Online video is fast becoming the latest and greatest rich media tool, but e-retailers are realizing that they can’t just deploy video for video’s sake. Rather, they need to add video content that’s useful in helping consumers decide on purchases, and presenting it when and where they are most likely to want to interact with it. Scene7, an Adobe Co., counted 93 Top 500 retailers this year, while 42 merchants named RichFX Inc. Five cited WebCollage Inc. Scene7 retailers include Amazon.com Inc. (No. 1) and Office Depot Inc. (No. 3). RichFX’s Top 500 clients include Costco Wholesale Corp. (No. 18) and 1-800-Flowers.com Inc. (No. 36). WebCollage retailers include Toys ‘R’ Us Inc. (No. 43) and eCOST.com Inc. (No. 119).

Search Engine Marketing

Finding the right search

Paid search or natural search? Not long ago many retailers thought that paid search was the way to go with search engine marketing because they got faster results. But rising keyword costs are moving many retailers to reconsider natural search and to seek providers who know how to make it work. Top 500 retailers named DoubleClick Performics most often this year. DoubleClick had 18 mentions; ChannelAdvisor Corp. and The Rimm-Kaufman Group had 12 each. Didit was named by nine Top 500 retailers. DoubleClick clients include Cabela’s Inc. (No. 40) and Zazzle.com Inc. (No. 211). ChannelAdvisor’s Top 500 clients include AbeBooks Inc. (No. 73) and J&R; Electronics Inc. (No. 95), while The Rimm-Kaufman Group’s list features Direct Marketing Services Inc. (No. 145) and Abt Electronics Inc. (No. 157). Didit clients include Brookstone Inc. (No. 131) and Miles Kimball Co. (No. 195).

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