PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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That level of hands-on management is typically available through vendors of on-demand platforms, which makes many of the add-ons affordable. Vendors that offer on-demand applications such as SpeedFC, ATG, Profit Center Software and Americaneagle.com create applications and platforms using a common core code base within their application that allows upgrades to be made across the entire user base as often as once a month. Retailers can customize their individual sites using tools accessed through an executive dashboard.
While customization tools represent about 20% of a platform’s features and functionality, they deliver the features that retailers need to be more creative in managing site content and customer interactions, while leaving platform maintenance and upgrades to the vendor.
From a cost perspective, the major advantage of on-demand platforms is that retailers typically pay a flat monthly fee which makes measuring the ROI clearer because retailers aren’t charged for add-ons to the platform and ongoing maintenance. “Our goal is to provide retailers with the tools they need to manage marketing and merchandising, while we take care of the platform architecture from end-to-end,” Zisk says.
Do the due diligence
SpeedFC, which provides web development services in addition to fulfillment, order management and customer service, bases its fee structure on the retailer’s revenue stream after implementation of its technology.
Before selecting any e-commerce vendor in this economic climate, retailers ought to test or get a demonstration of the vendor’s technology to make sure it works as advertised. Talking with at least three customers and one analyst that follows the company to provide a third-party perspective on the vendor’s financial strength and reputation for quality in the market is also recommended. “It is important to perform due diligence on a prospective vendor and get as much objective feedback on them as possible,” Zujewski says.
Another factor to weigh when selecting a vendor is how much the vendor spends on research and development to make the technology more flexible. “A vendor that continues to invest in technology is able to provide clients with a platform that is constantly evolving to meet the needs of a rapidly changing marketplace,” Zisk says. “This dedication to research and development ensures competitiveness for the retail client with ongoing flexibility and increasingly robust functionality.”
Finally, retailers should seek vendors that solicit ongoing feedback from customers about the performance of the technology. “Retailers are best served by vendors that genuinely listen to what retailers have to say about their technology,” Marrah says. “There is really no need for vendors to be defining the technological needs of their customers.”
Indeed, e-commerce technology is changing faster than ever and e-retailers that take the time to understand their customers’ needs and preferences will be in the best position to obtain the technology they need to thrive in the midst of the current recession without breaking their budget.
“E-commerce is still the cheapest investment in retailing,” Svanascini says. “It costs more to open a store or launch a print catalog and there are few e-retail sites that don’t recoup their investment. Investing now in e-retailing is a much more affordable, stronger and safer way for retailers to thrive in this economy, and differentiate themselves in a big way once the economic climate improves.”