In its second-largest acquisition, Amazon buys the company for $970 million.
Top 500 retailers look for vendors that go beyond the basics, and that tailor services to the needs of each retailer client.
Technology is a key point of differentiation in e-retailing. Consumers decide whether they want to shop at a retailer's web site by how fast pages load, the helpfulness of site search results, the ease of navigation and the overall appeal of the site's design. Most retailers, however, are not expert in all the technologies needed to create a web site that stands out from the competition. Nor are they experts in developing online marketing tools to attract new customers and keep current customers returning to their sites again and again.
That's where technology providers that specialize in these skills can make all the difference. The most effective technology partners take the time to understand how a retailer's business objectives correlate with their technology needs and, instead of offering cookie-cutter options, create tailored solutions that help retailers attract more customers, increase conversions and grow sales. Vendors that take that approach are the ones that wind up showing up among the leading providers of technology and services to the online merchants listed in the Internet Retailer Top 500.
"It's not just a matter of depth of knowledge about technology and keeping up with advances, but also understanding the needs of the individual client—what is likely to work for them and what isn't," says Paul Boisvert, director of product management for Yahoo Small Business, provider of the Yahoo Merchant Solutions hosted e-commerce platform that provides store development and web hosting services and other e-commerce resources. "We never assume we know all the needs of the client, which is why we spend so much time gathering feedback from them."
That retailer feedback is critical for a technology partner to understand what changes or upgrades are needed to set the retailer's web site apart from the competition and meet the specific needs of that merchant's clientele. That's why technology partners regularly survey their clients, hold annual user forums and conduct one-on-one interviews with retailers so they can learn lessons across their entire user base and identify best practices for each customer segment.
"Understanding the shopping experience consumers want is extremely important, and the broader the view of the client base and the needs of their customers, the better able we are to adapt new functionality developed for one client to other clients based on their specific needs," says Ed Hoffman, vice president of business and corporate development for SLI Systems, provider of hosted site search applications. "The first law of e-commerce is if consumers can't find what they are looking for, they can't buy it."
To comprehend and meet the needs of retailers and their customers, a technology partner should be focused on the retail market. Technology partners that are focused on retail will better comprehend the specific needs of retailers, especially when it comes to marketing tools such as e-mail, mobile and social networking.
With competition among retailers fiercer than ever, retailers need a true marketing partner that can adjust marketing campaigns as needed and provide applications that make it easy to manage and follow a retailer's interactions with customers across multiple marketing channels.
"Retailers can benefit greatly from a marketing partner that not only helps them track the dialog taking place with consumers in each marketing channel, but creates strategies to manage that dialog in each channel," says Joe Colopy, CEO of Bronto Software Inc., provider of e-mail, mobile and social marketing tools and services. "Having a unified view of the ongoing dialog with customers creates a more relevant and effective marketing campaign by preventing message overlap. It also keeps consumers tied into the retailer's marketing message, regardless of where they are in the buying cycle."
Some of the benefits technology partners can provide is the ability to develop new applications in-house, test them with larger merchants and roll out a finely tuned product to its entire client base. Yahoo Small Business builds many of its applications using the programming code that powers its core web portal business.
"Our cross-sell engine was based on an application developed in-house for our portal business to suggest different articles on the same topic or to address topics similar to those in the article the consumer is reading," says Yahoo's Boisvert. "To cross-sell we match items likely to be of interest to consumers or that complement an item already in their shopping cart instead of matching articles."
Yahoo's cross-sell engine will automatically show consumers that buy a mountain bike, for example, items other buyers of mountain bikes purchased as well. "One client using this application has seen a 10% overall lift in revenue," adds Boisvert.
Yahoo Small Business provides merchants with the same scalable, hosted platform used to power Yahoo.com, which receives 189 million monthly visitors. Key features include real-time web analytics, social networking integration, mobile commerce web sites and customer registration.
Yahoo recently enhanced its customer registration application to make it easier for consumers to sign on to the site of a client retailer. Consumers registering on a retailer's site powered by Yahoo Small Business can use their Yahoo, Google or AOL IDs. As part of the registration process consumers are asked if they want to use any one of those IDs or create a new one.
"Allowing the use of existing IDs for registration means consumers don't have to create a new one they may have trouble remembering," says Boisvert. "One client that has adopted open ID has seen their average order size rise 72% among registered customers vs. non-registered customers."
A cost-effective model
Besides shouldering the cost of developing new applications, technology partners can help retailers lower their operating costs by offering technology through the software-as-a-service model, or SaaS, in which the vendor hosts the software and the retailer accesses it for a monthly subscription fee via an Internet connection. The cost benefit of SaaS is that it spares a retailer from maintaining a data center, hiring more I.T. staff and paying a pricey up-front licensing fee for software that the retailer must host and maintain.