The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
With a bolt-on here and a plug-in there, shopping carts pump up their selling power.
Three years ago, veteran candy marketer Greg Balestrieri searched for and found what he figured would be a key component to growing an e-commerce business: the URL Candy.com. He and a partner plunked down $3 million for the domain, and it was off to the online candy store.
"We want to be the go-to destination for everything candy, in every candy category," says Balestrieri, Candy.com's president.
Before he could pursue that goal, however, the company had to assemble the right e-commerce technology, in particular the shopping cart that would serve as the core of the new site, calculating the value of a shopper's selections and enabling her to complete her purchase. Having worked previously with several types of shopping carts—including open-source and carts that come as part of comprehensive e-commerce software suites—Balestrieri chose shopping cart software that he figured offered the best mix of built-in functionality, available plug-ins of outside technology, cost and the ability to scale up to handle large volumes of orders from candy lovers.
Beyond primitive carts
As Balestrieri and other small but growing retailers know, online merchants cannot expect to thrive with the relatively primitive shopping carts of years ago, when a start-up retailer could expect to grow with a site that did little more than take orders. But most shopping cart software has evolved to support both a user-friendly checkout process and cart features—like cross-selling, consumer reviews and updates of back-end accounting and inventory records—that can help drive up sales and manage the business of online retailing.
"Where we started out and where we are today is like the other side of the moon," says Joe McGarry, president and founder of retailer Gloves Online Inc. "It's really different."
And that's a good thing, he and others say, because the top e-commerce sites have set the bar high, raising consumers' expectations that all e-retail sites will make online shopping easy and offer helpful information for making purchasing decisions. "We have to look at what Amazon.com and other online retailers are doing, how they're pushing e-commerce to new levels, and keep up with the perceptions they're creating among consumers," Balestrieri says.
For Candy.com, that means working with a shopping cart that has built-in features like product reviews, a gift registry and wish list, plus features plugged in from several outside vendors that provide more advanced site search, shipping services and data feeds to comparison shopping engines.
If at first ...
But it took two tries to get to the right shopping cart that offered the full range of features that Candy.com wanted to support its expected growth in sales, Balestrieri says.
The retailer launched online in 2010 on Qualiteam's X-Cart open source technology, which Candy.com's founders had deployed on an earlier site. But they soon decided they wanted cart technology with more features and that they wanted the technology provider to host the software, rather than handling that chore themselves. Candy.com's original shopping cart provided good technology with basic features for processing orders, "but it wasn't feature-rich, we had to manage it ourselves, make sure it was up and running, and be responsible for any upgrades," Balestrieri says.
Candy.com switched within its first year to a shopping cart platform from 3dcart Shopping Carts, an on-demand technology that it pays for with a monthly subscription. The retailer's second choice of shopping cart technology offers a strong selection of built-in features, and the retailer can easily plug in external applications that serve particular needs, Balestrieri says. In effect, he adds, 3dcart represents a new breed: a basic shopping cart technology platform that has evolved to offer many of the features and the flexibility of more expensive software.
The payoff, Balestrieri says, shows up in sales on Candy.com that have grown quickly, reaching $1.8 million in 2010 and on pace to surpass $5 million this year.
Helping to drive those sales, he says, have been built-in features like customer reviews, a gift registry, a wish list, and a customer relationship management application that enables customer service reps to assist customers while accessing records of their previous purchase transactions.
Candy.com also uses several plug-ins of external applications for which 3dcart provides connections through means such as application programming interfaces, or APIs. These external applications include shipping software from TrueShip, which provides packing slips and shipping labels for handing off shipments to carriers UPS and FedEx Corp.; integration with ShopRunner's expedited shipping program, which provides customers two-day shipping for no cost beyond an annual $79 fee; GoDataFeed, which forwards product images and details to manage product listings on web marketplaces and comparison shopping engines; and an advanced site search application from FusionBot.com, which enables shoppers on Candy.com to narrow search results by such parameters as price, brand and eligibility for expedited shipping deals through ShopRunner.
3dcart also provides integration with popular applications like customer reviews from Bazaarvoice and PowerReviews Inc. For now, though, Candy.com has decided to stick with 3dcart's built-in customer reviews application, which offers such basic features of a ratings and reviews application as ratings of up to five stars, the date recorded for each review and a record of each reviewer's e-mail address, Balestrieri says.
Managing the back end
What 3dcart doesn't offer—the back-end applications for managing inventory records and finances, for example—Candy.com gets from NetSuite Inc., a provider of a full suite of business management software with an available e-commerce module. Candy.com had considered using NetSuite for its e-commerce site and for the back-end business software, but felt the 3dcart platform offered stronger pre-built merchandising tools, such as for presenting large product images and features like a gift registry and wish list, Balestrieri says.
Subscriptions to 3dcart's software are based on the number of products a retailer sells and monthly traffic volume. Prices range from $19.99 per month for up to 100 products and about 4,000 monthly visitors, to $129.99 per month for an unlimited number of products and about 90,000 monthly visitors. Discounts apply if retailers pay for a full year at once.