May 10, 2013, 10:23 AM

To hire or not to hire a mobile platform provider

Vendors abound, but many Top 500 retailers take mobile development in-house.

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One year ago, 19 vendors provided mobile platforms to 78 Top 500 retailers, and 54 other Top 500 retailers said they built their own mobile technologies.

Today, 35 vendors provide mobile platforms to 140 of the retailers in the 2013 edition of the Top 500 Guide, and 76 Top 500 e-retailers say they have built their own mobile sites or apps.

While mobile commerce has boomed in recent years—322 of the merchants listed in the new version of the Top 500 operated a mobile commerce site or app compared with 135 in 2011 and 76 in 2010—most of the 35 mobile commerce vendors can claim only one or two Top 500 retailers as clients. Only three vendors have at least 10 Top 500 clients: Branding Brand, which has 38 Top 500 retailers; Usablenet, with 12; and Unbound Commerce, with 11.

Branding Brand had just one e-retailer client in 2010 based on the initial edition of Internet Retailer’s Mobile Commerce Data Book, published in 2011. But by 2012 it had 30, according to the 2013 edition of Internet Retailer’s Mobile 400. In the latest edition of the Top 500 Guide, whose roster differs from the companies in the Mobile 400, Branding Brand has 38 clients. Branding Brand ranks first among mobile commerce vendors in Internet Retailer’s Leading Vendors to the Top 1,000 E-Retailers. Usablenet ranks No. 3 and Unbound Commerce ranks No.7.

Those mobile technology vendors are growing as retailers and companies of all types seek mobile expertise. However, mobile commerce has become important enough that a growing number of retailers want to have at least some mobile smarts within their own organizations, says Peter Sheldon, principal analyst at Forrester Research Inc. “Increasingly, the retailers are taking responsibility for the development work and some of the day-to-day merchandising activity using tools and dashboards provided by the vendors,” he says.

That trend benefits from a new approach to web site design called responsive web design. Sites built using responsive techniques adapt to the size of the visitor’s screen, and let retailers change the elements a consumer would see, depending on the device they’re using. A retail chain might want the web site that computer users see to feature beautiful product shots on the home page. On the smartphone home page, however, the store locator might stand as the central element. Responsive design provides that kind of flexibility.

Responsive design also has another important advantage, Sheldon says: a retailer needs to create only a single site, with one set of images, product descriptions, prices and all the other content that goes onto a site. With software, the retailer can decide which elements appear on a smartphone versus a tablet or desktop, how big they are and where they appear on the screen.  That approach eliminates the need to design separate sites for mobile devices, Sheldon says, and it’s gaining traction among retailers. “Today, only about 20 of the Internet Retailer Top 500 have live responsive sites, but I know that many retailers are either developing them for launch later this year or considering them for 2014,” he says. “The more retailers that re-build their web front-end using responsive design, the less demand there will be in the market for these vendor solutions.”

Still, not all retailers have the internal resources to develop for mobile today, Sheldon says. Vendors with responsive offerings like Branding Brand or Skava, No. 2 among mobile commerce platform providers in the Leading Vendors guide, will continue to cater to them in the future, he says.

For retailers that do have internal teams but are looking for a technology to buy and customize in-house, vendors that provide responsive web design platforms will similarly prove most popular, he says. Those vendors include Mobify, No. 9 among mobile commerce vendors in the Leading Vendors guide; Moovweb, No. 6; and Netbiscuits, No. 5. “These frameworks are great for retailers that want in-house control but don't want to reinvent the wheel,” he says.

As Sheldon describes it, Top 500 retailers have taken varying approaches to cater to consumers shopping with mobile devices. Wine.com Inc., for example, finds a mix of outsourcing and in-house mobile development fits its needs—at least for now, says chief technology officer Geoff Smalling.  When the iPad debuted in 2010, Wine.com didn’t have any seasoned Apple Inc. developers on staff, he says, so it paid a vendor to build its iPad app. But regularly updating that app, along with the mobile web site, in coordination with a vendor takes a lot of time and costs more than hiring in-house developers, he says.

“Many of the vendors have pretty big initiation and monthly maintenance fees,” Smalling says. “And mobile isn’t generating enough of the revenue to cover it yet.” So, Wine.com is adding staff to its mobile development team to cover those needs internally, he says.

Mobile apps can run from $25,000 to $500,000, depending on functionality, m-commerce sites can cost from a few hundred dollars a month for highly pre-designed vendor offerings to $100,000 for robust, feature-packed destinations, mobile experts say.

Developing the mobile app and site in-house also helps Wine.com to maintain a cohesive look and feel across all devices, Smalling says. That’s important so that a customer who puts wine into her shopping cart from her smartphone while she’s out to dinner will later find it in her cart when she returns home to buy from the PC.

Another web-only retailer, Art.com Inc., chooses to build everything mobile in-house except the mobile web site for devices that are either less popular or still emerging, such as Google Inc’s Nexus One phone, which it outsources, according to chief technology officer Nasos Topakas. That proves to be the best method for ensuring the highest quality, speed of delivery and continuous innovations for the retailer, he says.

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