June 7, 2013, 2:10 PM

E-retail technology can resemble an aspirin or a vitamin

An IRCE speaker explains how to get the most from e-commerce vendors.

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E-retailers shopping for e-commerce technology fall into one of two categories: they need an aspirin or a vitamin, says Pinny Gniwisch, an adjunct professor of e-commerce at McGill University in Montreal and founder and former executive vice president of business development at jewelry e-retailer Ice.com. He spoke this week at the Internet Retailer Conference & Exhibition 2013in a session entitled "How to make vendors work harder for your business."

As the names imply, an aspirin technology will ease an urgent pain—perhaps the web site keeps crashing.  A vitamin brings incremental value to the business over time, such as by reducing cart abandonment rates, he says.

The distinction matters, he says, because retailers looking for aspirin are typically at a point of desperation, and that does not lead to good decision-making. “When we shop desperate we make mistakes,” he says, so, “when we shop for an aspirin, make sure we don't act like we need the aspirin.”

Rather than focusing on how quickly a vendor can plug a hole or fix an urgent problem, retailers should ask how entering a contract with a vendor will benefit the business in the long term, Gniwisch says. The questions he says they must answer are:

• How old is the vendor? “New companies need you at their beginning stage more than you need them,” he  says. Talking to the vendor’s staff can give retailers a sense of how long the support and services the company is offering will persist, as oftentimes startup vendors may change their terms, pricing or level of customer service as they grow, he says.

• What are other retailers saying about the company online and in person? And ask specifics: Can other retailers confirm whether the time the vendor says it will take to get the software live is how long the process really takes?

• How is the service? Gniwisch says to try calling for support or sending a few e-mails to test how long it takes to get a response and how helpful it is. Also, find out whether the vendor assigns individual account managers to clients, and how many clients each manager takes care of—if a retailer is one of 10 that a single staffer is managing, service is not likely to be optimal, he says.

• What does free really cost? While many vendors offer free services, a retailer may not know how the vendor is using its customer data, for example, or for how long the “free” price will last, he says. Vendors offering free technology sometimes wait until a retailer has become dependent on the service to start charging, he says. For example, at Ice.com, Gniwisch says he signed up for a free seller ratings program and built up a number of customer ratings in about a year. Then Google Inc. added seller ratings into its search engine algorithm and suddenly having seller ratings became an imperative for retailers, he says—and then the vendor collecting the ratings on Ice.com’s behalf began to charge for them.

Once all those questions are answered and a retailer is still interested in a vendor,  if possible, Gniwisch says to start with a 30-day trial of the software or service. Additionally, he says retailers can consider testing some vendors side by side in the same period, like an A/B test, before signing a long-term contract. For instance, retailers can easily test side-by-side more than one vendor that provides “trust badges,” or images on web sites meant to reassure customers of the site’s security and authenticity, he says.

Finally, retailers that have selected a new e-commerce vendor still need to read the fine print, then negotiate to clear up surprises, which arise without fail every time, Gniwisch says.

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