PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
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The problem was that Blue Bottle still needed to build custom features, such as the subscription option, but lacked the expertise to do so on its own. The retailer outsourced the work to Dynamo, a Montreal-based digital design firm that is one of 14 vendors Spree Commerce lists as "premier partners." Those are vendors Spree Commerce has vetted to ensure their competence with its software.
Working with an outside firm was "significantly" less expensive than hiring an engineering team, Bowman says. That's particularly true since many open-source developers often command a higher price than other software specialists, says Jeffrey Hammond, a vice president and principal analyst at Forrester Research.
Outsourcing also helped Blue Bottle get started on the build quicker, since it didn't have to devote time to interviewing applicants.
After Blue Bottle hired Dynamo, it began using collaboration software to keep everyone abreast of progress and problems. It shares visual content using Basecamp, a project management tool that costs anywhere between $20 and $150 a month, based on a merchant's project and storage needs. And it logs issues using GitHub, which lets multiple users review changes, comment on lines of code, report issues and plan projects. It also holds a weekly call with Dynamo to discuss any problems that arise.
The system has worked. Between the collaboration software and weekly call, the retailer has been able to address any pressing needs—and avoid any unwelcome surprises, Bowman says.
As a result, the site, which launched on time in June, is far more engaging than the previous site, he says. And that's helped sales triple year over year. The retailer has reduced its bounce rate and nearly doubled the average time on the site.
Blue Bottle's online product mix is relatively simple—it sells coffee and related accessories directly to consumers.
That's very different from Terry Bicycles, which maintains separate business-to-consumer and B2B sites. Maintaining two sites that share inventory is complicated, particularly for a retailer with only about 20 employees, says CEO Elisabeth Robert.
That complexity is one of the main reasons it moved from open-source technology to packaged software from NetSuite Inc. a few years ago.
"An open-source platform required a lot of management of inventory to support both channels and transaction processing," she says. "It required a lot of updating of the web sites."
The retailer only had one programmer capable of making those updates. When he left for another job, Robert was stuck with a patchwork site—the result of numerous fixes that weren't in line with standard best practices—that she couldn't easily change.
"It was difficult to find someone with this programmer's specific skill set," she says. "I didn't like being so dependent on one programmer. It became clear to me that we needed to have a clear end-to-end solution."
She settled on NetSuite largely because the system could handle the retailer's complexities—at an annual cost about half the $70,000 or so she would have paid a replacement for the programmer.
Giving up the flexibility of an open-source system did have its downsides. At first, Robert says, the retailer couldn't run certain types of promotional campaigns—such as buy one, get one free promotions—but NetSuite quickly worked with the merchant to develop those features. And it did so quicker than the retailer's single programmer could have, she says. "With just one kid using open-source technology to build those tools, it would have taken months," Robert says.
Not everything is perfect—the checkout flow is still too clunky, she says—but she says there's a comfort in working with an established company that provides comprehensive business software to more than 20,000 clients. "Being small, with limited resources, it is much easier to put everything in one bucket and not have to worry about it," she says.
That includes ensuring the site is compliant with the Payment Card Industry Data Security Standards. "That offers peace of mind and the knowledge that we're abiding by best practices," Robert says. "Before we switched systems we were never comfortable that we had everything right."
But working with a trusted third-party vendor, as Blue Bottle works with Dynamo, can eliminate those concerns, says Forrester's Hammond. "Open-source technology isn't just flexible in how you can build, its support system is also flexible," he says. "You pay for the support you need." And because it is open source, if one vendor doesn't work out, a retailer may well be able to find others familiar with that technology. With conventional software, a retailer may find that only the vendor can modify the software or build a new feature.
Advocates of open source cite the community aspect as a big plus. As users improve the software and share it with others, the software attracts more users, who further improve it. Blue Bottle, for example, made available for free the subscription tool it built. Sharing a new feature tool with the community makes a platform stronger, Bowman says.
"You don't want your community to dry up," Hammond says. "You have to keep people interested." Sharing also spurs others to share, and more retailers sharing means merchants have more tools to weave into their sites.
More options means retailers have more ways to tailor their sites to their specific needs. Just don't expect it to be easy to fit those pieces together.
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