Despite the economic downturn, providers of on-demand e-commerce technology platforms say they’re experiencing strong demand from retailers looking for a relatively quick and economical way to launch web sites compared to installing licensed technology.
Executives at Truition Inc., Demandware Inc. and Venda Inc. say their companies are each riding a wave of renewed interest in their software-as-a-service or on-demand offerings, which enable retailers to launch new web sites by subscribing to an Internet-based platform without having to install technology on their own web infrastructure.
“Given all the market uncertainty over the past several months, we’ve nonetheless had some of our best sales quarters,” says Gary Black, vice president of product development and operations at Toronto-based Truition.
Though privately held Truition does not report its revenue, the company became profitable for the third and fourth quarters of last year and is on course to turn a profit this year, Black says. “Last year we did about 14 deals with retailers, covering about 22 e-commerce sites,” he says.
Venda acquired 12 new retailer clients during the recent three-month period from November through January, covering a total of 25 e-commerce sites, including 20 in the U.S., says CEO Jeff Max. “We’re on track to do about 60 e-commerce sites this year, after delivering 48 sites in 2008.” Although he wasn’t free to name the new clients, they include two global apparel brands, Max says. Clients engaged last year include Encyclopedia Britannica, New York’s Metropolitan Museum of Art, and women’s footwear fashions retailer Jimmy Choo.
Max adds that he continues to see strong demand for Venda’s flat-fee pricing model, which charges clients $12,000 per month per e-commerce site.
Demandware has booked about six clients with multiple web sites so far this year, following 35 new customers last year, says CEO Stephan Schambach.
He expects to continue steady growth by offering retailers a lot of flexibility in how they can deploy the Demandware on-demand e-commerce platform. New client Jones Apparel Group, for example, has worked with Demandware’s professional services group to develop the first few of its new branded e-commerce sites, but ultimately will be able to develop additional sites on the Demandware platform with in-house staff, he adds. Retailers also have the option to bring in third-party developers such as PFSWeb, which works with Demandware clients to integrate the e-commerce platform with PFSWeb’s back-end fulfillment systems. “That flexibility is helping us to grow,” Schambach says.
He adds that Demandware has developed 58 promotional templates that retailers can customize to support marketing and merchandising campaigns--a development that helped clients post strong sales gains in the 2008 holiday shopping season.
Although Black didn’t estimate a number of projects for this year at Truition, he says the company is building on a rising interest in on-demand technology by establishing its expertise in areas where it sees strong growth opportunity. For example, it expects to develop a niche in providing on-demand e-commerce technology to retailers in the relatively new online retailing model of selling products only through timed events on members-only sites. Truition provided the e-commerce technology to launch Brands4Friends, a Germany-based site that operates under this model, which relies on a loyal customer base to sell through limited stocks of popular items like high-fashion apparel at special prices. Although Brands4Friends has since taken its e-commerce technology in-house, Truition is already working with other retail companies on similar projects, Black says.
In addition, Truition is reaching back to its roots in the online auctions business and planning to offer an on-demand platform that will support both auction and fixed-price sales, Black says. “We’re in the process of merging these technologies and this summer will have the first of our customers with a single e-commerce site offering both fixed-price and auction sales.”
Truition started in the 1990s as retail auction site edeal.com, then offered to host its auction platform for other retailers before changing its name to Truition and changing its business to provide non-auction e-commerce platforms. It still owns the rights to edeal.com, which now only directs traffic to Truition.com.
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