SPONSORED SUPPLEMENT: Creating the e-commerce platform of the future

Internet Retailer Web Design Conference 2009

Guide to E-Commerce Technology

In the rapidly changing world of Internet retailing, e-commerce platforms become outdated within a few years. As e-retailers look to enhance the customer shopping experience and deepen customer relationships, many are realizing that simply modifying their existing e-commerce platforms will not be enough as any such fixes are apt to be short-term.

Besides, e-commerce platforms that are cobbled together tend to be built on closed architecture, which creates the risk for increased incompatibility with new applications as the platform ages. Hence, retailers opting to maintain an outdated platform end up shoehorning in applications that are not necessarily compatible by rewriting some of the code in the application. The result is often a decrease in overall performance of the platform, costly maintenance schedules, and in the worst case, lots of downtime. Plus, aging components of an e-commerce platform can leave holes that expose the retailer`s database to intrusions from hackers.

For many retailers, the solution is to install a new open architecture e-commerce platform that can provide the flexibility and scalability needed to stay current with changing e-commerce technology, without limiting performance during the upgrade period.

Keep the vision

"E-commerce platforms are complex and there is no way to anticipate future needs so choosing a flexible, extensible, open platform allows for growth without sacrificing performance and stability," says Cliff Conneighton, senior vice president of marketing for e-commerce platform provider Art Technology Group Inc. "Upgrades are inevitable, so retailers need to keep the vision of their business in mind when selecting an e-commerce platform."

In addition to allowing for easy growth, some retailers stress the ease with which open-architecture platforms can be modified. For instance, Junction Solutions builds its e-commerce platform around Microsoft Corp.`s Dynamics AX (formerly Axapta). In building off the open architecture in Dynamics AX, Junction Solutions provides retailers with advanced decision support tools, allowing them to leverage operational research techniques such as linear programming, integer programming, and constraint propagation.

Microsoft Dynamics AX is designed to scale real-time connectivity across different locations using a common database. Language and currency capabilities for over 30 countries are also included, opening the door for retailers to expand internationally. "We provide retailers with the ability to be in control of their platform, not the IT department or the solutions vendor," says Holly Haines, product manager, multi-channel retail for Junction Solutions. "This allows retailers to make quick changes in real-time without having to reinvent the wheel every time."

In other words, e-retailers need to select a platform that not only is built to enhance the strengths of their business, but also that can grow along with their business instead of having to be replaced every three to four years.

Another way that retailers can address that problem is by choosing a vendor that offers software as a service. "One of the benefits of software as a service is that upgrades are made at no incremental costs," says Stephan Schambach, CEO of e-commerce platform provider Demandware Inc. "Manual upgrades can slow the process of adjusting to meet changes in the market and even prevent retailers from implementing the next change because of extended technical difficulties due to the prior upgrade."

No waiting

Because providers of hosted solutions and software as a service upgrade their e-commerce platforms constantly, retailers are able to use their e-commerce platform proactively. That can make the difference between attracting and keeping new customers and losing existing customers to retailers that offer more advanced functionality.

"Retail is a fast moving environment and retailers can`t wait for a vendor to schedule a change to their platform that may cost them a market opportunity in the meantime," says Haines of Junction Solutions. "Retailers want to be able to run their business using their e-commerce platform, they don`t want their e-commerce platform running their business."

Choosing the right platform is difficult and the path can be strewn with unexpected obstacles. Retailers, therefore, need to look very closely at what they`re trying to achieve, then find a platform that can help meet those goals.

"An e-commerce platform is part of the puzzle that is the retailer`s business, so a retailer does not want to just put one in place and feel they`re done," says Scot Wingo, CEO of ChannelAdvisor Corp., which provides technology and expertise to retailers seeking to grow.

In addition, they must focus on the basics that will help them get the job done. "Retailers need to avoid going for the glitz in their e-commerce platform and focusing on making the most of features that can help them meet the demands of the marketplace," says Ken Burke, president of e-commerce platform provider MarketLive Inc.

Furthermore, retailers need to think about how the web channel fits other channels. "Retailers need to look at how they can take their online strategy and turn it into a business that maximizes return on investment across all channels," explains Robert Wight, CEO of Channel Intelligence Inc. (see accompanying story, p. S4).

To help retailers think differently about how their business is structured, Channel Intelligence recently added several client service representatives who work with retailers more along the lines of a consultant than a service representative. Among the topics the client service representative discusses with customers is adding new products in data feeds and how to more effectively monitor changes in the performance of the e-commerce platform. Providing such information allows retailers to analyze profit on a per item basis inclusive of all touch points on the front-end and back-end.

"It is important to get retailers to ask themselves `What is the focus of my business and how can we allow customers to move through the site in a way that reflects that focus?`" says Wight. "Retailers need to look at taking their online strategy and turning it into a profitable business that delivers the greatest return for the marketing and advertising dollars."

Adaptations

On top of it all, retailers need to find flexibility in an e-commerce system. "The business applications that are the mainstays of any industry are the ones that can adapt to changing market conditions," says Bob LaGarde, CEO of LaGarde Inc. "E-commerce platforms need to be able to support the retailer`s current unique selling processes and the evolution of those processes in order to reach new market segments, interact more effectively with the customer and sell more efficiently."

Furthermore, retailers should ask their vendors about the frequency with which the vendors add features to their systems and the length of time it takes to make those features available. For instance, Truition Inc., which offers a hosted e-commerce solution, provides upgrades across its platform, such as language conversion, every 30 days. The aim is to deliver features and functionality as they become relevant and as customers expect to see them.

"Retailers have overarching needs, so it is important to have an e-commerce provider that can elevate their platform quickly and keep retailers ahead of the competitive curve," says Butch Langlois, president and CEO, Truition.

An area that Truition encourages retailers to pay attention to--and where it keeps its offerings up to date--is international markets, allowing retailers to expand across borders into Canada, Europe and Asia, markets where growth opportunities are abundant.

Logistically, retailers need to manage a variety of issues when establishing a footprint in a foreign market, ranging from daily fluctuations in currency conversion when billing a customer, to duty fees levied by each country to which they ship and including the ability to verify whether the international courier used to ship the package actually delivered it.

"With sales in Europe growing about four times faster than in the United States, retailers need a platform that allows for viable, economical access to European markets," Langlois says. "Competition is only going to get stiffer in the U.S."

Keeping up

Often keeping retailers ahead of the competitive curve is a job that falls to the vendor, as many retailers don`t know all that their e-commerce platforms can do for them. "We focus on helping customers understand the benefits and usability of their e-commerce platform so they can grow as fast as they want without the technology usurping their business," says Stephanie Leffler, president and general manger, Monster Commerce. "There is a very small percentage of retailers that actually utilize the full capability of their e-commerce platform."

Even many of the basic features on e-commerce platforms are under utilized. "Certain features, such as the shopping cart and checkout, have a big impact on abandonment rates, so it is essential that retailers understand how to make full use of them," says Burke of MarketLive. "It comes down to execution. If a retailer doesn`t understand how to use the tool sets within their platform, they won`t execute."

That is especially true in the case of the shopping cart, where abandonment rates can range from more than 30% for catalogers to 50% for multi-channel-retailers, according to industry experts.

MarketLive recently upgraded its shopping cart application to keep shoppers apprised of the total cost of the items in their cart at all times, including tax, shipping and any other costs. Research shows that 57% of shoppers abandon carts because of what they perceive to be high shipping costs, according to Burke.

"The shopping cart and checkout need to be feature rich because they have a direct impact on abandonment," he says. "Any feature within an e-commerce platform that can create a good customer relationship is highly relevant to the retailer`s merchandising and marketing strategy."

In addition to the broad features of e-commerce platforms, retailers must consider specific features, such as payment options. Not only do consumers prefer more ways to pay other than credit cards, but they also want to know they are conducting a transaction in a secure environment.

Staying relevant

Retailers that expand their payment options can increase sales as much as 20%, according to industry experts. With payment options such as PayPal and Bill Me Later, a consumer credit line, quickly gaining popularity with consumers, retailers that must wait for an e-commerce platform provider to add these features can lose sales, according to Truition`s Langlois.

"It is unacceptable to release new upgrades every 12 months," he says. "New elements need to be made available on a regular basis so the platform can morph to consumers` needs as they use the retailer`s site."

Truition, which recently added Bill Me Later to its platform, upgrades its platform every 30 days. "Wait too long to introduce a new feature and it loses relevancy," Langlois adds.

In selecting a vendor, retailers need to keep in mind not to lock themselves into a price point, as doing so can result in shortcomings within the platform selected. "Cheaper isn`t always better, because you do get what you pay for," says Justin Rattigan, vice president of Solid Cactus Inc., which offers tools to build and improve storefronts using the Yahoo Stores platform.

One of the advantages Solid Cactus touts by building around the Yahoo Stores platform is a proven platform that is constantly evolving. "Retailers need vendors that are moving forward with the market and are focused on e-commerce, not just selling add-ons to a basic package," Rattigan says. "If the platform does not accommodate a retailer`s business needs, it is unlikely to offer the scalability and flexibility to support it five years out."

There are several pricing options for e-commerce platforms. Hosted solutions for which retailers pay a monthly fee are among the most popular. Managed solutions in which retailers purchase a license for the software but offload IT support onto the vendor is another option gaining in popularity. Lastly, retailers can purchase a software license and manage the application themselves.

Budget considerations

Determining which solution is best comes down to the retailer`s IT budget and accounting procedures according to ATG`s Conneighton. "If the retailer is looking to make a capital expenditure, owning the license or a managed solution may make more sense," he says. "If the budget is not there for a capital expenditure, then a hosted solution may be best."

The cutoff point for going with a licensed or managed solution is about $200 million in annual sales, according to industry experts. "Below that level, it is too costly to go with an in-house solution," says Truition`s Langlois. "With a hosted solution, upgrades are scaled across the provider`s client base, which reduces the user`s cost and allows them to ramp up faster."

Even if retailers have to spend a little more per month than anticipated for a hosted e-commerce solution to get the scalability and flexibility that meet their business needs, the added expense can be justified through the time savings gained by not having to manage the system.

"The money saved on maintenance can be applied straight to marketing and customer service, areas that directly impact sales and customer satisfaction," says MonsterCommerce`s Leffler. "Budgets are a consideration, but retailers serious about implementing an e-commerce platform that can grow with them and that caters to the strengths of their business can`t afford to overemphasize cost."

More direct control over their e-commerce platform also provides retailers with greater flexibility as they can stretch their resources further. However since most have finite IT budgets, this causes retailers to become more involved in managing technology.

"Retailers` e-commerce strategies should allow them to focus on marketing and merchandising, not IT," says Hank Reeves, CEO of NewRoads Inc., which provides a hosted, on-demand e-commerce solution. "The more time they spend managing operational elements, the less they have to drive real differentiation and value creation." (See accompanying story, p. S18)

Moving in-house

Besides, it is too easy for retailers to fall behind on the latest innovations in e-commerce technology. "Retailers can leverage third-party investments and avoid playing catch-up with technology," adds Reeves. "They should have the best functionality available to drive personalization and convenience--and be able to manage it without constantly engaging their IT staff."

Still, many retailers want the flexibility to start with a hosted solution and later pull it in-house as they grow. NewRoads, which provides retailers with a fully integrated range of outsourced e-commerce, customer care, fulfillment, logistics, and IT services, offers such flexibility. "Our front-end offering has the benefits of personalization and control, in addition to being portable as we use market-leading application providers so retailers can move that in-house if they desire," Reeves says. "We`re a value added integrator of these applications and our strategy is to match the right platform based upon the merchant`s needs."

Selecting a solution based on budget is not to be confused with selecting a solution that best fits the retailer`s needs. "The value proposition of the technology is more important than the financing option," says LaGarde Inc.`s LaGarde.

Choosing a platform based on price can lock a retailer into a solution that is not necessarily flexible enough to meet a retailer`s needs, experts say. "A retailer`s biggest need is for an e-commerce platform that allows them to sell product the way they ought to in order to satisfy customer expectations," continues LaGarde. "Look for a system that is flexible and scalable enough to be molded and shaped to meet future unknown business requirements."

Experts also recommend talking to current clients and attending online user forums or reading user blogs before choosing an e-commerce vendor. Such information can aid retailers in determining where a certain vendor`s expertise lies, especially if they are considering a single vendor to provide front-end and back-end solutions.

"Retailers need to consider the experience of the vendor, because it`s tough for any vendor to have the expertise in every aspect of an end-to-end e-commerce solution," says ATG`s Conneighton, who stresses that many e-commerce vendors do not have expertise in providing back-end accounting solutions.

"Retailers that want to have a single vendor need to pick a dividing line for what that vendor will provide," he adds. "It is feasible to chose a front-end supplier and a back-end supplier, just make certain their platforms can be integrated."

Scalability from the start

Considering integration between the front-end retailing solutions and back-end accounting, fulfillment and call center applications, and the scalability of those solutions, is often overlooked by retailers in the start-up phase when they are selecting an e-commerce vendor.

"Front-end and back-end solutions have to complement each other and scale accordingly as the business grows," stresses LaGarde. "Efficiencies gained at one end of the business can`t be lost at the other end, because losing those efficiencies affects operating costs, business processes and customer satisfaction."

While LaGarde includes some back-end functionality in its e-commerce platform, it draws the line at offering call center and logistics applications. In these instances, the company partners with best-of-breed application providers to ensure compatibility and scalability. "There is no one-size-fits-all menu," LaGarde adds. "Filling in holes with partners allows for a compatible, scalable solution. That point can`t be oversold."

Still, scalability and flexibility in an e-commerce platform mean more than just the ability to integrate third-party applications. Retailers must also consider the vendor`s ability to serve up pages to different form factors. Internet-enabled handheld devices, such as Blackberry, Treo, and cell-phones are steadily finding their way into consumer`s hands.

As manufacturers of these devices emphasize their Internet capabilities, a point that plays well with consumers under 35, the devices are being used more frequently for shopping, or at the very least, research prior to making a purchase, according to industry experts.

"With more emphasis on the use of handheld devices for online shopping, retailers are going to need to be able to simplify the pages fed to these devices to fit the constraints of the screen," explains Junction Solutions` Haines. "We are already seeing tests between large retailers and Microsoft using handheld devices to display special promotions to a consumer while they are in the store and feeding them a map to find the product from their in-store location."

Multi-channel integration

Multi-channel integration capabilities are another consideration to keep in mind when evaluating an e-commerce vendor. With retailers looking to integrate their e-commerce platform into multiple channels it is essential to provide a 360-degree view of their business.

"The e-commerce engine is now central to creating a satisfying brand for the customer," says NewRoads` Reeves. "Integration across all dimensions of order management and fulfillment can be a big deal, and this cost is often missed in the buying process."

Indeed, it can easily cost at least six figures for the IT work alone to achieve such a high level of integration. "Going with a fully integrated hosted platform reduces that cost and gives the added benefit of not having to manage the platform," Reeves says.

Finally, retailers ought to check out the e-commerce platforms used by their direct competitors before selecting a platform vendor. This exercise not only gets them up to speed on the quality of the competitor`s platform, but provides ideas for what works and what doesn`t.

Supporting growth

"A lot of large retailers use custom applications so it`s a good idea to demo a couple of vendor platforms and see how their solutions stack up against those of competing retailers before making a selection," says Solid Cactus`s Rattigan. "Once an investment is made in an e-commerce platform it is tough to move off it."

With that in mind, retailers are best served when they give extensive thought to how their e-commerce platform will support growth, as well as help them optimize basic functions such as search and shopping cart.

"Retailers need to pick a platform that is flexible and channel friendly because these will become the main pieces of e-commerce platforms in the future," Wingo says.

If they don`t choose a scalable platform that provides the flexibility for growth, not only is their return on investment apt to be poor, but retailers also will find themselves at a competitive disadvantage.

Making the connection between platform integration and personalization

As competition among retailers to attract new customers and deepen relationships with existing customers intensifies, many retailers are seeking to differentiate their online stores by creating a more personalized shopping experience. Doing so requires extensive integration between their storefront, which is centered around merchandising and marketing, and the back office, which houses such critical functions as fulfillment and customer service. Further complicating matters is that the storefront and back office must also be integrated with other sales channels, such as eBay and comparison shopping engines.

To achieve this goal, retailers are installing e-commerce platforms that provide end-to-end connectivity to allow data to flow freely among sales channels and departments within their business so they can gain a clearer picture not only of the customer, but also of how efficiently they serve shoppers.

Major upgrades

These enterprisewide solutions are major upgrades from early e-commerce platforms, which were considered hodgepodge systems that siloed information within departments. Consequently, retailers ended up having a limited view of their customers as they moved through their web site and adjoining sales channels.

"End-to-end integration is key because it provides retailers with real-time visibility into their data base, into what the shopper is doing, and how they are being serviced," says Holly Haines, product manager, multi-channel retail, for Junction Solutions. "A lot of retailers have disjointed platforms that dump data once a day. Integration allows real-time access to data across sales and business channels so retailers can be nimbler in how they operate."

Achieving such nimbleness requires retailers to change the way they look at their online business. With retailers branching out beyond their storefronts to sell on eBay and comparison shopping sites, in addition to marketing through affiliate sites, it no longer makes sense for retailers to view these sales and marketing channels as separate entities that do not interact with each other or the back office.

"E-commerce is just one piece of the puzzle," says Scot Wingo, CEO of ChannelAdvisor Corp. "Retailers need to think how their platform interacts with paid search, natural search, alternative shopping channels like e-Bay, fulfillment, etc., and how to keep the data in those channels from being locked in place."

The ability to leverage customer data across all sales channels enables retailers to create a more personalized shopping experience. Nieman Marcus, for instance, sends five e-mails a week to its online customers and seven times a week during the Christmas selling season, according to Art Technology Group Inc. The e-mails deliver highly targeted offers based on what the retailer knows about the customer, such as an offer for an accessory to complement a recent purchase.

A navigation plan

What differentiates the e-mails are links embedded in the message that take recipients to a customized landing page built around the content in the e-mail, as opposed to a generic landing page. Such links and landing pages can be created for each individual in the e-mail campaign.

"It`s about creating a navigation scheme around the site based on what you know about the customer," says Cliff Conneighton, senior vice president of marketing for ATG. "The goal is to put more power in the hands of the marketing department to make e-mail promotions an extension of the web site and give customers information they want."

Using web pages to create the in-store shopping experience for an online customer allows retailers to market more efficiently. "Replicating the in-store shopping experience is critical because it allows the retailer to put the right product in front of the customer at the right time, just as if they were in a store being helped by a sales associate, and that is what drives conversion," explains Matt Carroll, senior vice president, commerce service, for NewRoads Inc. "The more a retailer can personalize the shopping experience, the more reasons they can give consumers to shop online."

A related personalization strategy is to use the data from the e-commerce platform to identify which affiliate and comparison shopping sites are used by consumers to research an item prior to purchasing it offline and directing them to the nearest store where the item is in stock. "Understanding the underlying data behind the sale empowers retailers to be successful at putting the right product in front of the customer at the right time in the right sales channels, says Robert Wight, president and CEO of Channel Intelligence, which has developed just such a solution.

Such flexibility lets retailers adjust their marketing and merchandising strategies across all sales channels to create a personalized shopping experience, as well as gain operating efficiencies. This one-two punch can deepen customer relationships by making the retailer`s sales channels more relevant to the consumer.

"In the retailer`s case, the end user of their e-commerce platform is the shopper, so they need to be able to conform that platform with their plan to enhance the shopping experience," says Ken Burke, president and CEO of MarketLive Inc. "To achieve that goal, retailers need tools to at least do base line segmentation of their customer base."

The cost of delivery

Creating a personalized shopping experience requires more than just using customer data to gain insights into customer shopping habits and product preferences. Increasingly, consumers want to know the cost of delivery before they actually purchase an item, how it will get to them, and have the ability to check on where the purchase is in the delivery cycle.

Getting at that information requires real-time connections to the back office systems containing that information so that consumers can access it any time during their shopping trip or afterward.

Providing shipping costs prior to purchase, for instance, can help significantly reduce cart abandonment, according to Justin Rattigan, vice president for Solid Cactus Inc. It is not uncommon for a consumer to abruptly quit a shopping session after learning the cost of shipping during checkout. Such sticker shock can be avoided by notifying customers of shipping costs as they place items in their carts.

One solution to further reduce sticker shock, especially for the most price-sensitive customers, is to offer several shipping options. In many cases, the options are centered around delivery time, e.g. delivery in three days, a week etc., as opposed to a selection of different carriers, though that, too, can be an option.

Solid Cactus includes a shipping module in its e-commerce platform that integrates with the fulfillment department and allows customers to check the cost of shipping through multiple carriers once an item is in the cart, rather than have a fixed shipping cost fed to them at checkout.

"It`s a way to create more interactivity with the customer and increase satisfaction," says Rattigan. "Personalization is about looking past statistical data on customers to identify shopping habits and using data to find new ways to sell product."

Many kinds of channels

Finding new applications for sales data is not the only way to create a more personalized shopping experience through integration. Linking the retailer`s online store with alternative sales channels, such as eBay, Amazon.com and affiliate sites is another option. Truition Inc. recently overhauled Sirius Satellite Radio`s e-commerce platform to provide a complete inventory management system across all sales channels.

The new platform enables the radio network to accurately track sales, fulfillment, and inventory in real-time, and adjust merchandising strategies across each sales channel, such as eBay and Amazon.com, which Sirius uses to facilitate sales of overstocks and product that has come to the end of its life cycle.

Sirius`s platform integrates into search engines to optimize results for Sirius and satellite radio products and directs customers to shopping sites. The platform also integrates with the sites of Sirius`s on-air personalities, such as Howard Stern and Martha Stewart, which also sell Sirius equipment.

"Introducing retailers to other sales channels, such as eBay and Amazon.com, under their own brand is a way to bring in more shoppers," says Butch Langlois, president and CEO of Truition. "To be truly multi-channel, retailers need access to customers wherever they go to shop on the web and manage those channels better."

Better management comes through access to real-time data, which platform integration provides. One drawback to a non-integrated platform is that data needed to validate or refute changes to the web site that will enhance the customer experience can be siloed within departments, according Junction Solutions` Haines.

Operating efficiencies

"If data doesn`t get passed along or gets lost, there is no way to know whether it all matches up properly with the proposed changes," she says. "E-commerce platforms need to break down the information silos through better integration so better decisions can be made in real-time."

To achieve the greatest return on investment, retailers need e-commerce platforms that create operating efficiencies. Integrating the back office functions to the online store helps achieve this goal.

The Schwan Food Co., for instance, worked with LaGarde Inc. to develop a platform that supported the testing of a line of gourmet foods which included such features as Build Your Own Meal and Meal of the Month. Once Schwan validated the business model for the new service, the grocer decided it needed to move to a more robust e-commerce platform that integrated its storefront to its back office functions, e.g. accounting, fulfillment, call center, etc., to preserve the efficiencies it expected to gain by selling online.

"The aim was to bring the cost efficiencies of selling online to the rest of the business by automating the entire handling, tracking and processing of the order," says Bob LaGarde, CEO of LaGarde.

Scalability and customer satisfaction

That level of integration made it possible for Schwan to synchronize its online and offline processes, including order details, inventory, and product and customer information. It also delivered a platform that is more adaptable to new initiatives.

"When those operating efficiencies can be extended across the entire enterprise, it not only makes the business more scalable, but it also helps boost customer satisfaction," adds LaGarde. "There is an opportunity in retailing to homogenize the technical requirements of an end-to-end platform solution to integrate back office systems."

Another advantage of end-to-end solutions is that retailers do business with a single supplier, rather than a multitude of vendors. This streamlined chain of communication lessens the chances for finger-pointing between vendors when something goes wrong, making it easier for the retailer to isolate the problem.

"Retailers are looking more to vendors to provide single solution platforms so they can identify what works and what doesn`t sooner," says Stephanie Leffler, president and general manger, Monster Commerce. "It is a consultative approach that provides more than just tech support from the vendor."

A consultative approach helps retailers create more effective customer loyalty programs through personalization. That is important, because most first time shoppers typically enter a retailer`s site through a search engine or a comparison shopping site. Hence, most of these shoppers don`t get a sense of the retailer`s brand

"In these instances, retailers don`t get much brand leverage from the search engine, which is not conducive to converting a shopper into a repeat customer, because they are less likely to remember the retailer`s brand," adds Leffler. "Integration to the front end and back end lets retailers effectively market to consumers in ways they will remember regardless of their entry point."

Looking ahead the next 18 to 24 months, e-commerce platform providers expect retailers to place an even higher premium on more integrated systems. One business channel expected to receive much attention is integration of the call center. Connecting service representatives into the e-commerce platform allows them to view the shopping experience of the customer that has called in with a question, according to Stephan Schambach, President and CEO of Demandware Inc.

A continuous experience

Having this information makes it possible for service representatives to avoid making recommendations on products and services that have already been offered to the customer through another communications channel, such as e-mail, only to be rejected. "There ought to be no break between the call center and the e-commerce piece of the platform," says Schambach. "Making a recommendation that has already been rejected is not helpful, but it can`t be avoided if the service representative does not have access to that information."

Personalization is as much about being helpful as it is about customizing marketing and merchandising offers. "Sometimes being helpful is all it takes to create a personalized experience," continues Schambach. "Integrating what retailers know about their customers across channels can lead to a complementary, helpful shopping experience as the customer moves through each channel."

In other words, customer care must be integrated across the entire platform to allow customers seamless movement between sales channels. "The shopping experience doesn`t end at checkout," says ATG`s Conneighton.

The increased focus on integrated platforms is expected to lead to more universal architecture. This flexibility actually extends the power of the platform into all areas of a retailer`s business ensuring that the retailer can upgrade and reconfigure its business to meet changing market conditions.

Standardization = lower costs

Two of the most expensive back-end channels to integrate into the e-commerce platform are the warehouse and the order management system, according to NewRoads` Carroll

"Standardization can lower the cost of integration substantially by making hosted systems more viable," he explains. "When there is a common set of functionality, it is easier to leverage the cost of investment across the platform, and in the case of a hosted solution, the customer base as well."

Leveraging their investments in their e-commerce platforms means retailers can more effectively use the platform`s core functionality to enhance the shopping experience. "It lets retailers create a more personalized, satisfying shopping experience," adds Carroll.

By seeing where best to apply resources across the platform, retailers can automate many of their business processes, such as e-mail confirmation for sales and real-time reporting on fulfillment. Freeing retailers from performing such tasks manually allows them to focus on their core business of marketing and merchandising and accelerating sales through all online sales channels.

"The idea of integration to create a channel-friendly platform is just becoming top of mind with retailers, but it is a trend that will continue," says ChannelAdvisor`s Wingo.

With about 80% of all direct consumer sales predicted to be generated online and about 75% of all offline sales expected to be researched online in the near future, platform integration is certain to grow in importance to all retailers, according to MarketLive`s Burke.

That means connectivity among all aspects of the retailer`s business, not just the storefront. "E-commerce platforms must connect not only into marketing and search, but the back office as well," Burke says. "From a vendor standpoint, the winners in the business will be the ones that extend their universe by allowing any application to integrate into their system." o

How e-commerce platforms influence marketing and merchandising strategies

When it comes to deciding on an e-commerce platform, there are many functionalities that retailers must take into consideration. A major area for investigation is marketing and merchandising. Not only are they as important to online success as they are to offline success, but they also change much more frequently on the Internet than in the offline world.

That`s a two-edged sword: That ability to change often is an opportunity in that retailers can quickly expand what works and cut back on what doesn`t. But it`s also a challenge because retailers need to have confidence that they are making the right decision.

"Retailers need to be able to gather data from their e-commerce platform that allows them to closely examine their online marketing, merchandising and advertising strategies to provide the greatest return on investment," says Robert Wight, CEO of Channel Intelligence Inc. "Retailers need the tools to be able to determine what products to advertise and what ad medium will maximize revenues, margins and profit."

Tracking sales

For example, e-commerce engines can be leveraged to track which products sold as the result of a customer viewing an advertisement, marketing promotion or link to an affiliate or comparison shopping site. Once in possession of that data, retailers can analyze the return on their advertising and marketing investment.

It makes little sense, for instance, to advertise a low-margin item on a search engine, comparison shopping or affiliate marketing site that may generate less revenue than the cost to promote the product in that channel, according to Wight.

But it`s not always a mistake to promote such products. "Profits from an ad expenditure aren`t just limited to the product that sold directly from the ad, but include whether the ad led to other purchases by the same customer," says Wight. "Having an e-commerce platform provider that can deliver this information helps retailers use their e-commerce platform to drive more sales and growth."

The logic of cross-sells

The ability to focus resources on the core aspects of the business, e.g. merchandising and marketing, is precisely what retailers want in today`s fast paced e-commerce economy. Thus retailers want e-commerce engines that allow merchandisers to inject logic into cross-selling and up-selling promotions.

"Why recommend a pair of pants to a customer who just bought a skirt if they aren`t in stock or not available in the customer`s size," asks Stephan Schambach, president and CEO of Demandware Inc. "Retailers need control over their e-commerce platforms so they remain relevant and don`t need to be periodically retrofitted, which can take up to a year to complete testing and rollout."

Demandware, which delivers e-commerce software as a service, offers a suite of menu-driven applications that can be accessed and implemented as needed by non-IT experts after a brief training period. These tools allow retailers to modify their web sites in real time providing a new found nimbleness allowing them to capitalize on fresh merchandising ideas that can deliver a substantial lift in sales sooner.

Creating loyalty

One of the primary tasks for any retailer is creating customer loyalty through marketing, merchandising and service. That`s a tall order, especially for retailers that make search engine marketing a main focus, because many consumers entering a retailer`s site through a search engine purchase on impulse.

"It`s hard to get a consumer to remember your brand under such circumstances," says Stephanie Leffler, president and general manger, MonsterCommerce. "Most retailers don`t take full advantage of their e-commerce platforms, especially when it comes to search, to help customers remember their brand."

MonsterCommerce provides a hosted end-to-end e-commerce solution that optimizes search engine results to help retailers drive conversion rates. One feature is Monster Marketplace a shopping portal that attracts more than 250,000 visitors daily to which retailers can direct potential shoppers through their search engine marketing strategy.

Written in ASP (active server page) language, a popular programming language for web-based administrative software, the MonsterCommerce platform provides customizable code, flexibility, and scalability. The company serves its clients in a consultative role throughout the life of the client relationship, making suggestions such as how to leverage the platform to increase sales and helping retailers determine which marketing and merchandising strategies work and which don`t.

Another part of platform utilization that relates to marketing and merchandising is optimizing internal and external search engine results. MarketLive Inc.`s MarketLive 5 optimizes search results within third-party search engines, such as Google, to improve retailers` organic search results.

One feature to improve organic search is an improved map feed to search engines that allows them to crawl all the data in a retailer`s site. Another is embedding category names and product names within the retailer`s URL, which is used to create organic rankings. Doing so can increase natural search rankings, which in an era of rising costs for keywords is an economical alternative for retailers.

Feeding the shopping sites

"There are some simple things retailers can do out of the box to make Google and other search engines very aware of their URL," says Ken Burke, president and CEO of MarketLive.

Retailers can also optimize their search engine marketing strategies by feeding their online catalog to comparison shopping sites. Central to this functionality is the ability to use the catalog as a source for keyword searches.

ChannelAdvisor, for instance, tags a retailer`s web and catalog pages so they are picked up more readily in organic searches. The process is particularly helpful when consumers are looking for a specific item and enter the style and make of the item into the search string.

Known as metatags, these identifiers go between the opening and closing head tags of a retailer`s web page. Metatags influence the description of a retailer`s page in the search engine crawlers that support the tag. Data within a metatag influences how a search engine ranks a retailer`s web page. "If retailers aren`t involved in this process they can`t optimize their search results," says Scot Wingo, president of ChannelAdvisor.

As part of the upgrades to its search functionality, ChannelAdvisor recently added a matrix inventory feature to its Premium Stores application that allows retailers more flexibility in customizing how their merchandise is displayed during keyword searches.

The feature ties in with the company`s support for eBay Express, a new site from eBay that provides shoppers access to fixed priced items on eBay for immediate purchase. As part of its compatibility with eBay Express, ChannelAdvisor also supports PayPal Website Payments Pro and manual payments automation. "E-commerce platforms need to be channel friendly," says Wingo.

Test, test, test

Another marketing feature retailers should make certain is included in their e-commerce platform is real-time A/B testing. The feature makes it possible for retailers to figure out how to price a product to maximize the return on marketing dollars spent to promote it. "Retailers don`t know how to maximize the price of their products because they don`t test their pricing," says Justin Rattigan, vice president of Solid Cactus Inc. "It`s not just knowing what price maximizes conversion rates and profits, but time sensitive pricing based on when certain demographic segments come to your site."

As retailers seek to maximize profits and their return on marketing and advertising dollars, the testing of marketing and merchandising strategies will take on greater importance. "Multi-variant A/B testing is going to become more important as retailers look to allocate resources to generate more business," says Demandware`s Schambach. "The e-commerce platform won`t do it by itself, retailers must have the tools provided to them."

Along with adding multi-variant testing to its platform, Demandware recently made its guided search application more user friendly. E-retailers can now refine their site`s search capabilities based on abandonment rates after a consumer conducts a search. "Unrestricted access to testing allows retailers to make adjustments to their site on their terms, not the terms of the IT department," says Schambach.

Maximizing profits through testing is only one piece of the puzzle. Equally important is the ability to arrange and place products in the appropriate category and in the right ranking so that when shoppers link to those listings via an affiliate or comparison shopping site they appear in the proper hierarchy.

Channel Intelligence creates a common definition for a retailer`s products that cut across a multitude of categories with comparison shopping sites. "Not every site organizes information in the same way, so if a product categorization doesn`t fit the listing, it doesn`t show up," says Channel Intelligence`s Wight. "Product-to-category mismatches lead to decreased exposure and a poor return on investment."