Online sales climbed 24% year over year, while Best Buy’s overall sales were flat.
The new e-commerce software lets retailers do things they only dreamed of before.
Electronic commerce software has gone far beyond its early utility of selling goods directly to web users. More than just sell-side commerce software, it has evolved into a broader technology category encompassing such areas as on-line catalogs, electronic marketing, customer relationship management, Internet trading exchanges and supply chain systems.
As retailers implement more of these systems, they’re reaching a point where integrated technology inside their enterprises is helping them to identify customers’ desires. Retail suppliers are also implementing systems to help them better predict and fulfill merchants’ orders.
The next goal is to take internally integrated systems at both retailers and suppliers to provide for enterprise-to-enterprise integration, to realize what’s becoming commonly called the value chain-resulting in a flow of information up and down the supply chain, connecting the demands of end customers with suppliers’ production processes.
“That integrated environment is what retailers are looking for now,” says Albert Pang, research manager of e-commerce software for researchers IDC, Framingham, Mass.
The reward, he adds, is the ability to move the right goods quickly at the right price. “No one wants to keep inventory more than a day,” he says.
Re-connecting the disconnect
But connecting many internally integrated systems among different enterprises can be difficult, either for technological or political reasons. “We’ve all been talking about integration for a long time, it’s one of the best value propositions,” says David Dalton, vice president of marketing for Ironside Technologies Inc., Pleasanton, Calif., a provider of sell-side e-commerce software used by suppliers. “But there’s a disconnect between buyers and suppliers.”
After a retailer integrates its own e-commerce systems, he notes, it may be resistant to then having to re-key purchasing information into a supplier’s system.
Companies like Ironside and other e-commerce software vendors are trying to bridge this gap by offering ways to connect enterprises, enabling data to flow from the back-end enterprise systems of both buyers and suppliers.
Driving more enterprise-to-enterprise integration are emerging technologies such as Extensible Markup Language, or XML, which enables disparate computer systems to cooperate with shared information. XML is one of the building blocks of the evolving technology known as web services, in which technology behemoths like Microsoft Corp., IBM Corp. and Oracle Corp. are investing heavily.
Web services technology is designed to enable companies to build and implement web-based applications that can be accessed and shared by multiple users. Web services applications can also be programmed to automatically update information in other web services applications, so that, for example, a retailer’s inventory record automatically updates a supplier’s fulfillment system.
Although detractors say web services may take years to become widely used, Pang and others note that business cases for implementing web services are emerging in several areas. “In 2003, you’ll see more implementations of web services,” Pang says. “We’re talking about a technology that can be deployed in fewer than six weeks. That’s the kind of technology people want to look into.”
The retail apparel industry, for instance, is likely to be an early adopter. “If you’re a retail department store chain, you can’t afford to wait for an apparel design to be circulated around the world, using faxes,” Pang says. “Your data has to be stored on a common repository that retailers, designers and suppliers can access. That’s partly what will drive the use of web services for the retail industry.”
He adds that many companies are likely to take a gradual approach to expanding their integration of e-commerce systems, using components that can be deployed quickly. Indeed, experts say web services technology will grow fastest as a tool to fully integrate internal systems, so that customer data collected on a retail web site, for example, can more efficiently update that retailer’s back-end systems.
Such efforts, Pang says, prove that e-commerce systems continue to bring new value to retailers. “It underscores the power of the ‘Net,” he says.