E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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Outsourcing, however, is not for everyone. Houston-based The Men’s Wearhouse Inc. is deploying TrueSpectra’s technology on its own servers. “We have better control over the whole process if we can do it in-house,” says Steve Lambert, manager of e-commerce. “If I want to make a change, I can do it more quickly than if I had to go outside.” Even with a small IT staff, Lambert finds it more efficient to use an in-house system. “The more we can do in-house without getting involved with an outside management company, the easier we can integrate it into our workflow,” he says.
The Men’s Wearhouse changes images about twice a year and doesn’t have the extensive image changes or severity of spikes that Berries.com experiences. Thus it makes more sense to maintain the application in-house. “The merchandise itself doesn’t change very much, but the ensembles do,” Lambert says. “This gives us the ability to present new images on a more frequent basis.”
From Speedera’s point of view, offering content management capability such as this in addition to the content acceleration, load balancing and other services it provides makes a lot of sense, says Aldort of InfoTrends Research Group. “Content delivery networks are becoming a commodity,” she says. “This offers Speedera a value-added service that it can take to market.”
For its part, TrueSpectra believes that the arrangement opens a market to it as well. More than a quarter of TrueSpectra’s customer base has inquired about the possibility of acquiring the technology on an ASP basis, Watkins says, and he believes that up to 40% of the entire market is not interested in buying software for image management. Purchase licenses start at $20,000 and Watkins estimates another at least $10,000 investment in hardware to run the software and $1,495 a year in a maintenance contract.
Berries.com clearly falls into that ASP category of users. Noting that between the store in Sacramento and the online operation, Shari’s dips 2 million strawberries into 25 tons of chocolate and sells about $10 million a year in sweets, Beresford says: “We don’t have a lot of experience with delivery of the graphic. Our expertise is in selling the product.”