Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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The tool, which allows the affiliates to design site-specific, dynamic ads with professional polish, has boosted affiliate sales. Bresee says affiliates using the sniplet generator are driving conversions at twice the rate of other affiliates. In January, the sniplet generator was the company’s sixth most effective campaign, ranking among other campaigns such as deal-finding sites.
The sniplet generator is just one example of functionality developed at low cost with open source software. BackcountryStore’s entire e-commerce platform, built on the open source platform Interchange, had a start-up price of about $250,000. The cost, outside of internal resources and hardware, was in consulting fees to web developer Red Hat Inc. “Most of the commercial e-commerce platform companies we looked at have high licensing fees. It could have wound up being a $500,000 to $5 million installation,” Bresee says. “Interchange did everything we wanted it to do. It has optional log-ons for checkouts, it was indexable by search engines, and it was open source, so it didn’t require any licensing fees.”
Users of open source solutions are advocates, but going that route does present more than a few challenges for retailers nosing around the idea.
Web development firm End Point, for example, supports open source components for its clients. But in some instances, grants Goldstein, commercial products may have an edge. “There will be some cutting-edge functionality commercial providers can offer that hasn’t yet been developed in the open source arena,” he says. “In that case, they are in a position to charge for that software.” And while such applications can be and are re-created using open source software, there can be lag in development time.
There is the cost rationalization argument. “With a packaged application, theoretically, when you’ve paid for the package, your work is just to customize it. That may be a lot of work or a little work,” Berk says. “With open source, you pay nothing for the software, but you might have to do a lot of work to customize it. So you either spend on the license or the development.” In some cases, adds Berk, e-retailers can wind up essentially paying double if the buy high-priced proprietary applications that still require considerable adjustment.
Then there is question of support. While there’s a big community of individual developers using open source tools willing to share information at no charge, it’s on their own time. The bigger the retailer, however, the greater the need for professional support immediately, and for as long as it takes, to fix a problem.
“For a long time, the big hurdle for open source was the issue of support,” Goldstein says. “Even accomplished developers are happy to have a support line to call for help. It’s taken a while before the open source community seized on that opportunity and offered that kind of support.” Today, End Point, which supports Interchange and other open source platforms, is one of a growing number of developer/consultants that offer such service.
The legacy question
Investment in installed legacy systems that tie retailers to proprietary software is another key consideration for those eyeing open source. While a company adding open source applications may save on licensing fees, integrating such applications with a commercial base may be time- and labor-consuming, requiring retraining of in-house staff-one reason commercial providers say expanding on the same platform is easier and less expensive.
“A few years ago, you had a couple of proprietary choices,” says vice president of Internet sales and marketing Jack Whitley. “If you had invested a lot of money in developing your site along proprietary lines then, you’d have some real issues in moving to an open source server platform now.”
Last year, the company decided to boost cart functionality. Replacements customers regularly receive e-mails on the availability of china patterns for which they’ve registered interest. Previously, to order the items listed in the e-mails, they had to manually fill out a form pasted into the e-mail. Now, new coding supports a button on the page that a customer can click to fill in the form automatically. “When they push a button, their browser adds the items to their cart and calculates the total,” Whitley says.
Doubling the volume
When Replacements took the new cart live last August, online order volume doubled within a month, says Whitley-one factor in increasing web sales that have grown to 50% of company’s business in the just the past two years.
“Cart functionality is nothing new, but we did it on the customer side from a web page without requiring a database and applications server on our side,” Whitley says. “Not only did the application cost nothing, but when traffic increased for the holidays, our servers were not bogged down with processing that work.”