September 1, 2006, 12:00 AM

Growing Pains

(Page 2 of 3)

A retailer that wants to graduate from selling only in auctions to also sell through its own site may wish to go with the eBay ProStores platform if it wants to maintain tight integration with its business. But if the retailer wants to spread its business more widely through, Yahoo Shopping and shopping comparison sites as well as through auctions and its own dedicated site, it may want to consider a platform vendor like Truition Inc., Marketworks Inc., Mercent Corp. or ChannelAdvisor Corp., each of which provides e-commerce to support a retailer’s own web store in addition to integrated shopping and inventory management across multiple online channels, Mendelsohn says.


“From what I’ve seen of eBay ProStores, they serve sub-$1 million retailers very well, but now are expanding their enterprise edition to serve more sophisticated sellers with more headroom to grow,” she says. “And its integration with is very tight and sophisticated. But if the same retailer wants to sell beyond eBay and its own store, it should take a hard look at platform vendors like Truition and ChannelAdvisor.”

Other e-commerce platforms for small but growing e-retailers include Monster Commerce; Everest Software Inc.; osCommerce, to which migrated from Yahoo Merchant Solutions earlier this year to get a higher level of customer tracking and content management; Venda Inc., to which migrated off Yahoo this year to benefit from features such as running more promotions and tracking orders; and Demandware Inc., which gets about 20% of its clients from Yahoo-based retailers, according to CEO Stephan Schambach.

“Our only consistent source of retailers is Yahoo Stores,” Schambach says, adding that he rarely sees eBay sellers because they usually sell low-margin products. Because Demandware caters mostly to retailers with at least $10 million in sales, its Yahoo clients tend to be retailers on the verge of doing that much or more in sales, he adds. Demandware starts out at about $10,000 per month for its front-end e-commerce and merchandising platform, which can integrate with back-end third-party inventory and fulfillment systems.

Venda also gets about 20% of its clients from Yahoo, and caters to retailers ranging in annual sales from about $1.5 million to $200 million, CEO Jeff Max says. Although Venda’s flat fee of $10,000 per month per web site may seem steep for the average Yahoo Stores retailer, it’s often competitive for larger merchants who must pay Yahoo a percentage of sales and may pay extra to third-party partners for additional site features, he adds.

MarketLive, which caters to mid-tier retailers with a licensed platform that starts at $75,000, has about 30 clients who migrated from Yahoo and represent about 10% of its business, says director of marketing Lisa Duryea.

Hitting a growth surge

The need to take a harder look at e-commerce platforms is even more crucial when a young retailer suddenly hits a growth surge, as did Ty’s Toy Box LLC. The company is a home-grown retailer that started out of Ty Simpson’s home after he realized there were few U.S.-based sellers of Wiggles-licensed toys based on an Australian TV show that his daughter liked. After launching his retail business with auctions on in 2003, founder and CEO Simpson steered the business through rapid changes that took him from being solely an eBay auctioneer to that plus an operator of multiple sites for multiple retailers within three years. And last month he launched a site within as a new toy partner of the leading online retailer.

Along the way, Simpson has worked with several e-commerce platform providers-and is still considering changes as his combined retailing and retailing services business has evolved from a focus on toys to a broader focus on licensed products, including apparel, toys and other items, whose sales can suddenly surge along with the popularity of a particular TV show or movie. “When you hit a good one, it can be big,” he says.

Simpson’s goal is to find the right mix of technology that can support his need to maintain direct control over his back-end operations like inventory management, while letting technology partners host the e-commerce front end, including order management and checkout, across multiple online channels.

Simpson left the auction business after about a month to sell through, which he launched on an ASP platform hosted by Nexternal Solutions Inc. “It was fine at that early stage,” he recalls. “We could upload products, get real-time integration with our shipping application, and we had all the basic things we needed to start a web store.”

But then Simpson decided to sell through eBay auctions again as well his own site, and brought in ChannelAdvisor to integrate with “We thought we could use eBay again as an alternate channel to sell things, and we wanted to treat every customer the same,” he says. But Nexternal Solutions didn’t work well with ChannelAdvisor, and he had to manage things like newsletters, shipping information and merchandising separately for each channel, Simpson says. “We had to set up SKU information multiple times and go with two checkout systems,” he says. “Then we were saying, ‘This isn’t fun.’”

In the market again

Simpson then brought in Truition, which provided a hosted platform that, so far, has provided a more customizable e-commerce storefront and integrates with orders received through a growing list of partner sites, including, and Amazon. “It worked well,” he says. “We could work with one set of product descriptions, one set of inventory records, and consistent shipping information as we became more multi-channel on the web.”

The Truition e-commerce platform requires a set-up fee that can range from $40,000 to $100,000, depending on the amount of customization and channel integration, plus a monthly fee based on about 2-3% of sales, says president and CEO Butch Langlois. Truition generally serves retailers with $1 million to $50 million in annual sales, he adds.

But now that Simpson is also growing his retail services business, he’s again investigating the e-commerce platform market to see how he can get the best mixture of direct control of back-end inventory systems and hosted applications from outside providers for his e-commerce storefronts. “We’re moving beyond the sweet spot for a traditional ASP, so we’re looking at technology platforms all over again to make sure we can be totally scalable,” he says.

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