Revenue increased 11.9% in Q1 of 2015, to $17.26 billion compared with $15.42 billion in the year-ago period.
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The on-demand model allows retailers to focus on running their business, rather than getting into the technology operations business. Instead, retailers can tell the on-demand platform provider how they want to map the features and functions of the platform to their marketing and merchandising objectives, such as building content and promotions on microsites or companion sites as needed. This results in substantial savings in cost of operations, staffing, licenses and hardware, all of which are difficult for retailers to predict.
Levels of direct control
This kind of flexibility is included in the cost of Venda’s on-demand platform, which lets retailers be more targeted about what they want to accomplish from a marketing and merchandising standpoint.
“From a creative and design perspective, retailers can tell the vendor what level of management they want over freshening their site, what tasks they want to undertake internally, farm out to an agency or what they want the vendor to manage,” says Venda’s Max. “Having this level of self-direction and self-sufficiency is a tremendous advantage for the retailer from an operations and cost perspective.”
Venda charges $12,000 per month for its service, plus a fixed fee for its payment processing gateway. Contracts typically run three years with options for one-year renewals.
“Paying a monthly fee makes measuring the return on investment clearer, because retailers aren’t constantly getting nicked for the cost of add-ons to the platform and ongoing maintenance,” Max says. “A lot of retailers overlook these additional costs during the sales process.”
Because on-demand platforms access software via the Internet, retailers can extend their management of the platform outside the office. Employees can log on to an operational dashboard through a web browser to perform such actions as creating new promotions, accessing performance reports, or checking the status of an order.
“This makes it a lot easier for retailers to know the status of their business at any time from any location and helps create a stronger relationship between the retailer and the system they manage,” says PCS’s Marrah.
To ensure the highest level of technical support ProfitCenter Software provides constant training for its own staff as well as that of the retailer’s internal I.T. staff to explain new features and functionality, how to deploy them and how to best leverage them to benefit their business. Retailers can also access self-service pages within PCS’s web site that provide answers to a variety of common questions.
True cost of ownership
Before making the decision to implement any on-demand platform, retailers need to perform due diligence about the true cost of ownership. It is important that they ask the vendor to walk them through the proposed contract so they understand the full cost of implementation and properly manage their expectations of on-demand technology.
“A lot of retailers come to a vendor with a list of what they want, but have no real concept of the cost or timeline for implementation or whether they are ready for an entire on-demand platform,” says CDS Global’s Colon.
Walking a retailer through a proposal gives the retailer a clearer picture of what to expect from an on-demand platform and helps determine whether the business is ready for an entire platform or a few applications. “Sometimes it is better for the retailer to dip their toe into the water rather than jump in feet first,” Colon adds.
Asking whether the supplier provides explicit specifications in the proposed contract for such criteria as web site up-time, page load time, response and resolution time for reported problems is also a must. “It is important to spell these thresholds out, so all parties are clear on the resolution timeline responsibilities for each level of severity,” Max says.
Other questions retailers should ask include financial health of the supplier and how much money the vendor puts behind research and development and meeting compliance standards.
“If a supplier’s financial health is weak, they may not be investing properly in keeping their technology current,” Marrah says. “Their technology may have the latest bells and whistles but it may not be compliant with security standards like PCI or internal auditing standards such as Sarbanes-Oxley, which are essential.”
It is also recommended that retailers verify the redundancy of the supplier’s platform to make certain the vendor has adequate infrastructure to not only handle spikes in traffic but also keep clients’ web sites operational in the event of technical problems or disasters.
Resiliency and redundancy
“When a web site goes down or pieces of it are not functioning properly because the platform can’t scale to the volume of traffic, it costs retailers business and that’s something they can’t afford to have happen, especially in today’s economic climate,” Max says. “The resilience and redundancy inherent in the multi-tenanted model protect against this kind of calamity.”
Testing a feature prior to rollout can reduce the potential for technical snafus. It is in a retailer’s best interest to become familiar with the vendor’s testing procedures and make certain the results are immediately available to them.
“There has to be visibility in testing to be sure it is being done properly,” says CDS Global’s Murken. “Transparent testing is the best way to prevent performance problems before a change to the web site is rolled out.”
As retailers look for new technologies that can provide a competitive edge in a slumping economy, the richer features of on-demand platforms and the lower, fixed operating costs are making them more attractive.
“On-demand platforms allow retailers to stay competitive and better manage customer relationships,” Marrah says. “With the rapid advances in e-commerce technology, retailers can’t afford a platform that holds back their business.”