April 30, 2009, 12:00 AM

More retailers will open up their APIs to expand market reach, experts say

To expand their market reach over the next few years, a number of large retailers will open up their application programming interfaces to let outside developers connect to their product catalogs and shopping carts, Gartner analyst Gene Alvarez says.

By 2012, about 25% or more of top-tier retailers will greatly expand their online market reach by letting software developer partners access the retailers’ application programming interfaces, or APIs, to connect to their product catalogs and payment systems, Gartner Inc. analyst Gene Alvarez says.

“We’re discussing this with brand-name retailers,” Alvarez says. “They’ll work with partners who will build applications connected to their shopping carts and product catalogs to help them move products.”

Opening up a retailer’s API to provide access to product databases and shopping carts is not new. eBay.com Inc., Amazon.com Inc. and others have been doing it for years to build diversified online marketplaces by letting other retailers sell on their e-commerce platforms.

But now more retailers are also opening up their APIs in a bid to attract partners who will develop innovative ways to expand the reach of their e-commerce sites, Alvarez and others say. A good example is Best Buy Co. Inc., whose Best Buy Remix program is already working with developers like Ribbit, which is building ConsumerPrice.com as a site where, among other things, shoppers can share voice-recorded product reviews and buy from Best Buy’s product catalog.

Best Buy and others realize that, no matter how good their e-commerce site is, it will only reach a tiny percentage of the universe of online shoppers at any one time. That means an e-retailer must find ways to extend its site through partner sites offering new and compelling shopping features, says Oren Michels, CEO of Mashery, a company that provides a hosted Internet gateway and dashboard application that Best Buy and other retailers use for managing how developers connect with their APIs.

Michels adds that Mashery is in preliminary stages of working with other retailers who are planning on opening up their APIs to developers. One of its clients, Etsy Inc., which operates Etsy.com as an e-marketplace for independent sellers of handmade products, expects that developers using its API will create new ways to connect with shoppers, says chief technology officer Chad Dickerson.

Part of the attraction of a strategy of opening up a retailer’s API to outside developers, experts say, is that developers may think of new ways to connect with consumers that never would have occurred to the retailer itself. Using APIs also ensures that partners are using accurate and up-to-date data by connecting directly to back-end systems like product catalogs.

“Maybe developers can figure out a way to build a better product finder, or a new widget to make online shopping easier and faster,” says Sucharita Mulpuru, principal analyst for retail e-business at Forrester Research Inc.

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