E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
There’s no alternative but to sweat the details for online retailers searching for e-commerce technology partners.
With competition mounting in its pet supplies niche, The Fish Net Inc., a $25 million retailer that sells through a single store and the e-commerce site ThatPetPlace.com, realized a couple of years ago that it needed better and faster ways to hook and keep online customers. And that meant finding a new e-commerce platform that would give e-commerce managers more control over merchandising pages and marketing campaigns, enabling them to move quickly to create compelling and timely offers.
Chief operating officer Rick Amour and his team rolled up their sleeves and did what he calls a SWOT analysis-a hard look at the retailer’s strengths, weaknesses, opportunities and threats. “We took about a year to decide what we wanted to improve, then went out and looked at several packages, set our priorities, and scored everything for functionality and the most beneficial features that met our SWOT analysis,” Amour says.
Since migrating from its former system to a software-as-a-service platform from ProfitCenter Software Inc., TheFishPlace.com, also known as That Fish Place-That Pet Place, has boosted sales by 12% to 15% in particular products and categories through improved merchandising and marketing, Amour says.
The Fish Net’s method of finding a suitable vendor relied on a strategy that experts say can make or break an e-commerce business: First, accurately assess how well the retailer serves its market, starting with how well it engages customers; benchmark its e-commerce capabilities against its competitor’s; match its growth goals with available e-commerce technology through a thorough review of many vendors; then work out a good contractual agreements with the chosen supplier.
The reality for some online retailers, however, is that an often emotion-packed drive to operate on a new, improved or expanded e-commerce platform by a certain date overshadows the due diligence required to pick the right technology provider, experts say.
“Retailers can get so nervous they just sign up with a new vendor and make the same mistakes in choosing a technology provider all over again,” says Mike Miller, vice president of business development at FitForCommerce, a consulting firm that helps retailers choose e-commerce technology providers.
Retailers who don’t do their homework and enter a contract too soon can find their e-commerce project doomed from the start, experts say.
“It doesn’t matter if a retailer is a $1 billion company or a $50,000 company,” says Elaine Rubin, president of EKRubin Inc., an e-commerce consulting firm. “The biggest mistake-and I’ve seen this across the board at all types and sizes of retailers-is in not taking the time to ask questions up front, and instead focusing on making a certain project start-up date. And then challenges come post-launch, as retailers get into a queue with lots of other people waiting for maintenance and development work.”
Rubin is also the founder and former chairman of Shop.org, the online retailing industry trade group that is now part of the National Retail Federation.
Kicking the tires
Reaching a good working relationship with a vendor requires a commitment from the retailer at the start of its technology review process to spend the time necessary to identify needs and then match them with the best technology providers, experts say.
“Less than 1% of retailers are kicking the tires properly when choosing technology vendors,” Miller says. “A lot of requests for proposals are written like wish lists of technology features, with loose definitions of how retailers expect technology applications to work.”
For example, he says, a retailer might like an e-commerce technology vendor because it integrates with a particular site search application from another vendor. “But then they don’t ask whether, if you change the attributes of a product, you can make the change by entering the new information just once in the e-commerce platform, or if you also have to enter it separately into the site search application,” he says.
Having to take multiple steps to update product information slows down efforts to modify online merchandising displays and site search and navigation, he adds.
This is no time to be shy, says Renee Walker, marketing manager at tea maker and retailer R.C. Bigelow Inc., which recently chose a vendor after a selection process that was so thorough it scared off some would-be partners. Indeed, demanding attention from vendors to extensive proposal details can help weed out the weak ones, she adds.
“We prepared a really detailed request for proposal of several pages,” Walker says. “When we had a few vendors who didn’t respond because our RFP was too long, we realized we didn’t want to work with them.”
Asking tough questions
Walker and another Bigelow marketing manager, Carrie Hammond, worked with FitForCommerce to identify Bigelow’s needs, including technology and service, and match those needs with the right vendor.
FitForCommerce has developed a multi-step process that typically starts with an interview with the retailer to lay out its existing and planned capabilities. It then refers to its FitBase knowledgebase, which includes information from the Annual Merchant Survey and Mystery Shopping Study from research and consulting firm The E-tailing Group Inc. That data helps match a retailer’s current e-commerce capabilities with industry best practices related to more than 300 e-commerce features and functions, says FitForCommerce CEO Bernardine Wu.
Bigelow, with a well-known brand and a strong presence in social networks, decided it needed to improve its content management and merchandising displays, and better connect its e-commerce platform with direct links to its extensive presence in social networks, Hammond says. “We wanted to grow sales by engaging repeat customers,” she says. “And we’re very involved in Twitter, Facebook and other social networks, and have some great networked videos, but we haven’t been showcasing that on our web site.”
As marketing experts charged with upgrading Bigelow’s e-commerce platform, Walker and Hammond started asking tough questions of the web site design firms that responded to its RFP. It wanted a firm that offered both strong technology and good web page design, but soon found that few were standouts in both areas.