September 24, 2009, 12:00 AM

Licensed and SaaS platforms each offer ups and downs, retailers say

Retailers including Overnight Prints and Encyclopaedia Britannica are finding advantages and disadvantages in licensed and on-demand e-commerce platforms, executives said at the Annual Summit this week.

Retailers including Overnight Prints and Encyclopaedia Britannica Inc. are finding advantages and disadvantages in licensed and on-demand e-commerce platforms, executives said at the Annual Summit this week.

A key part of any review of e-commerce platforms, said Bernardine Wu, CEO of consultants FitForCommerce, who moderated a panel of retailers, is the realization that each option and each vendor offers a different range of capabilities. “You want to know the good and the bad, so you know how to manage it,” she said.

Jill Salomon Dvorak, director of consumer e-commerce for The Britannica Store, the retail unit of Encyclopaedia Britannica, said her company decided to launch a new e-commerce site on an on-demand, software-as-a-service platform so that it could get the functionality it needed without having to rely on internal I.T. resources. “We went with on-demand because we didn’t have a big I.T. team,” she said.

Encyclopedia Britannica’s officially launched this week on a software-as-a-service, or SaaS, platform delivered over the Internet from Venda Inc.

While a SaaS platform can offer advantages in speed of deployment and functionality without requiring a large internal I.T. staff, Dvorak advised retailers to do their homework before choosing a vendor. Know what you’re getting into, talk to the vendor’s other customers, and see if its platform suits your business model, she said.

Some points to clarify before going with a vendor, she said, include:

  • Figure out how much internal staff time will be required to deploy a SaaS platform;
  • How long a retailer may have to wait for a new platform software patch to fix any software bugs;
  • What applications that support a retailer’s desired shopping features are pre-integrated into a platform;
  • The flexibility of a new platform for making design changes;
  • A platform vendor’s ability to support market trends, such as supporting e-book sales.

Overnight Prints, which sells products ranging from business cards to T-shirts that customers can personalize on, is migrating from an in-house e-commerce platform to a major licensed platform, said Brian Beck, chief operating officer. Among the advantages, he said: leveraging a vendor’s expertise and having the ability to make web site changes without having to rely on internal software developers, and taking advantage of software code already built and test by other experts. Overnight Prints is No. 169 in the Internet Retailer Top 500 Guide.

But Beck also cautioned retailers to be aware of possible additional costs beyond basic licensing fees, such as for customization of web page designs and integration with other software applications.

He also advised:

  • Conduct page-loading tests with a site-hosting provider;
  • Set development timelines and hold vendors to them;
  • Check to see if you already have a license with any third-party vendor applications with which the e-commerce platform provider needs to integrate; this could enable the retailer to re-use an existing license or pay a reduced integration fee.
  • Clarify what a retailer must do to maintain its e-commerce platform if the platform vendor goes out of business.

For retailers considering open-source e-commerce platforms, the range of costs and responsibilities can vary widely, Wu said. Retailers can benefit from free support from an open-source community of software developers, but they may still have to take on the cost of maintaining their own data centers, she added.

Wu noted that smaller retailers may find a suitable low-cost e-commerce technology with the open-source OS Commerce platform, while larger retailers may be more likely to opt for working with external systems integrators to deploy Magento open-source technology.

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