E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Systems that play nicely together are a key priority
As the economy in general, and e-commerce in particular, rebound, online retailers are upping their budgets for web technology. And while retailers plan to address a range of needs, a high priority is making sure the systems they acquire integrate with technology already in place.
These priorities emerged out of a recent Forrester Research Inc. report entitled "2010 U.S. Online Retail Technology Investment Outlook" by analyst Brian K. Walker. The report, based on a survey last year of 291 U.S. online retail professionals, found 57% planned to increase their technology spending in 2010, while only 5% were cutting back.
In fact, Walker warned both retailers and technology vendors against moving too quickly to catch up after the recession slowed spending on e-commerce technology and services.
Retailers, he says, may feel pressured to keep up with rivals, and may thus rush through the selection and implementation of new e-commerce technology. "It will be easy to get caught up in these efforts," Walker says, "and forget about the return on investment, long-term stability and support for their investments."
Walker also advised retailers to watch out for vendors who take on too many projects, aiming to maximize their revenue amid the e-commerce upturn. "Taking on too many projects risks poor outcomes for customers banking their business on these solutions," Walker says. "Buyers of solutions must manage this risk actively with their vendors through negotiations, contractual agreements and project management best practices."
Working with vendors is on the agenda for many retailers, Walker says, as online retailers increasingly turn to outside firms to provide them with e-commerce technology, rather than relying on their own personnel to keep up with all the changes in this increasingly complex and fast-changing arena.
He notes that the most common response to the question "How is your online store supported today?" was that it's supported by internal information technology staffers managing a homegrown platform, selected by 41% of respondents. Another 21% use commercial software, but maintain in-house the computer systems that run that software.
It appears e-retailers now are looking for vendors to carry more of the weight of e-commerce infrastructure and technology. In the survey, many expressed interest in new delivery and support models for obtaining e-commerce technology. The report says 55% of online retailers are interested in working with vendors that will provide technology in a software-as-a-service model, with the vendor hosting technology that the retailer accesses through the web, or for the vendor to host and manage the technology entirely.
The top technology priority for the e-retailers surveyed was their e-commerce platforms, cited by 49% of respondents. And many are moving on this: 27% said they planned to deploy a new platform within 18 months and 11% already had a replatforming project under way.
This strong demand, Walker says, "will place pressure on the e-commerce platform technology and services community to support this strong demand, and it reinforces the need for retailers to select partners carefully and follow best practices."
The second highest priority among the retailers surveyed was content management tools, cited by 37%. And, responding to a separate question, 67% cited improved content on their sites as an investment priority for the coming year.
E-commerce technology vendors are responding to this demand by merchants that want to be able to change the content on their sites in response to customer demand and inventory levels.
"Having flexibility within the site and having robust content management tools gives the merchant the ability to merchandise the site the way they might merchandise the store," says Jeff Zisk, president and CEO of Speed FC, a provider of e-commerce technology as well as fulfillment and call center services. "You might want certain items up front to draw people in and more depth behind it. By giving merchants tools to customize their sites we've seen conversion rates increase over the past year."
The kind of flexibility Speed FC's system offers allows an e-retailer to reorder the way products are displayed on a category page, or to change the default color of items displayed. It also allows the retailer to put an item in multiple categories, such as putting women's camisole tops both in the camisole category and with short sleeve tops.
"You want to have the product where it's most likely that the person will shop for it," Zisk says. "When there's not one answer, you want to put it in multiple places." Speed FC, which offers its fulfillment and contact center services for retailers that use other e-commerce platforms as well as its own, has 25 retailer clients, including 10 that use its entire range of services.
Another e-commerce technology provider that has invested this year in enhancing content management tools is Celerant Technology Corp. Celerant builds custom sites, and doesn't use templates, says Zeke Hamdani, director of web services at Celerant. "Once we build the site we give you control, the ability to change it and keep it fresh without having technical knowledge," Hamdani says. "You can refresh your web site all day long, we give you a full content management system."
Celerant also provides retailer clients with blogs and the ability to tie blogs to products and categories, he says.
The third highest priority among the retailers surveyed by Forrester was back-end integration, cited by 32%. That, too, is an area that many vendors are prioritizing to respond to retailer demand.
Celerant has developed an integration between its analytics system and e-mail marketing tools. That allows a retailer to set up rules to send an e-mail to a customer who exhibits particular behaviors. For instance, if a shopper abandons a cart the system can recognize that and—if the shopper has previously registered an e-mail address—send the consumer an e-mail offer. Or the retailer might set a rule to e-mail a customer 15 days after a purchase, asking her to return to the site to review a product, and offering a 10% rebate if she does, Hamdani says.