A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
E-commerce platforms with more than the basics can help e-retailers take off at a gallop.
Laura Canada didn't rush into online selling. The women's apparel retailer spent about a year vetting e-commerce platform vendors and their proposals before picking OrderDynamics to build and host its e-commerce site, which launched in September.
While price played a role in the decision, it was more important to find e-commerce software that would be easy to implement and maintain, that offered a rich feature set and could grow with the e-retailer over the years, says Sam Barnes, the retailer's e-commerce director. "Ultimately the platform is a tool to reach your online goals," he says.
OrderDynamics was roughly in the middle for price compared with other vendors the retailer considered, Barnes says, but the platform offered more tools the e-retailer deemed valuable to its operations. Those included a pre-built integration with Canada Post, Canada's equivalent to the U.S. Postal Service, that allows Laura Canada to ship packages to any post office for pickup.
"Starting with a basic, inexpensive system doesn't always work—you outgrow it a year later," Barnes says. "We're not Ann Taylor in terms of resources, but we'd like to compete with them." Women's apparel retailer Ann Inc., formerly Ann Taylor Stores Inc., generated $248.3 million in sales on the web in 2011, making it one of the top 25 e-retailers of apparel and accessories in North America.
E-retailers shopping for an e-commerce platform are finding options that go beyond making a web site work. Platforms today often incorporate as standard features more tools designed to serve retailers' broader needs, says John Kinsella, vice president and senior consultant at FitForCommerce, an e-commerce strategy consultancy that helps e-retailers evaluate technology tools and vendors.
"Platform providers are including more functionality and pre-built integrations in order to facilitate the launch and differentiate their product offerings," he says. "For example, all providers need to address mobile, product content and social media. Those brands with retail stores also need to consider clienteling, enterprise fulfillment, centralized customer databases and customer relationship management."
This means retailers have more to consider when selecting an e-commerce platform. Laura Canada took ample time to find an e-commerce platform that met its goals and budget. For other retailers, getting online as fast and simply as possible may be the goal. Whatever the case may be, experts say e-retailers should evaluate their own needs and goals and ask platform vendors some hard questions about how they'd work together to meet them. They will likely find e-commerce platform providers are starting to anticipate some of their key requirements, helping them to launch on a stronger foundation from the start.
Size and price
An e-commerce platform provides the basis of an online store, at once controlling the outward-facing web site consumers interact with while connecting to back-end systems such as point-of-sale, customer relationship management, order management, content and inventory.
Kinsella says e-retailers should first think about the customer experience they want to provide consumers, then write down the features and functionalities that would require. Then score those options from must-haves to nice-to-haves. That approach helps e-retailers to identify vendors with the right integration packages—and keep them from overbuying.
E-commerce platforms such as those from IBM Corp., Oracle Corp., Microsoft Corp. or BroadVision Inc. may offer many features, but they can also cost tens of thousands to millions of dollars with implementation costs factored in, and are geared toward the largest e-retailers with the deepest pockets. OrderDynamics, which targets its platform to mid-sized retailers, costs between $5,000 and $15,000 per month, and some platforms aimed at smaller retailers cost much less. For example, vendors Bigcommerce Pty. Ltd. and Volusion start at $25 per month and $20 per month, respectively, and rise into the thousands based on the number of products on the site and how many administrative accounts the e-retailer wants.
Kinsella's advice for evaluating platforms, however, is the same for all retailers. He says e-retailers should assess an e-commerce platform on three fronts: the functionality it has and is capable of, what role the e-commerce platform vendor will play in platform developments, and what the vendor will be like to work with. How platform vendors measure up against these needs will help e-retailers determine if the fit is right.
Kinsella recommends plotting out the must-have features for the next three to four years, providing the vendor eight to 10 goals it would like to accomplish. For example, a retailer may aim to expand internationally or launch mobile commerce.
"With the long-term goal in mind, then the components of the plan can be phased in thoughtfully to optimize the investment in technology and ensure the organizational capacity," he says. "Otherwise, layering in technology with no long-term goal may lead to poor investments and unsuccessful implementations."
This can help an e-retailer understand what the platform is capable of and what a vendor will be like to work with, he says. "It's one thing to have a new function but another to implement it in a smooth, adapting-to-change way," Kinsella says.
Laura Canada's Barnes says the retailer's first priority was to find a vendor with a stable core platform. The retailer knew it could add extra modules later. However, OrderDynamics' integration with CanadaPost was a plus that played a role in its selection. The e-retailer only ships within Canada, and CanadaPost is the biggest carrier in the country. Not having to build a link to CanadaPost meant Barnes could focus on the kinks that come up in nearly all e-commerce platform implementations. For example, Laura Canada calls one clothing line "knitwear" internally and "sweaters" in stores, but for OrderDynamics to integrate the retailer's point-of-sale and merchandising systems, the label needed uniformity. Barnes says that took some time to update.
Free still costs