The manufacturer and retailer is upgrading its inventory management and supply chain systems to prepare for a global network of e-commerce sites.
The upcoming issue of Internet Retailer magazine shows how mid-market web merchants are using top-shelf technology.
Although the percentage of Internet Retailer Top 1000 merchants that report having in-house e-commerce platforms has actually increased slightly since 2011, from 34.0% to 37.4% in 2014, several top-tier vendors have increased their share of the mid-market. According to Top500Guide.com, eBay-owned Magento has 27 mid-market clients among the Top 1000 in 2014, up from 11 in 2013. Oracle has 21 Top 1000 retailers, up from 17 last year. Yahoo stood steady at 12, while Demandware grew to 17 retailers from 13 the year before. (For this article, Internet Retailer defines the mid-market as e-retailers earning between $20 million and $75 million in annual revenue.)
About two years ago, for instance, executives at PureFormulas.com, a Miami-based online seller of vitamins, supplements and related products, realized they needed to shed their Yahoo e-commerce small business platform for something more robust.
As shown in the upcoming September issue of Internet Retailer magazine—you can subscribe for free here—the mid-market web-only retailer, which expects to take in about $44 million in revenue this year, wanted to add SKUs and expand into such product categories as sports nutrition, pet health and cosmetics, among other improvements, including getting software patches more quickly. Yahoo had worked fine enough, but according to William Perez, the e-retailer’s chief information officer, its platform offered relatively little scalability or ability to add third-party extensions to boost the retailer’s technology back end. Despite the “relationships” the company had built with Yahoo, change was needed.
So PureFormulas.com went shopping. Perez says that with the aid of a consultant, company employees spent an estimated 1,000 hours, or more than 40 full days, meeting with or investigating all the major e-commerce platform vendors—including Demandware Inc., hybris AG, Magento—before buying from Oracle Corp. The retailer signed a contract with Oracle in May 2013, downloading Oracle Commerce software on its own servers. The implementation required in-house design work and coding in advance of the full launch in August of the retailer’s new platform—which has also been deployed by larger retailers, including, last year, Kohl’s Corp., a retail chain that took in $1.76 billion in web sales in 2013, according to Top500Guide.com.
“It’s like buying a very expensive car,” says Daniel Moure, the Miami-based retailer’s chief marketing officer, using a phrase often voiced by retailers of roughly the same size, or smaller, when describing similar technology shopping experiences. It's not only the cost that makes the project like that, but the process of handling: getting the right people trained to work the platform, for instance.
No doubt more e-retailers will use the same words in the coming years. That’s because an exclusive Internet Retailer survey from June showed that nearly 62% of respondents put “e-commerce platform” at the top of their technology spending list. Of those that planned to replace their platforms, 60.5% planned to do so within a year.
Oracle has recently boosted its own wooing of mid-market e-retailers. Oracle Corp.’s Oracle Commerce e-commerce platform is mainly used by larger e-commerce companies. But a new software deployment tool from Speed Commerce, launched this summer, is intended to make the Oracle platform accessible to companies with as low as $5 million in annual revenue that sell online to consumers or other businesses. “We saw a void in the market for mid-market e-commerce sites having the ability to buy and run on Oracle Commerce,” says Jeff Zisk, president of Speed Commerce.
For more about the gains e-retailers can make through platform upgrades, and the challenges and costs of doing so, check out the September issue of Internet Retailer magazine.