How Overstock Kept TCO Low For New Site Launch

In yesterday’s Elastic Path webinar An Enterprise Guide to Lowering TCO for Multistore Environments (now available on-demand), our CTO Michael Vax walked us through a number of multistore models.

Interestingly, I spotted an article in the Wall Street Journal that was fitting to this topic. Overstock.com just announced it will be launching a new B2B channel on October 31, 2009 on the domain o.biz. O.biz will sell in bulk at bulk pricing and The ‘Stock believes the channel could someday account for a double-digit percentage of its sales.

Overstock CEO, Patrick Byrne says the new site only cost around $1 million dollars to create, as it “piggybacks on all of the infrastructure we already have.”

As we learned in the webinar, the TCO (total cost of ownership) for multistore initiatives can be significantly lowered by sharing as many components between stores as possible. The high level components of an online store are as follows:

• UI – user interface “look and feel,” features
• Marketing – promotions, personalization, SEO, banners, sales
• Merchandising – product associations, product recommendations, bundles
• Prices – tiered pricing, multiple price lists
• Catalog – product attributes, images, video
• Inventory – and rules on product availability
• Customer – registered customers (single sign-on across sites), customer profiles, customer support
• Fulfillment – order and shipment management
• Deployment – ecommerce platform, Infrastructure, integration with other IT systems

The inefficient way for Overstock to have developed its sister site is to have 2 separate deployments, like so:

This does not scale well.

Assuming Overstock could reuse the majority of its ecommerce components, its model may look like this:

Customizations may be necessary to various components based on how Overstock wants to best serve its B2B and B2C customers. This model may not be correct, as perhaps its bulk business has a separate inventory and separate fulfillment, or it wants to maintain separate customer databases and accounts, but you get the idea.

Multistore vs. Multitenant

In the multistore environment, a single organization operates multiple stores. These stores may have their own ecommerce teams, but they are still under the same parent company. In the multitenant environment, a single installation of the ecommerce platform is used by multiple organizations that operate multiple stores. The “tenant” organizations do not have access to other tenants’ data such as catalog, pricing, inventory et cetera.

Overstock is a simple example of a multistore environment. At the other end of complexity, we have the multistore and multitenant environment that you would find in an enterprise telecommunications situation. Telcos can leverage their commerce platform to not only run multiple stores for different countries, customer segments and brands, but they can also provide their platform to resellers or large customers like employers and government agencies that may offer wireless plans to their employees. In essence, the telco becomes a “hub” for its resellers and customers.

Its multistore/multitenant environment might look something like this:

Alright, segue time…

A Look at the Telco Industry

In our next webinar Ecommerce best practices for the telco industry, Elastic Path product manager Peter Sheldon and I will be presenting the findings from our extensive research of telecommunications ecommerce including:

• What are the biggest causes of shopper frustration and store abandonment?
• What best practices have emerged and what can we learn from other online retailers?
• How can complex availability, compatibility, and provisioning rules be simplified for a better online experience?
• How does the experience differ for new vs. existing customers?
• How can triple play and quad play operators simplify and streamline their online experience?

We believe this will be an interesting session for all Get Elastic readers, no matter what industry you’re in as it will cover the features and functionality that make for a leading edge ecommerce site and many of the takeaways can help you with your own e-stores.

Please sign up today:

Date:
Tuesday, October 27, 2009 9am Pacific / 12pm Eastern