This post is a recap of today’s webinar: The eCommerce Platform of the Future.
- Flexible framework with reusable services that makes it easy to extend and build out custom features
- Rich out of the box set of core features needed to meet standard ecommerce requirements
- Full access to source code to customize and extend the application as the customer sees fit
- Where are we?
- Key forces shaping ecommerce platforms today
- Key trends impacting ecommerce platforms in the future
- The shape ecommerce platforms may take
- What this means for the business decisions enterprises need to make today
Forrester shows a screenshot of Amazon.com back in the 90’s to reinforce the distance which we’ve come to the rich, robust, interactive, multichannel, multi-device platforms today. eCommerce is now mainstream with 75% using the internet to purchase, and 20% purchasing weekly. The internet is accessible almost everywhere and 22% of Gen Y connects somewhere outside of work or home (mobile, laptop etc). This impacts ecommerce and how we think about it. Big Brands Dominate, Niches Exist
Forrester forecasts online commerce to grow to 8% of total retail sales within the next 4-5 years (currently 6%).
Question: Why is it that books has so predominantly captured market share vs. office supplies which are so easily to replenish? Because Amazon trained us to buy online? Answer: Yes, Amazon’s ability to execute contributed to this — the media in general works very well online – easy to describe and fulfill. The form factor is one that you can share information about, ratings, reviews and from fulfillment and operations perspective it’s easy to execute.
Apparel and clothing is interesting – the catalog direct-shopping channel was successful before ecommerce. That led to quick growth in that category online (natural channel switch from catalog to online catalog). Note: Office supplies is huge for B2B and this is B2C data.
Factors Driving The Market for eCom Tech Demand
- eCommerce is among few bright-spots for retailers
- Wholesale-brands and CPG’s are looking to eCommerce as way to offset lost sales
- Established online retailers are dealing with aging site infrastructure and technology
- Integration to enterprise or legacy systems such as has become more and more important
- Businesses are increasingly finding their trading partners require better online channels. [B2B]
The upside to investing in ecommerce projects in a bad economy is ecommerce is also a channel, so there’s more opportunity. Companies looking to offset the decline in other channels or integrate more effectively with financial and other systems see the opportunity. There is also growth in B2B – companies looking for cost efficiencies, better experience for trading partners etc. B2B growth is healthy though may be more threat with corporate budgets shrinking, it’s still looking good. In Forrester’s recent survey of an ebusiness panel, 35% indicated they are thinking about replatforming in the next 12-24 months. In a down economy, this is a very healthy number.
A Step Back
What is an eCommerce Platform?
An ecommerce platform really is the intersection of what you sell, who you sell it to and the business process/model wherewith you sell it. The platform is what supports:
- Catalog – products, content, services
- Customers – consumers, business partners
- Business Process – Business model, business rules, value proposition
The ecommerce platform is an ecosystem or hub of the customer experience and the transaction, bringing all the pieces together such as vendor management, campaign management, customer service and other capabilities or distinct services with the things you need to execute well and optimize your business (analytics, business intelligence etc). Increasingly we’re seeing that we’re dropping the e – it’s becoming a commerce platform, not an ecommerce platform.
One Size Does Not Fit All
Businesses come in different sizes and complexities, it’s a function of what is going to work for you.
The Shape of eCommerce Platforms: Today
- Walled Gardens – Platforms that try to accomplish everything for you, tightly integrated within the product
- Distributed Systems – Services and capabilities are woven together around standards. This offers more flexibility and can drive innovation faster but are more challenging to own and operate
To determine your delivery model, you need to know what your goals are, how incorporate trading partners, technology needs, skill sets and opportunities. Also look at models of owning and operating a platform, then you compare individual products/vendors. This can be confusing for buyers because trade-offs are not always apparent. Forrester advises to engage a consultant to help navigate the options. Note: We have a couple webinars that address this topic: Selecting the Right Ecommerce Software in Six Weeks or Less with Bill Mirabito of B2C Partners The Art & Science of Choosing Ecommerce Technology with Bernardine Wu of FitForCommerce
Question: What should someone do to find a consultant? There are good ecommerce consultant solutions in the market, it’s also something that a company can navigate on their own with a well-disciplined internal process, just understand it will take a few months or more. Note: Forrester provides these services as do B2C Partners and FitForCommerce. There are also others. The key question early on is the model: list examples, how do you want to pay for it, what kind of internal staff do you have, how do you want to manage, and what platforms are available…it’s about finding the right fit.
Key Forces Shaping Ecommerce Platforms Today
- Multiple Devices
- User Generated Content
- More and Rich Content
- SaaS Point Solutions
- Product Discovery
- Enterprise Integration
- Multiple Channels
- Multiple Business Models
- Data, More Data
What This Means: Design
- And a focus on services
Speed and flexibility are key factors. Also access of data flowing in and out of your platform and syndicated outside of your platform to do things like virtual fulfillment or in-store pickup. Note: To learn more about SOA (service oriented architecture) we have a rundown here: What is SOA and how does it apply to ecommerce?
What It Means: Decision Making
- A five year decision (minimum 3 years, 5 to 10 realistically)
- Who are you and what do you want when you grow up?
- Plan ahead
- Think strategically
- Justify ROI beyond current conditions
Expect to use your platform for 5 years or more (which is why you do your due diligence when evaluating your options). You want to think ahead, ask yourself “does it enable me to be creative down the road?” rather than “does it have feature X or feature Y?” Many companies are still working with legacy solutions developed 9 or 10 years ago. It can take years to build out customizations. Once you make the decision you don’t want to re-address it in the short-term. Though it’s important to be able to justify short term ROI on ecommerce projects, think of this investment beyond the present time. Don’t be “penny wise, pound foolish.”
There’s not much uniqueness in retailing – a lot of retailers are “me-tooish.” Are platforms to blame? What’s your take on unique retailing? Retail market is a me-too market. There’s a follower’s nature – retailers will adopt a feature or customer experience of a competitor. That is not really the way you should be thinking. What’s important to your brand, product and customer? What is your differentiator? Is it price, service, or lifestyle of brand? For example, if it’s price, you need to have great product discovery tools, great SEO. Platforms can definitely limit creativity. If it’s less expensive and risky to experiment we might see more creativity emerge.
What’s your take on innovation in B2B vs. B2C? We’re seeing a lot of convergence in what is required between the two. The experiences that consumers are accustomed to now in B2C: the ability to self-serve, search, browse, customer account – they’re also looking for these when they interact with a trading partner. So customer profiles, quick reorder, self service and configuration tools (think usability and customer-centricity) are driving B2B innovation.
Timing: Should you look at 5 to 10 year window when pitching an ecommerce project? Most people are concerned with tomorrow. You need to justify based on 1-2 year ROI, and the degree depends where business is at in terms of maturation. At the same time, try to take longer term view. You can do both, since you may take narrow view of scope short term, knowing you can elaborate and build out the platform’s capabilities in year 2, 3 or 4.
How do you handle replatforming a legacy system or super-customized purchased platform? Uniqueness in commercial proudcts is about 10%, so if you want to leverage what you’ve already built try to wrap the customization as a service or standalone application and use it while you build out the new platform. What is available through commercial products uniqueness is 10% try to wrap the customization up as a service or distinct standalone application and use it for a while as you build out the new platform. Easier said than done in most cases. Many times the cost to support custom app is significant when you consider the staffing load and opportunity cost of working on other things. Also, key developers involved in building the application have left and nothing’s documented, every time you do a new project bug fix or whatever, you have to decompose existing code base to move forward. This could add 1/3 more lead time and QA time. In the enterprise context it’s astonishing. At the same time transition can be difficult and you have to be strategic.
Where do you think cloud computing fits in to ecommerce in the future? Platforms are ready to take advantage of cloud computing but we are early in willingness of moving data to the cloud. It’s close to the tipping point, and a bit easier in the consumer space.
Ancillary applications (add on, best of breed applications like search or rich imaging) — do you stick with the platform’s tool or do bolt on? Focus on the customer experience you’re trying to create and how you want to manage it. Is the default component going to deliver what you want and need? If not, evaluate solutions in the same way you’d approach a platform decision. Integration is easier now, a fairly repeatable process with more common platforms. Advocate for integration support (with an SI or push the vendor to support you or provide documentation to do it).
What if you take a lot of steps design-wise adn later find the platform has problems that couldn’t be vetted in the RFP phase? How do you avoid this problem?This is a best-case scenario, not perfectly practical to everyone, but ask for a POC (proof of concept) from a vendor you’re seriously considering (not more than 3) to show an example of the solution, how it works and how the platform enables it to happen. The fact is most projects are time constrained to the POC often gets cut. Try to advance the opt-outs in the agreement so you have some ability to get out of agreement if you feel the product doesn’t meet your needs. Also, try to advance the feature in the QA process so you have time to evaluate it sooner. Otherwise, kicking the tires on demo versions and checking references in the RFP process can also help. If you have any other questions, these can be addressed offline as we ran out of time.
Solving the Ecommerce Dilemma: Buy or Build? Buy vs. build is the perennial question facing IT leaders seeking to enable their organization’s ecommerce ambitions. On the one hand, the simplicity of an out-of-the-box solution is appealing and avoids reinventing the wheel. On the other hand, you know that your infrastructure poses some unique challenges, and the business wants to be an innovator, not an also ran. In this one hour webinar, Michael Vax, Elastic Path’s CTO, will discuss the critical questions that IT leaders need to consider before they select the right ecommerce strategy for their enterprise. * Webinar takeaways: Process for uncovering your business and technology needs * The pros and cons of a buy vs. build decision for ecommerce * How to combine the advantages of both approaches Register now Date: Wednesday, March 25, 2009 Time: 9am Pacific / 12pm Eastern Presenter: Michael Vax, Chief Technology Officer, Elastic Path Software