Why online retailers are changing horses mid-race

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By: Wise Marketer Staff |

Posted on July 13, 2005

E-commerce technology is in a state of flux, with many online retailers admitting that they plan to change their basic online trading technology platform within two years, according to the 'Q2 2005 Top-Line Technology Survey' from the E-tailing Group Inc. and Venda Inc.

In the survey of 160 e-commerce executives, 55% indicated that their company was "very likely" or "somewhat likely" to make a change to their technology platform. While 35% of technology platforms are currently proprietary, the rest made use of large scale vendors, service providers, retail specialists, and small merchant solutions.

According to Lauren Freedman, president for the E-tailing Group: "With ROI and profitability being core merchant objectives, and a tactical approach being essential, it is timely to take a closer look at how merchants are gauging their technology platforms. To remain competitive, multi-channel merchants must deliver best-in-class merchandising and exemplary customer experiences at a cost that keeps the bottom line intact."

Vital but difficult
Indicative of the growing importance e-commerce has to overall company revenues, almost nine out of ten (89%) reported that their e-commerce efforts are "very" to "somewhat" profitable.

Yet there is concern that only 29% felt that their internal IT resources are up to the task of operating their current platforms. "We caution that when migrating to outsourced solutions, merchants need more than hosting and should seek vendors with specialised expertise that compliments their in-house scenario," Freedman added.

Satisfaction wavering
Most respondents were not pleased with their existing e-commerce technology. Predictably investments in such technology to-date have been a "mixed bag" with 36% agreeing with the statement: "We made some good investments, and some that were poor and just didn't pan out".

The survey found, perhaps not surprisingly, that complete or unlimited satisfaction is difficult to come by, as the majority of merchants expressed a satisfaction score (from 1 to 10) of between 3 and 8. However, a little less than one-third expressed some degree of dissatisfaction.

All change
Almost half of those surveyed (48%) anticipate a change of platform within two years. When asked to rank the importance of business factors that impact decision making when evaluating a new platform, respondents most often cited:

  1. Features/functionality
  2. Cost
  3. Reliability/stability
  4. Merchant control
  5. Platform flexibility

But, interestingly, the least significant factors cited were:

  1. Fulfilment capability
  2. Time to market
  3. Hosting capabilities

Tactical lessons
Venda's CEO, Jeffrey Max, warned: "In these tactical times a technology platform that meets core needs of scalability and flexibility is essential. More merchants are looking at the operating advantages of outsourced solutions but, at the same time, they also want to retain control and contain costs."

Merchants further expressed these demands in an open-ended question, sharing their "top three lessons learned that a company should consider when selecting a new e-commerce platform". Their responses were generally focused on thorough pre-planning, professional project management, in-depth research, diligent vendor evaluation, and the setting of realistic platform criteria.

As a result of the survey, the authors offer the following ten-point checklist for merchants that are working toward affordable e-commerce:

  1. Be comprehensive in assessing your needs;
  2. Be clear in defining your requirements;
  3. Be collaborative with internal teams and external partners;
  4. Be cognizant of costs;
  5. Be competitive;
  6. Be conscientious and thorough;
  7. Be consumer-responsive;
  8. Be a good communicator;
  9. Be in control;
  10. Be a comparison shopper.

A free webinar will be hosted by the E-tailing Group and Venda on July 19th, 2005, to further expound the survey's findings and analysis. Further details and registration are online at http://www.venda.com/webinar.

For additional information:
·  Visit E-tailing Group at http://www.e-tailing.com
·  Visit Venda at http://www.venda.com