FROM ECOMMERCE TO ALL COMMERCE
FORWARD-THINKING RETAILERS ARE THINKING AHEAD TO THE NEXT STAGE OF RETAIL, AN OMNICHANNEL WORLD, AND THE CHALLENGES THIS POSES AROUND THAT TECHNOLOGY TO BUY AND HOW BEST TO EMPLOY IT, REPORTS CHLOE RIGBY
Customers who have grown accustomed to browsing and buying from the device they have at hand, whether that’s a smartphone, tablet or PC, are setting a relentless pace of change. Faced with this, it’s a priority for many retailers to create a single commerce system that serves the shopper consistently whether they buy or interact through the store, the call centre or online.
Behind the front-end functionality of the single commerce system, and the services that allow shoppers to have their online orders delivered to a shop or shop via kiosks in the store, there is a plethora of data. A few years ago, multichannel retailers worked to gain a single view of the customer. Now, companies are looking to add a single view of the product, powering services such as order online to collect in store. It’s this focus on data management that sets apart the new breeds of ecommerce platforms, which are increasingly better described as commerce platforms, and it’s one that we focus on separately in the cross-channel experience feature on page 18.
But at the strategic top line, these new approaches to data require action. For some companies, it means working ever harder to integrate systems. For others, it means taking the step of investing in a single commerce platform in order to give customers the omnichannel consistency and service that consumers now demand.
Some 62 per cent of e-businesses, in a recent study from technology research company Forrester, said omnichannel integration was a top priority for the year ahead. The Forrester Commerce Technology Investment and Platform Trends 2013 report found 56 per cent of the e-businesses questioned planned to increase their spending on technology, with ecommerce platforms, multichannel integration and web content management tools named as a priority by 52 per cent. It also found that two-thirds of the businesses questioned either had an ecommerce replatforming project underway or had recently moved to a new platform, while a quarter were still using commerce solutions developed in-house.
For many, said Forrester analyst Peter Sheldon, the move to invest is fuelled by already strong ecommerce revenues. “This sustained and solid growth in online revenues means many ebusiness leaders have the funds and backing to invest heavily in commerce technology,” he noted.
“Across the board, retailers, consumer brands, and industrial suppliers alike are significantly bolstering their capital investment programs to ensure they stay at the forefront of digital innovation while ensuring that their online, fulfilment, and back-office systems are ready to scale for anticipated growth over the next five years.”
Acting sooner rather than later can save both time and money, says Gavin Masters, who is head of ecommerce consulting at multichannel systems specialist Maginus and was previously international ecommerce manager at Hallmark Cards . “Most retailers will need to take the plunge and move to a more suitable system – often needing to restructure their business around it – and those who act quickest will benefit most,” he says.
“Those who keep hanging on for the ‘golden opportunity’ are likely to find themselves falling further behind with escalating costs of both operations and replatforming.”
STRATEGIC MUST-HAVES
Every platform has its list of must-have features – but the features each retail business must have are those that support the services the retailer’s customers want to use, whether that’s collect in store or responsive site design that puts m-commerce first. No platform will have every feature, but working out how to add in those that are needed should form part of strategic planning. Finding out what it will take to add in a third-party solution or specialist platform, in terms both of time, cost and resource, speaks to the flexibility of the platform that’s being considered, both now and for the future. That’s important to consider even if the features to be added on are not scheduled for implementation for several years.
“Ultimately, the platform selected and the partner you choose to supply you with the platform is something that will stay with you for a number of years, so the decision should not be taken lightly,” says Masters.
He advises that businesses also consider the strategy taken by the platform they are choosing, and make sure it aligns with what they want to achieve. “It is important to understand the roadmap of the platform and when new features will be added,” he says. “This can help you align strategic and commercial activities with major releases of your online software.” He adds: “Understanding the background of the platform can also give some clues on its relative strengths and weaknesses – has it developed from a bespoke-built system, or has it changed hands a number of times, and could that affect the complexity of the code behind the scenes?”
Forrester’s Sheldon identified a difficulty for retailers in knowing whether to invest in a range of best-of-breed solutions or whether to make “strategic bets” with fewer vendors in order to reduce the complexity of integration and to reduce the total cost of ownership. For example: “Today, all of the leading ecommerce platforms have mobile-enabled starter stores; however, the dilemma is whether these starter stores are good enough or whether the e-business pro should choose a best-of-breed solution from a third-party mobile commerce platform vendor. There is no one right or wrong answer to this question; both approaches can and do work for different organisations.”
IBM commerce solutions product marketing manager Pete Wharton says it expects retailers will want to innovate by adding the latest technology added on to a main platform, and enabling that is important: “The more you open up the solution and put it in the hands of business users, they can take a fail-fast approach rather than waiting. I see that trend and I see it accelerating.”
WAYS TO BUY
Functionality is only one of the choices that merchants will make when choosing a new ecommerce platform. Whether to buy an ‘owned’ platform on license, paying upfront for the software, or whether to use one that’s available and constantly updated through the cloud, paying a monthly fee that may be based on turnover or another equation agreed with the platform vendor, will be another.
Currently, most ecommerce retailers use on-premise platforms, according to Forrester. When it asked 49 e-business and channel strategy professionals how their online store was currently supported, four per cent said they had software as a service (SaaS) solutions, eight per cent an open source commerce platform, such as Magento, and 22 per cent a homegrown solution supported and hosted internally. Some 49 per cent said it was a commercial application, and of that 49 per cent, 54 per cent said it was supported and hosted by their internal IT staff, 13 per cent by the product vendor and 33 per cent by a third-party service provider.
There has been a move towards offering cloud-hosted options for ecommerce platforms that were previously only available on-premises, but still, it seems, the owned version is predominant. Those with large IT teams may tend to opt for on-premises solutions that they can individualise, while those that have a lean structure may well benefit from software as a service (SaaS) providers that shoulder the burden of keeping a solution running day to day.
Mark Adams, partner at platform implementor Portaltech Reply, believes the status quo will change only slowly because of the complexity of providing a single customer experience across all channels. “The environment’s much too complicated to say we’ll provide the same service in the cloud and everyone’s going to be happy.” But he does see opportunities emerging and predicts, “We will see some services in the cloud where it makes sense.”
IBM is one player that has moved towards offering its Smarter Commerce platforms in the cloud. IBM’s Wharton says that when it took the step it expected to see interest from mostly mid-market players. But while lower upfront cost was an attraction, the speed of deployment was also important to companies of all sizes. “We found larger companies coming to us saying it’s the speed of deployment, the time to value,” he said. “People are using it to break into new geographic markets. They’re starting to run new hybrid-type solutions, using cloud to get into market quickly and then in time bringing it back to on premise.”
MEASURE SUCCESS
Measuring through key performance indicators (KPIs) is the way to determine that a solution is working for the business. While financial KPIs, turnover and profit margins, will always be relevant, customer-focused measurements are also coming to the fore. Hybris’ chief customer officer Kees de Vos points to figures such as customer engagement, lifetime customer value and customer satisfaction. Meanwhile Maginus’ Masters points to the importance of ensuring strategic goals are being met. “Whether that’s repeat orders, customer numbers or brand awareness depends entirely on the strategic direction of the business and what it wants from its online presence,” he says.
Ultimately, argues de Vos, the final measure will be survival. “The companies that are doing this, the retailers that are doing this well are going to win the race,” he says. “They are going to survive. The people that are not able to have this consistency, relevancy across touchpoints with their customers are not going to be able to survive going forward.”
Speaking
from
experience
From the heart
“[The ecommerce platform] is the heart of your systems, where you should achieve a single view of all your customers, of all products and, in order to manage a customer experience more effectively, a single view of orders and stock. That’s a fundamental shift from the approach people have taken historically.”
Kees de Vos, chief customer officer, Hybris
Five-year plan
“Because online is changing so quickly, it can often feel pointless to retailers to introduce a five-year plan, but it needs to be done. It may not be practical to set targets based on certain functionality or commercial goals (though for retailers who are a long way behind the curve, this is important to do) but ensuring that your business and its underlying systems support future movement online is key.”
Gavin Masters, head of ecommerce consulting, Maginus
Make the difference
“Commerce is very active, developing very quickly, and there’ll always be new ideas that come up. Our goal is to add the pieces that make a difference.”
Pete Wharton, commerce product marketing manager, IBM
What’s changed
Since we last covered the subject of ecommerce platforms, the move towards the unified single commerce platform has been marked. In a world of continued financial downturn, companies that succeed in giving customers the seamlessly consistent service that they now demand are seeing the difference in their profit and loss accounts. When the economic upturn does come, those retailers that have best equipped themselves for the future shape of commerce will see the biggest benefits.
CASE STUDY: Why american golf moved from on-premises platform to the cloud
While most retailers still work from on-premises ecommerce platforms, one retailer recently moved from on-premises to a cloud-based solution.Multichannel retailer american golf, which sells online and through 102 stores in the UK and Republic of Ireland, took the decision to move away from its legacy on-premise system to Demandware’s cloud-based solution as a strategic move to support its plans for fast growth.
The company found the transition fast. “We achieved in three months with Demandware what would have taken up to a year and required far more resources with our in-house platform,” say Pat Foley, head of ecommerce at american golf. “We launched seven web and mobile sites in a very short period of time and are now able to easily replicate changes across the entire estate, rather than dealing with sites, one at a time. We’re now on the front foot in every area, from daily management right through to international expansion.”
Foley says that the move has allowed him to concentrate on strategy and growth rather than the day-to-day performance management that previously occupied half of his time.
The company, which has grown over the last 35 years from a small business based on a Lancashire golf course to Europe’s largest golf retailer, now serves Denmark, Sweden and France online and is also planning sites for Italy. It also offers omnichannel features and services including gift card, flexible delivery and in-store collection options.
Jeffrey Barnett, chief operating officer at Demandware, says: “Managing the complexity of multiple brands, channels and geographies, along with responding to the accelerating demands of consumers, can be a daunting task for many retailers.”
