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WEBINAR REVIEW Total cost of ownership for ecommerce

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In a recent Internet Retailing webinar, Chris Poad, director of seller services at Amazon UK , joined us to talk through Amazon Webstore and how the solution could help retailers to run cost-effective primary and secondary websites in new markets and new channels.

Online sales are growing fast, and it’s a market that’s set only to get bigger, said Chris Poad, director of seller services at Amazon UK in a recent Internet Retailing webinar. By 2015, according to PricewaterhouseCoopers figures, three quarters of the UK’s residents will have bought something online, said Poad. At the same time, Forrester Research is forecasting compound annual growth rates within Europe of 10% a year.

One sector expected to grow particularly quickly is the clothing sector, which eMarketer has said will be the fastest growing US category between 2011 and 2016. That’s an effect expected to be duplicated in the UK. “One reason for that is that while this is one of the largest categories in terms of total volume,” said Poad, “a lower proportion of apparel is bought online at the moment and we’re still seeing strong growth.”

But while the outlook for online sales is good, many businesses, nonetheless, are finding it necessary to cut costs associated with running ecommerce platforms. About 55% of apparel companies, 46% of manufacturers and 56% of retailers now have online presence, said Poad.

“While those brands are looking to raise additional sales, many are looking for something else and the research that we’ve done has indicated that cost savings associated with operating an online platform, particular the technology side, is a key focus,” he said.

A study carried out for Amazon by research company Kingpin found that 27% of online traders questioned were looking at moving away from their existing platform. Some 31% of retailers and 37% of apparel companies said better features would motivate them to change their ecommerce platform, while 25% of retailers and 24% of apparel companies pointed to cost savings.

Poad went on to introduce Amazon Webstore, a scaleable, pay-as-you-go Amazon Webstore, designed to enable companies to run their own branded website, based on Amazon technology. Amazon Webstore is hosted in the cloud with costs based on a percentage of sales.

Poad said: “The cost is a very low-risk element of your business, meaning that you as a seller can focus on sourcing great products and expanding your selection rather than worrying about the technical side of keeping your website running with high availability and good performance.”

He said advantages of the platform included the ability reduce overheads, from upfront IT investment to internal infrastructure and resources. It also creates a more scalable solution and helps to mitigate risk and prevent fraud, he said.

The software-as-a-service (Saas) solution also means a fixed monthly cost, with a commission-based payment model and no capital expediture, he said. Third-party platforms could also offer a quick route to market.

Poad cited Kingpin research that asked online traders what was the primary reason for choosing their ecommerce partner. Price was the most important single factor for all of the categories of traders who took part, cited by 24% of retailers, 31% of manufacturers, and 25% of apparel companies.

Summarising the benefits of Amazon Webstore, Poad said there were no long-term contracts, no upfront costs, a low total cost of ownership and the ability to consolidate expenses with an all-in-one solution.

In a wide-ranging question and answer session, Poad tackled subjects from payment choices through to ways of approaching merchandising, and why retailers should entrust their customer data to Amazon.

To hear the webinar for yourself, to view the accompanying slides and hear the question and answer session in full, visit the Amazon webinar page. For details of our other webinars visit our webinars page.

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