An executive report from Internet Retailer
february 2016
The 2016 Guide
to E-Commerce
Platform Selection
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
an executive report from internet retailer
| e-commerce platforms
Table of Contents
2
3
Introduction: the replatforming imperative
6
The right vendor (at the right price)
11
Must-have features
15
Mobile is the question: Is responsive the answer?
19
On-premise versus the cloud
23
Conclusion: 5 takeaways
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
The 2016 Guide
to E-Commerce
Platform Selection
More than half of web retailers plan to upgrade their e-commerce
platform in the next two years. Mobile is a priority and many want
vendors to host e-retail software.
Online retailers face a conundrum: They know they need sophisticated e-commerce
technology that’s easy to use, allows them to personalize their promotions to individual
shoppers and translates automatically to mobile devices. But many who lack the internal
personnel to build such technology fear turning their web operations completely over to an
outside company.
There is no easy answer, but that’s not keeping online retailers from taking action. More
than half in a recent Internet Retailer survey say they will replace their e-commerce platform
within the next two years. Indeed 22.45% say they’re in the midst of a replatforming project
today, while 14.29% say they will move to a new
platform in the next year and another 16.33%
When do you next expect to replace
within two years.
Interviews with eight e-commerce executives
your e-commerce platform?
among the 98 respondents to the January 2016
survey reveal their concerns mainly fall into
four categories: vendor fit, finding the features
their company needs specifically, serving mobile
shoppers and deciding whether to operate software
in-house or let cloud-based vendors do the job.
Indeed, anonymous comments given by Internet
Retailer survey respondents reveal their worries
about the replatforming process: that they lack
enough time to choose an e-commerce platform
wisely; that they will end up with fewer features
� In the midst of a re-platforming
22.4%
and functions than they need; the complexity, time
project now
and cost involved in changing platforms; and the
� Within the next year
14.3%
challenge of importing data correctly into the
� Within two years
new platform.
16.3%
In this report, we will look at each of the four
� More than two years from now
4.1%
questions e-retailers raised in their comments and
� No plans to replace our current
follow-up interviews, and provide their views and
42.9%
platform
those of other experts on the factors each web
merchant should consider when making these
Source: Internet Retailer, January 2016
important decisions.
3
Sponsored Spotlight
E-commerce sites must be able to
deliver what shoppers want today
E
ach advance in Internet technology has changed
the way consumers shop online. In the mid-1990s,
Amazon.com offered customers a revolutionary
way of shopping from the comfort of their personal
computers, and many retailers followed. A decade
later, smartphones introduced another groundbreaking
shopping experience—buying anything from just about
anywhere. Again, retailers quickly adapted. Meanwhile,
tablets, email and social became part of consumers’
everyday lives—all becoming part of how we shop online.
And retailers scrambled to keep up.
“It’s extremely hard to predict where customer
behavior is headed,” says Jason Wallis, chief technology
officer of Mozu, a platform for mid-market and
enterprise retailers. “It’s the adoption of consumer
technology that is driving what retail needs to do,
because consumers are setting the terms for where and
how they want to shop—and they are setting those terms
by how they use technology.”
Couple these unpredictable changes with a growing
business, and a retailer may quickly find that its systems
are unable to respond efficiently to what consumers
want now.
Jelly Belly found itself in this situation a few years
ago. The growing candy retailer wanted to replace
its outdated home-grown e-commerce system with
a platform better capable of catering to its evolving
customer needs. The company sought to launch multiple
responsive sites that would scale with their growth and
empower their e-business team to update merchandise,
promotions and content—without relying on IT support.
“JellyBelly needed a platform that was nimble and
innovative so it would be able to quickly deal with
modern challenges—such as unpredictable changing
consumer behavior—as they come up,” Wallis explains.
The company decided to implement Mozu because it
found the open SaaS platform to be cost-effective, and
it offered a consistent mobile experience, among other
reasons. Since moving to Mozu, the Jelly Belly site runs
two times faster than it previously did, and the company
has experienced a 300% increase in mobile sales.
“Migrating from our homegrown platform to Mozu has
given Jelly Belly the power to drive growth much faster
than we could on our own,” says Brandon Finch, Jelly
Belly’s director of e-business.
As many retailers consider replatforming projects,
Wallis says there are some critical elements to keep
in mind when choosing a platform partner. An ideal
platform, he says, offers regular enhancements and
upgrades with a pricing model that is fair and predictable.
It should have a strong content management system
so marketers and merchandisers can easily manage
shopping experiences. The platform should make it easy
for consumers to shop on smartphones and tablets,
as well as on desktops and in a retailer’s stores. The
platform should also enable a retailer to operate multiple
e-commerce sites, which is crucial for retailers that have
smaller niche sites in addition to their main sites. Finally,
he says, the retailer should be able to easily run and
operate the platform without the expense of extensive IT
support. All of these attributes, he says, retailers will find
in Mozu.
“Retailers won’t have to replatform every few years
if they have a platform that knows how to evolve with
constantly changing consumer behaviors,” Wallis
explains. “At Mozu, we believe in innovation, and our
platform gives retailers the power to innovate, grow and
adapt as the market adapts.”
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an executive report from internet retailer
In your experience, what are the main
challenges you faced when upgrading your
e-commerce platform?
Lack of funds
26.5%
Not enough experienced staff/Tried to do too
much at once
43.9%
Too many older systems to integrate
39.8%
Disconnect between store and e-commerce
teams/Poor vendor performance
15.3%
Our goals changed mid-project
13.3%
Other (please specify)
14.3%
Source: Internet Retailer, January 2016
If you are planning to replace your
e-commerce technology, how much do you
expect the re-platforming project will cost?
�
Under $50,000
25.5%
�
$50,000 to $100,000
6.1%
�
$100,000 to $250,000
10.2%
�
$250,000 to $500,000
9.2%
�
$500,000 to $1 million
10.2%
�
More than $1 million
�
Don’t know
4.1%
34.7%
Source: Internet Retailer, January 2016
6
| e-commerce platforms
The right vendor (at the right price)
Retailers and other businesses selling online are
spending a lot on e-commerce technology. But many
are having to make compromises because they don’t
have the budgets to get everything they want.
Forrester Research estimates businesses spent
$3 billion 2015 on what the advisory firm
calls “commerce servers,” which includes the
underpinnings of an e-commerce website. That is
set to grow by 17% in 2016 and by another 10% in
2017, Forrester said, in a report that includes the
spending by retailers that sell to consumers as well
as companies that sell online to other businesses.
The budgets vary widely among the companies
that responded to the Internet Retailer survey, no
doubt reflecting the variance in their size from small
web-only merchants to national retail chains.
Of those planning to replace their e-commerce
software, 25.51% expect to spend less than $50,000
on the project, 6.12% $50,000 to $100,000, 10.2%
$100,000 to $250,000, 9.18% $250,000 to $500,000,
10.2% more than $500,000 and 4.08% more than $1
million. 34.69% said they don’t know what it will cost
to replace their underlying e-commerce platform.
Whatever they’re planning to spend, some fear it’s
not enough. In fact, six of the eight retailers interviewed said they want more features than they can
currently afford. That forces them to decide where to
compromise.
One example is Kenny Brown Performance Group,
a privately held manufacturer of high-performance
cars and after-market performance automotive
suspensions. The company has specific needs such
as strong in-bound marketing integration, but can’t
afford to build just what it wants, says marketing
director Cari Southworth.
“We’re not to the point where we can justify the
investment in a customized e-commerce platform
built specifically for us,” she says. Kenny Brown is
moving to Shopify’s e-commerce platform because
it has the capacity to grow, is easy to use, improves
social media visibility and provides for responsive
design, a format that adapts the look of a retail website to the device the consumer is using. Responsive
design lets a retailer build a website with one code
base so that it doesn’t have to operate several sites
to account for the many types of devices—desktops,
smartphones and tablets—consumers use to access
the Internet.
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
Southworth, whose company sells its performance
vehicle conversions and automotive suspensions
online, says she will work with a vendor the company is still in the midst of selecting to install one
key component from its existing website: a configurator that makes recommendations to customers
as they plan their car projects based on their needs,
budget and vehicle use.
Chelsea Mueller, director of e-commerce for
Cheaper Than Dirt, says the discount sporting goods
retailer just launched a new website and e-commerce
software on Jan. 12, using Kivo, formerly MarketLive.
The main goal of the project is to accommodate
growth. She says the transition from a platform built
and managed in-house made her aware that when
a company hires a vendor to run its e-commerce
software it’s the retailer’s responsibility to make sure
that the outside developers keep it up to date.
The retailer must stay informed about the product
roadmap, ask questions about new technologies and
encourage the e-commerce platform provider to
integrate with necessary services, she said.
“That’s the trade-off,” she said.
Kivo delivers its technology using the software as
a service, or SaaS model. That means the vendor
hosts the software and the retailer client accesses it
via the web, rather than hosting the software on its
own servers.
Mueller says her company’s revenue-sharing
model with Kivo ensures the vendor has an incentive
to keep updating the system.
“If your sales are X, you’ll pay a percentage of
sales for your subscription to the platform,” she said.
“That way, the platform is incentivized to keep you
updated and on the cutting edge since the vendor
makes more money when you make more money.
Everyone has skin in the game, as opposed to a
flat-rate model where you have a flat subscription
rate.” Mueller declined to disclose how much of a
percentage of sales it will pay Kivo.
Other web retailers, however, object to paying a
percentage of sales to a vendor, because they anticipate rapid growth and don’t want to pay rapidly
escalating fees for e-commerce software.
Still others don’t want to work with commercial
providers at all.
David Coy, president of Beauty Care Choices, says
he is skeptical of what he calls “canned” e-commerce
software and believes the company should have
complete flexibility in operating its own system.
Beauty Care Choices is an online seller of salon
products, including cosmetics and hair, skin and nail
care items, that offers consultations by email and
phone. The retailer developed its own proprietary
e-commerce platform, giving it the flexibility to
make changes and implement new features without
having to rely on a vendor, Coy says.
But he recognizes that this strategy brings its
own risks.
“The difficulty in this approach is having to either
staff or contract developers who are familiar with the
code and spec out any projects we want to develop,”
he says.“The benefit of using a third-party platform is
that we have access to any new features they launch.”
Others are leery because of prior bad experiences
with vendors.
“We went through a couple of nightmares,” says
Cherri Newbury, president and co-founder of
DiscountCoffee.com, an e-retailer that sells national-brand coffee, tea, snacks and break-room supplies
to consumers and businesses nationwide.“Hiring
development companies is probably the most
challenging thing you’ll ever do.”
Thinking about the last time you deployed
a new e-commerce platform, pick the
statement that best describes how long
the project took for deployment.
�
About the time we estimated
23.5%
�
Somewhat longer than we estimated
44.9%
�
A great deal longer than we estimated
27.6%
�
Somewhat less time than we estimated
1.0%
�
Much less time than we estimated
3.1%
Source: Internet Retailer, January 2016
7
an executive report from internet retailer
Thinking about the last time you deployed
a new e-commerce platform, pick the statement
that best describes how much the project cost.
�
About the amount we estimated
37.8%
�
Somewhat more than we estimated
41.8%
�
A great deal more than we estimated
13.3%
�
Somewhat less than we estimated
3.1%
�
Much less than we estimated
4.1%
Source: Internet Retailer, January 2016
One company, StoreFront/LaGarde, went
bankrupt six months after DiscountCoffee.com
signed up for its services, and another changed
the rules along the way, despite having signed a
contract. The latter company refused to abide by the
contract because it would have cost them money,
and ultimately bailed out, she said.
“They over-promise and under-deliver,” Newbury
said.“It takes six to nine months from the vetting
of their services to getting contracts reviewed. One
turned out to be a legal nightmare,” she said.
Yet Newbury says upgrading an e-commerce
platform is essential to meeting technology
advances and evolving company and customer
needs. She says the company has had more positive
experiences with vendors than negative ones over
the past 18 years, and that some vendors have been
what she calls “stellar partners.”
“When you find a good one, it’s best to stick with
them as long as you can, until you outgrow them,”
Newbury says.
She says one good way to find e-commerce
vendors is at the annual Internet Retailer
Conference & Exhibition, where some 650
10
| e-commerce platforms
technology and service providers promote their
products on the show floor.
“We found great companies like Acadaca, Born
and Krish,” Newbury says.“Any e-commerce
company is truly missing a great resource by not
attending an IRCE.”
A conference like IRCE, she says, gives her
the chance to talk frankly and eye to eye with
e-commerce vendors about her company’s plans
for growth. She asks questions about the vendors’
length of time in the industry, seeks current
customers and references who will talk about good
and bad experiences, and makes an effort to speak
to the vendor’s owners or developers.
While such due diligence is crucial, experts say
selecting an e-commerce platform is always complex
because new vendors keep cropping up.
“We continually learn of new vendors so it would
seem there are more choices for clients—especially
SaaS offerings,” says Penny Gillespie, research
director at advisory firm Gartner.“More choices are
available but they are all different, which can make
selection more complicated.”
“That way the platform
is incentivized to keep
you updated and on
the cutting edge since
the vendor makes more
money when you make
more money.”
—Chelsea Mueller,
director of e-commerce,
Cheaper Than Dirt
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
Must-have features
So what are the necessary ingredients for an
e-commerce platform today?
The Internet Retailer survey showed 72.37% chose
an ability to function seamlessly with mobile devices
and 72.45% chose flexibility as their top priority
in deploying new e-commerce software. Other
top answers included 68.37% choosing ease of
integration with existing software; 63.27% value for
price; 65.31% reliability of the vendor; 51.02% fast
implementation time; 46.94% a variety of pre-built
integrations with other e-commerce software, and
45.92% the platform’s reputation. The respondents
could pick more than one answer.
Southworth says Kenny Brown’s e-commerce
platform needs to accommodate video and other
content in a way its current technology does not.
The current platform is difficult to use and edit, and
requires calling in IT support for most tasks, she
says. The company is just now starting to update its
e-commerce software and website.
“Our brand is known as a personality—an educator,”she says.“People come to our website looking for
knowledge.
That presents a conundrum for the small company
because so few out-of-the-box e-commerce software vendors offer the kind of content management
system she seeks integrated with the e-commerce
platform as well as strong in-bound marketing
integration, Southworth says. In-bound marketing
includes promoting a retail website via search,
affiliate and social marketing, as well as by display
ads and email.
Mueller says Cheaper Than Dirt’s new e-commerce software from Kivo works suits the retailer’s
needs because non-technical employees can add
promotional pages, update product detail pages and
change the design of almost any page on the website
by using a pre-built format that lets them drop in
text and images.
Previously, the company used its own in-house
development staff to handle all the website changes
and to create new pages.
Kevin Hickey, CEO of Online Stores LLC, says the
retailer’s e-commerce and order fulfillment systems
both need to be robust. That means they must be
able to process large numbers of transactions quickly
and securely to avoid down time on the company’s
six highly focused e-commerce sites. The websites
sell a variety of items, such as flags, tea, pool toys
and construction boots and clothing.
The retailer has invested in integrating the two
systems, which came from separate vendors–
Magento for e-commerce and Circle Commerce for
order management and the broad business functions
typically referred to as enterprise resource planning,
or ERP. That tight linking enables the retailer to
know what inventory is available and when it can
ship, Hickey says. He said it took several hundred
hours of development time to integrate the two
systems.
Newbury says operating DiscountCoffee.com has
become easier since the e-retailer relaunched the
site in February 2014 with Magento Enterprise.“You
can pick up the phone and talk to someone,” she
says—that someone being a member of Magento’s
support team.“If you want to do something new and
different, it’s easy to stay on top of the curve.”
Magento Enterprise is a version of the open
If you are in the midst of or planning to
deploy a new e-commerce platform, what
is your No. 1 priority?
�
Being able to serve consumers on
mobile devices
�
Ability to offer more kinds of
promotions
�
Ability to personalize web pages
for each shopper
11.2%
�
Deploying a more robust platform
that can handle growth
43.9%
�
Ability to handle more SKUs
�
Ability to operate multiple
e-commerce sites
�
Ability to sell overseas
21.4%
3.1%
3.1%
15.3%
2.0%
Source: Internet Retailer, January 2016
11
an executive report from internet retailer
“We have designed
internally a single website that does everything.
We were pulling out our
hair maintaining both
code sets.”
—David Coy,
president,
Beauty Care Choices
source Magento software that bundles together
many features that e-commerce sites required.
The annual license fee is nearly $18,000,
according to Amit Bhaiya, co-founder and CEO of
DotcomWeavers.com, a web apps and e-commerce
consulting firm that specializes in Magento
e-commerce projects.
A free Community edition of Magento is available,
but retailers that go this route must invest significant
amount of time in adding features and customizing
the software for their needs.
Magento touts as a big advantage of its software
the thousands of developers certified to work with
the e-commerce software.
“We have 8,000 extensions that work on the
Magento platform,” Magento CEO Mark Lavelle says.
Gartner’s Gillespie says customers using Magento
have typically expressed higher-than-average
satisfaction on its performance and cost of ownership,
based on Gartner’s market research. She says the
biggest challenge will be for Magento to move users
to the 2.0 version introduced Nov. 17, 2015, while
ensuring that older extensions get updated and are
available to customers that are not ready to move.
Magento’s open source software requires assembly,
which some see as complexity and others see as
flexibility, Gillespie says.
Bhaiya says prices vary widely among the more
than 20 e-commerce enterprise platform vendors
14
| e-commerce platforms
In selecting an e-commerce platform, what
are the most important things you look for?
Value for price
63.3%
Flexibility
72.4%
Ease of integration with existing software
68.4%
Offers many pre-built integrations with
other e-commerce software
46.9%
Reliability of vendor
65.3%
Reputation of platform
45.9%
Platform is used by companies like mine
27.6%
Fast implementation time
51.0%
Mobile functionality
73.5%
Cross-channel functionality
(physical stores and web sites)
41.8%
Other (please specify)
13.3%
Source: Internet Retailer, January 2016
on the market today. On the low end there are
technology providers like BigCommerce that offer
packages for monthly fees of $30 for e-retailers
selling no more than $50,000 online a year, $80 for
merchants with annual online sales up to $125,000
and $200 for e-retailers taking 3,000 orders per
month online. For companies with sales above $1
million a year BigCommerce quotes prices based on
the web merchant’s needs.
For larger retailers, Bhaiya says there is software
from companies like hybris, part of German
business software company SAP AG, which can cost
upwards of six figure to install and configure, plus
$5,000 to $10,000 a month in ongoing maintenance
fees. Forrester Research says companies should
plan to spend 20% of the initial purchase price of
e-commerce software in annual maintenance fees.
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
Mobile is the question: Is responsive
design the answer?
Responsive design is on the minds of many of the
retailers interviewed, mainly because many of them
have seen their mobile share of shoppers double
within the past two years. Responsive design allows
a retailer to build a single website that recognizes
the device the shopper is using and shows her a
web page tailored to that device. That eliminates
the need to maintain separate e-commerce sites for
desktops, smartphones and tablets.
Coy says Beauty Care Choices was planning to
roll out a responsive version of its site by the end
of February 2016. He says the company found
no benefit in running a separate, parallel site for
mobile devices. When the retailer ran both a mobile
site and a desktop site, the executives decided to
optimize the mobile site to look good and be easy
to navigate on mobile phones, while directing
tablet users to the desktop site, he says.
But now, he says, the retailer will only have to
maintain a single, responsive site
“Instead of trying to maintain two sites, we have
designed internally a single website that does
everything,” he says. The internal process took three
months.
“We were pulling out our hair maintaining both
code sets,” he says. The difficulty centered around
having to do double the development when a page
or feature was added or changed, he says.
Another advantage of responsive design is that
there is a single URL, which leads to higher rankings
in Google. With two sites there is a desktop web
address like Retailer.com and a mobile site with a
URL of m.Retailer, and Google sees those as two
sites, which divides the SEO value of traffic and links
to those two sites. With responsive design there is
one URL, and Google has signaled it sees that as
preferable for consumers, which is generally taken as
a sign that responsive sites will fare better in Google
search results.
Responsive design also ensures that a consumer
who starts a shopping session on one device, for
example putting an item into a shopping cart, can
complete it on another device.
Joe McGarry, president, CEO and founder of
GoGloves, is another retailer that has gone the
responsive design route. McGarry says 50% of the
retailer’s business comes through mobile devices,
and that the steady growth in mobile customers
prompted his company to undergo a major upgrade
in 2015 to become responsive.
Coy and McGarry are in good company in
moving to responsive design. The Internet Retailer
survey showed an overwhelming 94.90% of those
planning to deploy a new e-commerce platform
will employ responsive design principles. 5.10%
said they did not plan to do so.
Of those planning to use responsive design,
91.40% said they want to serve mobile shoppers
from a single website; 53.76% want to maximize
the search engine optimization value of one site
versus two or more, and 31.18% said it is less
expensive than building multiple sites.
Nonetheless, not every retailer that has gone the
responsive route is completely satisfied with the
results.
Newbury, of DiscountCoffee.com, is concerned
that customers get lost amid icons many are
unfamiliar with, such as the common gear icon
that symbolizes settings, three bars for navigation
and the exclamation point signaling to watch for a
problem.
“The merchant does not lose out; merchants
need to move to responsive design to stay in tune
with their customers,” Newbury says.“But since
responsive is still so new, the customer is still challenged with learning the new icons and layouts.”
If you are replacing your e-commerce platform,
are you going to employ responsive design
principles on the new site?
�
Yes
94.9%
�
No
5.1%
Source: Internet Retailer, January 2016
15
an executive report from internet retailer
Why are you going with responsive design?
In order to serve mobile shoppers from
a single website
91.4%
�
To maximize SEO value of one site
versus two or more
53.8%
�
Less expensive than building multiple
sites
31.2%
�
Vendor recommended it
�
3.2%
Source: Internet Retailer, January 2016
Web developers have been trying out ways to
adapt the look of a website to the user’s device for
15 years, but it’s only in the last five years that large
numbers of retailers have adapted the technique now
called responsive design.
For DiscountCoffee.com, there has been a clear
impact since the retailer moved to responsive design
three years ago: Traffic to the site from mobile devices
has grown from about 10% to 40%.
Terry Monroe, partner and co-owner of Murphy’s
Department Store, says his company’s template–the
basic website design on which the retailer builds its
web pages–from software company Lightspeed Retail
E-commerce is responsive, and Murphy’s is gaining
traffic and some sales since deploying it in February
2015.
But he has reservations.“It is a bit awkward due to
the small space available on most tablets and phones,”
Monroe says.“We have over 2,800 items available for
sale on the website, and, to me, our presentation on
a laptop is more pleasing and easier to navigate than
our responsive presentation. We have not done a lot of
research yet to see if there are improvements that can
be made, but we will be reviewing the mobile experience for customers in the next six months.”
18
| e-commerce platforms
Forrester analyst Mark Grannan says there is some
disappointment with responsive design among
those who imagined it was a simple solution to the
problem of serving consumers on multiple devices.
“Unfortunately, many did not fully appreciate the
complexities of designing for multiple contexts
within a single design/development process,” he says.
Retailers considering responsive design should
also be aware that there are many variants and that
they continue to evolve. The first implementations
of responsive design typically sent all the data that
could be used on any type of device down to the user’s
browser and then gave instructions to the browser
on which elements to use and where to put them on
the web page. That, however, meant sending a lot
of data, including across cellular networks, slowing
down the performance of responsive sites on mobile
phones. Later versions recognize the device at the
retailer’s server and only send the data needed for that
device. That approach is sometimes called“adaptive”or
“hybrid”responsive design.
And responsive design continues to evolve to
become even more tailored to the user’s device. Ian
Fogg, senior director for mobile and telecom at IHS
Technology, a consulting firm, says retailers can detect
the specific smartphone the consumer is using and
send a web page designed for that particular smartphone device.
That would allow, for example, a retailer to offer
fingerprint authentication to consumers with smartphones that have that feature while asking for a
password from consumers with older phones.
“Open-source systems
are often so customized
that moving them from
one server to another is
like surgery.”
—Andy Crestodina,
strategic director,
Orbit Media Studios
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
On-premise versus in the cloud
To keep up to date, retailers’ operations are increasingly moving to the cloud, meaning that the retailers
will pay for a vendor to handle web services by
owning the hardware, providing computing power
and managing the service at data centers.
A subset of cloud computing is software as a
service, in which a vendor hosts software on behalf
of a client that accesses the software via the web. It’s
an increasingly popular e-commerce option.
The Internet Retailer survey showed 46.94% of the
respondents intend to roll out a SaaS e-commerce
platform. Another 10.20% say they will choose
licensed software that the retailer hosts; 14.29% say
they will choose licensed software that the vendor
hosts; 14.30% plan to develop and host the software
in-house; 4.08% chose none of the options, and
10.20% selected open source, in which the retailer
can view and modify the source code.
Open source software may be hosted on-site by a
company, but that’s not the only option, says Andy
Crestodina, co-founder and strategic director of
Orbit Media Studios web design and development
firm.
“In theory, one of the benefits to open source is
that it’s more portable, in theory, and can be hosted
anywhere, but this isn’t always true,” Crestodina
said.“Open-source systems are often so customized
that moving them from one server to another is like
surgery, similar to any proprietary platform.”
Though open source is more likely to be hosted on
a company’s own servers, on-premise might mean
several things: on servers a retailer owns, on rented
computers that the company manages itself or that
reside in a “cage” the retailer rents in a data center,
Crestodina says.
In the latter scenario a retailer can manage
remotely servers in an outside company’s data
center; server administrators connect using software
that lets them monitor and manage without being
on site, he says.
Forrester Research foresees 55% of commerce
server revenue going to cloud-based service providers in 2016, with those providers’ subscription revenue growing from $22 billion in 2012 to $53 billion
in 2016. Cloud-based software revenues should grow
to more than half of total software revenues by 2020
because retail and information technology executives
see that approach as the surest way to keep up with
technology innovation, Forrester says.
The value of SaaS software is that a vendor
focused on updating technology is responsible for
adding new features, not the retailer. For example,
when a new social network, such as Pinterest, suddenly becomes popular, the vendor can add a feature
that lets shoppers share purchases on Pinterest to
the software that all the vendor’s clients use, giving
them instant Pinterest connectivity.
Retailers interviewed for this report, however, have
mixed views on the value of maintaining control over
e-commerce software versus turning it over to others.
Some online retailers have had problems when
moving their e-commerce sites to web-based servers
hosted by another company. For example, Newbury
says Discount Coffee’s e-commerce site was frequently offline after it moved to the cloud five years
ago. She blamed denial of service attacks and other
kinds of malicious attacks.
“My website was down more than it had
ever been. I’m not comfortable moving back,”
she says. The retailer now uses a conventional,
What best describes the kind of e-commerce
platform you now operate?
�
Developed and hosted in-house
14.3%
�
Open source
13.3%
�
Software as a service (provider hosts
software, accessed via the web)
35.7%
�
Licensed software that the provider
hosts
13.3%
�
Licensed software that we host
ourselves
19.4%
�
None of the above
4.1%
Source: Internet Retailer, January 2016
19
an executive report from internet retailer
not cloud-based, hosting vendor that promises
redundancy, or the ability to move the website to
another server, in case the primary server goes down.
The setup requires no sharing of the server hosting
DiscountCoffee.com with other websites. That can
be significant, as when a single server is hosting
many websites an attack on one site can affect the
performance of the others.
McGarry of Go Gloves, meanwhile, says he
prefers running his own servers. That approach
gives a retailer maximum control, but puts the onus
on the retailer to maintain a staff that can respond
to any problems.
Other retailers say cloud-based software has
improved the performance of their websites.
“Performance speed and stability made cloudbased hosting appealing,” says Mueller of Cheaper
Than Dirt. She could not quantify how much better
the service is because the retailer had been using
Amazon Web Services to host its website for three
weeks at the time of this report.
Hickey, of Online Stores, says the retailer is
What best describes the kind of e-commerce
platform you would like to operate?
�
Developed and hosted in-house
14.3%
�
Open source
10.2%
�
Software as a service (provider hosts
software, accessed via the web)
46.9%
�
Licensed software that the provider
hosts
14.3%
�
Licensed software that we host ourselves
10.2%
�
None of the above
4.1%
Source: Internet Retailer, January 2016
22
| e-commerce platforms
evaluating the Mozu cloud-based software from
Volusion LLC in hopes it will save time and expense
in managing the system and ensuring security,
compliance with PCI rules on protecting consumer
payment card data, and system capacity and
optimization. The retailer will decide sometime this
year, he says. Online Stores currently runs Magento
Enterprise licensed software on its own servers.
Monroe, of Murphy’s Department Store, has
operated on cloud-based Web Store software
from Lightspeed for one year and appreciates the
vendor’s ability to keep the software constantly
updated and to quickly answer his questions.
“We are using our second cloud-based system
that includes both point-of-sale and e-commerce,”
Monroe says. The retailer operates one physical
store and a single website.
“Our previous experience had several problems
that we resolved when we changed to Lightspeed
Retail,” Monroe says. But, like most e-retailers that
use vendor software, he says the software does not
meet every one of his needs. For example, Murphy’s
would like to demonstrate its housewares and other
products on YouTube videos, and place those videos
on product pages. There’s no space to do that now,
though the retailer is working on it.
“Lightspeed Retail is general and we do have
some difficulty fitting what we need to have for
our customer base into the Lightspeed framework,”
Monroe says.“Because they have designed their
service to be general enough to fit a variety of
retailers, there are some features that are awkward
to adapt to our situation.” But, he adds,“We do not
have the budget or technical knowledge to develop
something specifically for our business.”
That illustrates the common complaint about SaaS
software: In many cases the software is the same for
all the clients that use it, and the vendor only adds
features periodically. In the meantime, it can be hard
for an e-retailer to differentiate itself with distinctive
site functionality. Those limits have to be weighed
against the benefit of not having to build and
maintain a website internally. And retailers should
keep in mind that each vendor’s technology works
differently, and that some offer more customization
options than others.
sponsored by
| GoECart | WebLinc | Mozu | vtex | Bigcommerce
Conclusion: 5 takeaways
Selecting an e-commerce platform isn’t easy. But
here are five insights from online retailers and expert
advisers.
Thinking about the last time you deployed a
new e-commerce platform, pick the statement
that best describes the success of the project.
1. Analyze in detail the price of each option.
That includes not only what a vendor would
charge, but what it would cost in salaries to
recruit and retain the IT personnel needed to
maintain an e-commerce platform in-house.
2. Figure out whether your operation is relatively standard—and thus could relatively
easily fit into prepackaged software designed for
many retailers—or if it’s quite unique and thus
may require a custom build.
3. Look ahead three to five years. How much is
your business realistically like to grow? If you
project rapid growth you might be better off
with software that carries a fixed fee rather than
an option that charges a percentage of sales.
4. Consider the pros and cons of responsive
design for your specific business. Every
retailer today must provide a website that’s easy
to use on a smartphone, and responsive design
provides a way to do that without maintaining
more than one site. But there are a variety of
ways to implement responsive design, and each
retailer must educate itself on the costs and
benefits of each. And there are some retailers—particularly those for whom rich imagery
is crucial—who may find that the benefits of
building and maintaining separate websites for
desktops and mobile phones is worth the cost.
5. Keep up with changes in the technology.
The way consumers shop online is changing so
fast, and the technology is changing just as fast.
That’s leading retailers to redesign their e-commerce sites and move to new platforms more
frequently than they did in the past. Prepare
for the next replatforming by staying abreast of
the technology that emerges in the next couple
of years, and the strategies of retailers using
the latest technology. That will put you in the
best position when you start looking for a new
e-commerce platform in a few years. •
�
Very successful
45.9%
�
Somewhat successful
40.8%
�
Very unsuccessful
2.0%
�
Somewhat unsuccessful
3.1%
�
Somewhere in between: not what we
hoped, but not a disaster
6.1%
�
Other (please specify)
2.0%
Source: Internet Retailer, January 2016
23