Climbing the eCommerce Property ladder

I thought I would start this blog with a summary of my latest thoughts around eCommerce platforms which I presented at eCommerce Expo recently.  In this presentation I make the analogy between the journey a business takes when it comes to eCommerce platforms to that of a person navigating the property ladder. 

When I first moved to London from the North East to start my IT career in the role of an analyst programmer for Reuters, I was unsure about how it would turn out and after university I had little financial support or security.  I actually slept on a friend’s floor for the first few months until I got myself established. I then rented my first place in West Kensington, a very small studio flat located fairly close to the office.  This suited my (very) basic personal needs (tiny place to sleep, shower, some personal space, cooking facilities and close to work) and matched what I could afford at the time.   As it turned out I had some great times there and fortunately my career soon flourished.  

This is somewhat similar to a fledgling start-up ecommerce businesses whether a completely new business or an existing retail brand goes online – they are often uncertain as to their future revenues, have basic requirements (home/landing pages, browse, product details, basket, checkout, payments, etc) and their budgets for development are very limited.  In this case, businesses usually opt to try and build their own site from some open source framework, use a low cost service such as eBay or engage a SaaS based eCommerce provider.  These options simply get you up and running with the bare minimum that you need to sell products online.

Once I became more established at work and socially connected in London I started to outgrow the studio.  I desperately needed more functional space to live in. I had no room and so much stuff.  Having a shower, kitchenette and bed in the same small room started to loose it quaintness and it was not a place where I could invite my friends for dinner.  At this time I was still not in a position to buy especially at the crazy property prices in London, so I rented a slightly larger flat. It was still quite restrictive in space but met my immediate needs perfectly.   

 This is what I have encountered time and time again in online retailers reach a point in which they outgrow their start-up platform and look to re-platform as they require more functionality on the site, better tools to manage the business and increased scale.  Often these businesses are not yet in a position to buy, implement or even manage a fully fledged enterprise ecommerce platform so they move to SaaS platforms such as Snow Valley or Fresca. 

Alternatively, they may try to augment their home-grown platform with specialist technologies to address specific pieces of functionality and resolve particular technology issues.The most common areas I’ve been involved with in these types of situations are:

• Improving search, browse and merchandising using software like Endeca
• Improving content management by integrating with a CMS (e.g. Fatwire, Episerver)
• Adding mediated product ratings and reviews(Bazaarvoice, Buzzilions)
• Adding product recommendations Cetona and Baynote
• Managing product information and catalogues (Hybris PIM)

The next stage in many people’s lives’ is they meet someone live together and get married.  If you are still in your comfortable bachelor pad you may find that you need more flexibility in terms of décor and interior design as well as more space for the masses of shoes you’ll no doubt inherit.  I think a whole blog post could be devoted to women, their shoes and a man’s inability to understand why. At this time you will start to look for a new property with a whole set of new requirements you wouldn’t have considered before such as the size for a new family and local schools.  Fortunately for me being a technical strategist at heart I had already planned ahead and bought a house before I was married with plenty of capacity, good location for schools, transport links and neutral decoration to act as a blank canvas for my wife’s decorative taste, and yes I had space for those all important shoes.  

Again I have seen many businesses reach a certain point where the SaaS based services seem to become too restrictive for the business.  Despite the claims of complete flexibility, SaaS based providers have the problem of trying to balance the flexibility for customisation and the benefits it gets from running a generalised platform e.g. costs, maintenance support, etc.  Once the ecommerce business reaches a point in which their requirements go beyond the stock features and functionality of the SaaS platform, custom development is required. As development is not the core competency of many SaaS providers, businesses will have to contend and wait for development resources to become free. 

Business control can also become an issue as a business matures – an example I have seen is an online business trying to extend its range of offerings to use new third party suppliers which conflicted with the SaaS provider’s business model.  Although, nothing is ever impossible the outcome usually results in escalating costs, slow response times and friction between the business and the SaaS provider.  Furthermore any new innovative developments in functionality are often shared with the rest of the community making it difficult for mature businesses to define and differentiate themselves.

When an online business is in this situation they start to look at ownership models using licensed platforms and regardless of which supplier they still have the option of a self managed or fully hosted solution depending upon their own internal IT capability and appetite.  At this stage they will find themselves just like a newly wed family searching for a house, looking at a whole new set of requirements they couldn’t have possibly imagined as the technology supplier spins the web of new features, possibilities, platform considerations, integration technologies.  Just like selecting a mobile phone they all seem to be completely essential. 

One of the big problems is that if your are moving from a SaaS platform, all that lovely work you did is lost as SaaS based platforms tend to be closed technologies.  There are also a series of  clandestine meetings conducted with suppliers as the business is afraid of the repercussions if the current supplier finds out about their clever plans to move.   A business, soon finds out that re-platforming on the enterprise system is a huge undertaking taking months of development with the total costs for licensing, infrastructure, and services reaching as high £5 -10 million.

Each move a business makes to a new platform comes at a massive risk and cost.  It takes the focus away from what is core (to SELL) to months of strategy, selections, requirements, development, testing rollout……..

My own experience and talking to my friends in the industry, there seems to be a dizzying number of businesses that   re-platform every 2-3 years.  However, I also have clients who have huge online businesses running on bespoke platforms which are more then 6 years old – although they creaking a bit right now.  I guess the moral of the tale is to be cautious when deciding what platform to choose because what may seem right for today is not necessarily right for tomorrow.  I was always told to stretch to buy the best house I could afford and satisfy the needs over the long run, rather than suffer from the inconvenience and cost of constantly moving.

Video of my presentation for ecommerce Expo http://www.seminarstreams.com/ecom-expo-2.asp