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Shopping for Flexibility in Ecommerce Platforms

Speed, visibility, innovation, flexibility and comprehensive
Market forces are pushing retailers to react to consumer demands faster and more effectively than ever before. We asked retailers and consumer goods manufacturers why they recently changed their e-commerce platforms and the need for flexibility came to the forefront regardless of company size, product category, or online sales strategy. What kind of flexibility? These companies need to strike quickly when opportunity arises, responding to the wants and needs of the customerwherever that customer chooses to be. They also want the flexibility to pursue market opportunities by swiftly launching highly functional sites that specifically target a vertical market opportunity, a hot product category, or a cross-border international sale. They seek the flexibility to sell-through partners by easily integrating innovative online applications (e.g., social and mobile) into their go-to-market strategies. Perhaps most importantly, retailers and manufacturers require the flexibility to place the power to connect with customers into the hands of the business user. Simply put, they want their commerce platforms and partners to empower their marketing and sales teams, not limit them.

Shopping for Flexibility in Ecommerce Platforms

Executive Summary

etailers and consumer product brands need the flexibility to be where the customer is; now and tomorrow.

for manufacturers and laggard e- commerce retailers; who are doubly challenged by the need to meet or exceed the online consumer expectations set by established worldclass retailers. However, the opportunity to play catch-up and engage todays customer is no longer a matter of simply implementing the latest feature, functionality, cool website widget, or e-commerce technology. The research found that the bar has been raised regarding features and functionality that commerce platform partners offer their online retail clients. As one executive put it, there isnt a huge difference on the front-end to any of them. We found that this emerging status quo reinforces the need for greater platform flexibility not just on the front-end but the back-end as well. The study participants expressed the need for extended functionalityand cited more agile and comprehensive integration with order and content management systems as examples of ways more flexible platforms could ease their teams workload. To them, platform flexibility means tighter integration with not only the digital hotspots where the customers are, but also with their service providers, channel partners, and product suppliers. What does this mean for the e-commerce industry? It validates what has become increasingly obvious to many: the shopping experience is no longer just about your e-commerce site. You have to be where the customer is today and will be tomorrowand your platform has to be flexible, innovative and user- friendly enough to take you there and lead your innovation not hinder it.

Increasingly, the customer is everywherenot just at shopping sites or on Facebook and email, but also on iPhones and Androids and couch-surfing iPads. To be there, retailers and manufacturers need more flexible commerce platforms capable of extending their reach and effectiveness (e.g., via advanced search engine optimization, marketing, and merchandising tools) and more flexible technology partners with highly knowledgeable, innovative and future-oriented teams. This white paper summarizes research conducted with retailers and consumer goods manufacturers who have recently replaced their e-commerce platform. The research explored key catalysts to change their platforms: the timely pursuit of new growth opportunities, their previous platforms lack of scalability and flexibility, and the need for greater control over the brand as retailer and manufacturers move in sync with todays customer. As more customers embrace digital commerce, the evolution of their shopping behavior and their expectations makes it increasingly difficult for e-retailers to deliver on their brand promise. Brands are struggling to find the right balance between building the optimal online-shopping customer experience and managing the brand experience. This is especially true

The Challenges of Connecting with the Connected Consumer

The irony is obviousthe more connected consumers get, the harder it becomes to connect with them. Mobile devices let the in-store shopper access ratings and reviews and compare prices while they touch and feel the goods. Social media connects friends and the like-minded and lets them all share what they find, feel, and experience. The need to connect with the connected customer is driving retailers and manufacturers to take a long look at the shortcomings of their underlying platforms, applications, and the other systems that make these connections possible. Too often, managing this technology taxes the resources that they should instead be using to market, merchandise and sell to the customer. A common theme among those interviewed was that, as retailers and manufacturers, the last thing that they want to do is to

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Shopping for Flexibility in Ecommerce Platforms

get into the software development business. Inflexible Platforms Mean Missed Market Opportunities The research probed into motivations behind changing platforms and participants spoke first to the missed revenue opportunity. The digital sales opportunity is clearly a priority for these brands. They want to opportunistically pursue new online sales initiatives (e.g., quickly launching a rich and engaging Back to School site) or grow e- commerce revenues by connecting with customers off-site (e.g., via social networks, social commerce sites, comparison shopping engines, or through online marketplaces). Complicating the pursuit of these opportunities are early generation e-commerce platforms. Many of the executives interviewed have realized that supporting the existing in-house e-commerce infrastructure is not aligned with their core competencies. They understand that the speed of change demanded by consumers (and resulting requirement for faster speed-to-market) does not fit their resource allocation and technology budget. Numerous executives pointed to the web site-centric technology foundation upon which they had built their e-commerce business as an obstacle to future growth. They discussed the frustration of spotting opportunities (e.g., a surge in the popularity of a product among trendsetters or promoting top sellers on Facebook) but not being nimble enough to convert opportunities into revenue (e.g., resources committed elsewhere, difficult to offset build costs). In many cases, by the time that they could turn on a new digital commerce initiative, first mover advantages had been lost. Equally frustrating was the need to deploy additional resources to keep up with new technologies that had not been (or could not be) integrated with their platform. Connecting the Brands Promise with Customers Expectations Ensuring brand consistency wherever the customer

chooses to shop is another challenge the executives discussed. They spoke to how inflexible platforms can further burden their companies increasingly difficult tasks of messaging consistently and of delivering the cross-channel shopping experience that the customer expects.

Platform providers can no longer be a silent bystander, but must take on the role of an active partner

Throughout the evolution of shopping, from storecentric days to the rise of web-centric cross-channel shopping, it has gotten increasingly challenging to move the customer through the conversion funnel and to understand which points of influence impact conversion disproportionately. In simpler times, brands not only had a good idea of where the customer was, but they also knew what influenced them the most. The brand was ubiquitous because being where it mattered did not mean having to be in too many places. It was a lot easier to be customer-centric when you knew where the customer was. Today the customer is the ubiquitous one. Shoppers are everywhere at once, in multiple channels simultaneously and consuming a diverse collection of branded and unbranded information through a proliferation of conduits. The influencersbe they search and product comparison engines, bloggers, social networks, or social commerce sitesare equally diverse, specialized, and fragmented. As a result, good retailers take commerce to where people live, work, and play. The leaders with whom we spoke voiced their continuing concerns that their respective brands are still not delivering what customers expectin large part because their platforms are too rigid to convert vision into reality. Their platforms cannot keep up with the customer. By the time the latest customer innovation launches, they already expect something ahead of the curve.

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Shopping for Flexibility in Ecommerce Platforms

Driving Demand for New Platforms: Connecting with Channel Partners

The executives also point to the challenge of integrating their digital commerce initiatives with commerce systems of channel partners and dealer networks. Manufacturers especially feel this pain point. The bigger barrier was the need for their e-commerce platform to scale sufficiently to support existing systems and both the direct-to-consumer business and the business-to-business commerce processes necessary to serve their wholesale channel partners. As one manufacturer put it, Our biggest challenges [relate to] understanding the [platform] requirements on an overall big picture perspective. We need to build direct-to-consumer and business- to-business on one platform. So the platform has to be open enough to support my big box vendors that want us to drop ship [e-commerce fulfillment]. Other manufacturers mentioned that they still must manage issues related to channel conflict. They have found that the best way to deal with channel conflict is to make sure they invest in tools and technologies that help their channel partners grow their own online sales. These manufacturers want a platform that allows them to sell direct and support the online business of their traditional retail partners, as well emerging pureplay channel partners. They want robust, user- friendly platforms with tools that can help them easily and quickly publish either an entire product catalog or a targeted subset of the catalog to all of their online marketing and sales partners. Manufacturers and online retailers that work with comparison shopping engines, online malls, emarketplaces, etc. are also seeking comprehensive commerce platforms that can seamlessly connect them to these partners. Success in todays business environment means reaching customers everywhere they are shopping online.

Another Customer Disconnect: Organizational and Cultural Barriers

Many of the interviews centered on how the inflexible architecture of commerce platforms prevents retailers and manufacturers from taking advantage of selling opportunities. However, the executives also discussed how organizational dynamics prevent them from connecting with customers. The manufacturers specifically mentioned their companys traditional product-focused culture hindering the pursuit of innovative and customer-centric e-commerce initiatives. One e-commerce veteran hired to significantly grow a well-known branded manufacturers e-commerce business explained that he had to first deal with the companys product-centric culture. As a branded manufacturer, we simply havent touched the customer. When you talk internally, it is very product- focused around here. His challenge has been to get his product and category managers to broaden their traditionally product- centric mindset so that they can better appreciate how e-commerce best practices create value for the consumer. A flexible, user-friendly commerce platform could serve as a tangible, handson tool to help his team understand the benefits of a direct-to-consumer online operation and at the same time connect his brand with shoppers visiting the corporate website, the online outlet store, its Facebook site, and other sites out there. In addition to a commerce platform that could push the product catalog to digital commerce partners, he was looking for easier access to digital tools (e.g., email marketing, social media, search engine optimization/ marketing, etc.) that his team could use to market and

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Shopping for Flexibility in Ecommerce Platforms

sell to customers. To illustrate the internal disconnect, the executive cited a decision by his product managers to launch a new product on Facebook. The product team did not initially plan to connect the product launch to the companys e-commerce site or to the companys other e-commerce initiatives. A flexible platform would serve as a bridge of sorts connecting his product-centric team members with todays customers, who are increasingly less concerned about where (or from whom) they buy a product and more interested in the product itself. Such a commerce platform would provide his team with the tools needed to build and quickly launch an engaging landing page that would support the Facebook product launch and that would also integrate the Facebook promotion with the broader product launch and the overall product and brand strategies. The Push for Go-to-Market Flexibility is Refining Commerce Platform Selection Criteria The idea that a commerce platform now represents a primary means through which a brand can reach a customer is increasingly resonating with companies. We found that this commitment is especially strong among organizations whose executive leadership is committed to customer-first engagement strategies. Of all of the platform-selection criteria that emerged from the research, this need for a more flexible commerce platform that helps companies control their brand as they connect with customers came through loud and clear. One comment captured the sentiment, Were looking for the flexibility to own the brand [and not] be at someone elses mercy. Retailers and manufacturers also want a commerce platform that does not require them to depend heavily on IT to implement rich sites, targeted landing pages, robust micro sites, or to push out email and viral campaigns. The executives want platforms that let marketers and merchandisers do what they do best know where the customer is going and get there on time and on message. We also asked the studys participants to look to the future and share their opinions on what e-commerce platform providers will need to address. They spoke of the need for a single platform with innovative What do future-focused capabilities executives expect from pre-built into the commerce solution providers? platform. They want the platform to provide (or Quotes like Search engine integrate easily optimization requires a with) tried and tremendous amount of true marketing architectural consideration tools as well and Mobile and social are as the latest on the horizon both speak to features and the desire for solutions with functionalities. innovative capabilities pre-built [We need] into the platform. seamless integration with marketing functionalities. They also want flexible back-end integration to operational systems such as order management and third-party fulfillment systems. As one respondent put it, You cant separate the selling machine from the inventory management machine. What executives do not want was equally clear. They do not want to overbuy as some had in the past. Many admitted that their in-house market-sizing efforts were not diligent enough and contributed to buying more platform than the business required. When they launch a new platform, they do not want to face the challenges of past implementations: namely dealing with disparate systems; underestimating resource requirements required during the launch phase; and underestimating the maintenance costs and resource requirements that they will face in the future. They do not want their platform to be a moat within which their information technology team builds an impenetrable fortress. Although they do want IT to have access to the platform APIs necessary to innovate and turn on a dime, they also want a partner who can do the heavy IT lifting as necessary. In the end, the consensus among the executives was clear: platform suppliers need to focus on making platforms more functional and easier to use. They want robust functionality, but equally important they want the flexibility to change with the market and move to where the customer is heading. This is the key take-away from the study.

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Shopping for Flexibility in Ecommerce Platforms

The executives in the study do not want to have to guess where the customer will be tomorrow. Nor do they want to find that their platform cannot get them there or that it gets them there too late. They want a comprehensive platform that keeps them in lockstep with the customer and helps them deliver their brand. They want a partner that understands the future. They want a partner that has designed and built a platform from the bottom-up; one that is flexible enough to integrate the tools of continuous innovation. They want their brand to easily co-exist where the consumers live, work, and playtoday and tomorrow.

How can the commerce platform community help my business? They need to focus on making platforms functional and easy to use. Were spending too much time managing the beast instead of selling!
Senior E-commerce Executive

Conclusion: Knowledge is Power. Flexibility is Strength.

As we spoke with the executives in the study, it became clear that they see platform flexibility and ease- of-use as the enabler of customer strategies. They know their job is to get closer to customers and they see the latest generation of commerce platforms as a crucial means to strengthen the bond between their brand and customers. After years of driving traffic to their websites and spending millions to improve the shopping experience, they see the customer is once again on the move. They have to be where the customer is going and they want a partner to help them get there. They have learned from past mistakes. Many executives initially overbought, resulting in negative impact on company resources. These costly oversights delayed market entry and added unwanted costs. Given todays economic climate, they cannot make this mistake again. No one has to sell senior executives on the value that digital commerce initiatives can create. They get it. In fact, every participant in the study said that the directive to use digital commerce to get closer to the customer came directly from the top. Use this study to validate how flexible commerce platforms can help your brand connect with customers, wherever they choose to shop. Connecting with tomorrows customer will require quick and easy integration with innovative technologies and applications as well as with critical back-office partners. Look for platforms designed to offer digital marketers and merchandisers robust yet easy-to-use tools. Make sure your platform can scale up or scale down based on market dynamics. Can a commerce platform help a brand make sure its promise to the customer is realized? Not only can it do so, it must.

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Shopping for Flexibility in Ecommerce Platforms

About the Study

Objectives The objectives of this research study are to: Help understand changing market forces, e-commerce strategies deployed by retailers and consumer goods manufacturers, and the role of platform partnerships Understand the process, criteria, and experience that consumer goods manufacturers and retailers have undergone during recent platform conversions Methodology To gain the deep insights that achieving these objectives required, researchers, strategist, and analysts at J.C. Williams Group and The Research Trust enlisted the help of senior executives at leading retailers and consumer product manufacturers. The team held oneon-one interviews with senior executives in July and August 2010. The executives interviewed were mainly directors and vice presidents for e- commerce and direct marketing. All those interviewed had undergone a platform change or were currently in the midst of an enterprise-wide system change. Interviewee Profile The majority of companies interviewed earned revenues between $5$50 million. When switching over from their original platform, the companies were leaving platforms built on proprietary code, moving off another service platform, or had no previous platform. Most of the companies interviewed had been in the e-commerce space prior to a platform change. When deciding to switch or purchase a brand new platform, retailers and manufacturers took some or all of the following steps: conducting a business assessment; evaluating the available software solutions; issuing a request for proposal; and/or meeting with a pre-determined short-list of vendors for discussions and demonstrations. The final decision-makers in the decision to make a platform change were typically senior level executives (e.g., president). The timeframe to implement the platform solutionfrom the time the vendor partner was determined to platform launchon average ranged from four to nine months.

About the authors J.C. Williams Group (www.jcwg.com) is a boutique retail-consulting firm with recognition in the fields of strategic planning, retail branding, research, technology, and multi-channel retailing. With offices in Chicago and Toronto, J.C. Williams Group provides practical, creative, and in-depth knowledge of retailing. Internationally, the firm is a member of The Ebeltoft Group (www.ebeltoftgroup.com), an international consortium of retail consulting firms. The Research Trust (www.researchtrust.com), a consulting partner to the J.C. Williams Group and Okamura Consulting, specializes in the development and execution of best practices programs. Programs include a mix of strategic planning, primary and secondary research, quantitative and qualitative analysis, thought leadership, market education and communications. ShopVisible delivers evolving commerce solutions for clients--companies who are seeking better experiences and relationships with their customers enabled by agile, extensible, and seamless technology. For ShopVisible, commerce is more than a well-facilitated transaction; its an entire ecosystem of people, processes and technologies coming together. Our on-demand SaaS commerce platform provides the innovation and adaptive structure to help companies and their communities thrive everywhere. Our commitment to innovation and continuous enhancement to the platform is why ShopVisible is the chosen partner for companies like London Fog, Tempur-Pedic, Office Depot Canada, and Bluemercury. Join us on the journey as we evolve commerce. Lets create a thriving ecosystem for your customers and your company together. Learn more at www.ShopVisible.com.

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