1. E-COMMERCE PLATFORMS & SOLUTIONS
Any company choosing an e-commerce platform is faced with a bewildering number of choices.
Determining which of these solutions best fits your needs is no longer as simple as having your
local Internet providers develop a Web page with navigation and some type of shopping-cart
functionality.
E-commerce solutions have evolved to include core functionality for navigation, shopping cart,
checkout, shipping and handling, and taxes and some level of integration to an order
management system (OMS), an enterprise resource planning (ERP) system, or a warehouse
management system (WMS). Then there are the Web 2.0 options: rich media with audio and
visual tools, customer product reviews, social networking, and blogs. Newer technology also
provides functionality for options such as mouse-over (move the mouse over an image and the
description will display without the user's having to click on the image), drag and drop (simply
drag the item to the shopping cart without leaving the current page), and one-page checkout.
Given this array of possibilities, how do you determine the best e-commerce platform for your
business? Here are a few guidelines:
Treat your search as a system selection project. Too often companies have viewed e-
commerce as a separate part of their business. In reality e-commerce has become integral to
multichannel marketers. Today multichannel companies report that on average 35%-45% of
their business comes through the Web.
You should view your search for an e-commerce platform the same way you would a search for
a new OMS or WMS. Spend time up front to understand what the e-commerce solution should
provide, determine the project team, and develop a budget and a timeline.
Develop your vision. Before you can determine what the e-commerce platform should provide,
you need to know what you want your Website to do and how you want to use it from a
conceptual standpoint. The project team needs to have a clear vision of how the site should
look and function, what the growth objectives are, and who the target customer is.
To develop the conceptual vision, you'll need to involve user management from all
departments, including the contact center, merchandising, and the stores in addition to
marketing, IT, and online. As a management team, what is their collective vision for the
Website and how it should serve the customer? How do they want your customer to view the
business? If you have stores, do they want site visitors to feel as if they've entered one of
them? What types of marketing efforts need to be included? How do you want to display

2. merchandise? These are just a few of the questions that go into developing a vision for an e-
commerce platform solution.
Define your requirements. This is a natural extension of developing your vision. What do you
want the site to do? What type of functionality do you want? Everybody has shopping-cart
technology — is there anything in particular that you need yours to do, such as personalization
or cross-selling? What sort of Web analytics features do you need?
Determine the degree of customization and flexibility you may want. Customization may take
the form of something as simple as the ability to change promotions — offering a special
discount on a given day, for instance. Or you might want to be able to change elements such as
site navigation. How flexible does the solution really need to be? Don't get mired in jargon and
functional possibilities. Concentrate instead on how your new site will produce sales or increase
inquiries that lead to sales.
Keep integration requirements in mind. Implementing an e-commerce platform with all the
bells and whistles will fall short if your OMS or ERP system can't effectively communicate with
the site.
Decide whether you want to build or buy. Building your own e-commerce platform historically
provided a competitive advantage in the marketplace, as packaged e-commerce solutions were
expensive and basic. Many companies viewed their online business as different from anyone
else's and thought their uniqueness required a homegrown platform.
Times have changed, however, and companies now realize that the real differentiator for their
Website is the look and feel, the effectiveness of its onsite search, and its merchandising (the
presentation as well as the actual goods). Today many e-commerce platforms offer similar basic
features and functionalities.
While the build solution ultimately offers custom fit and control, using resources to build basic
functions such as product catalog management, merchandising features, campaign
management, and shopping-cart functionality can put a company at a disadvantage because of
the amount of time needed to develop the underlying technology layers for functionality and
the integration points to your existing systems. It commonly takes 12-24 months to design,
develop, and build an e-commerce solution from scratch. Then there's the matter of finding and
keeping experienced staff to build the solution. The question arises whether your company is

3. better off using its resources to support its core competency rather than to develop a solution
that already exists.
As the second generation of e-commerce evolves, more marketers are opting to buy packaged
or custom software. Platform programs generally encompass features such as visualization
(product rotation and zoom), merchandising (marketing products based on customer
preference, past history, or best-sellers), and personalization (offering the customer marketing
opportunities based on purchasing patterns). Vendors have built more functionality into their
platforms to handle the basic online selling features for product catalog management,
merchandising, campaign management, and shopping-cart functionality. Another advantage to
using a packaged solution is that the vendor provides upgrades to the core functionality.
Some vendors are incorporating Web 2.0 features into their solutions while at the same time
offering integration to third-party software (best-of-breed solutions) that can handle a more in-
depth customer interaction. Buying an e-commerce platform that provides all the required core
functionality as well as the ability to use best-of-breed applications and custom services is
generally considered the optimal solution. The goal is to achieve a balance between the e-
commerce solution and the number of best-of-breed applications, since maintaining multiple
applications for the long term can increase maintenance costs.
If you decide to buy, choose between a licensed solution or software as a service (SaaS). With
licensed software, you purchase the e-commerce software package and host the solution
internally or externally at an outsourced hosting facility.
Licensing for a packaged software solution is normally structured on a per-user or per-CPU basis
and typically requires an up-front investment of $400,000 and up. Annual maintenance costs
usually fall in the range of 15%-22% of the license cost. The license model also requires an
investment in server hardware and database software.
Vendors offering packaged e-commerce solutions have built core features and functionality into
their solutions but provide the flexibility to customize a Website's look and feel. The licensed
model is typically used by midsize and large multichannel companies wanting absolute control
of their e-commerce platform. Benefits include the ability to make changes as required,
reduced time to introduce new features, and the ability to integrate with best-of-breed
technologies.

4. Purchasing licensed software is the more common solution. The SaaS, or on-demand, model is
gaining in popularity, however, especially among businesses that do not want to commit the
large up-front investment required by a licensed model. This is particularly true of small and
midsize companies that don't require complete control of their platform.
An on-demand e-commerce platform provides a company with the use of a vendor's solution
for a flat monthly fee or a percentage of revenue. The vendor owns and hosts the software,
which may exist on a shared or non-shared environment. In a shared environment there is one
version of the software, and all clients share the code and server resources. In the less common
non-shared environment, the resources are dedicated to a particular client.
Up-front setup fees for an on-demand solution can range from $50,000 to $400,000, depending
on the complexity and size of the client's business. The flat-fee or revenue model is typically set
up with a tiered structure based on online revenue, site visits, or order volume. Fees are
typically 1.5%-3% of sales.
Look at the pros and cons of hosting and managed services. Hosting means that you buy a
solution and the necessary hardware and pay the vendor to put the hardware in its facility,
where it will reside. In the managed-services model, you buy the hardware and the software,
the vendor hosts the hardware, and you contract with the vendor to maintain the operating
system and e-commerce software application.
Before you decide which model you want to use, you need to understand the vendor's concept
of maintenance and updating; you also need to know your IT staff's ability to support hosting
the solution internally or externally.
Seek a vendor you can partner with. When you're researching e-commerce companies, you
want to find a vendor that will work actively with you. It's crucial to have that kind of
relationship in order to be sure that you will have the support and maintenance you need.
Six Tips for Avoiding Common Pitfalls
Put your requirements in writing. Too often e-commerce solutions are built or customized
based on verbal agreements — but what the vendor provides and the customer expects don't
always match.

5. Conduct a request for proposal (RFP) process. This identifies to the vendor what your
requirements are and establishes initial pricing.
Develop a three- to five-year budget scenario with up-front or startup costs, initial year
investment, and subsequent years' investment. Include annual maintenance fees for hardware
and software support. It's important to understand the total investment to determine which
solution is best for your business.
Define a schedule or timeline. Many companies underestimate the time it takes from
establishing requirements to implementation.
Formalize a project plan.
Be sure to schedule status updates on regular intervals.