In its recent annual merchant survey, E-Tailing Group reported that 36% of retailers expect to invest in ecommerce technology this year. Last Fall, the 2008 Cross Channel Tech Trends Study produced by AMR Research and RIS News indicated that two-thirds plan to upgrade their platform by the end of 2009.
Together, this data suggests most online retailers upgrade their ecommerce platform once every 3 years. They may not change vendors. But it’s still a good bet that they are planning a major ecommerce upgrade now or very soon. Why so frequently? There are seven conditions that trigger a new look around the market. They are:
- Contract talks
The most common reason to upgrade is that contract terms with the current provider force the client to consider options. For hosted solutions, service agreements eventually come up for renewal. For software, any installed version has a limited shelf-life. Many vendors release a major upgrade every 12-18 months. After about 3 or 4 years, users must upgrade or have support discontinued. - Lost confidence
Failed expectations are another trigger for upgrades. Whether the trouble was caused by miscommunication, clumsy execution or broken promises – it doesn’t matter. Excuses are symptoms, not solutions. There are only two ways to fix a problem with technology: (1) First Aid or (2) Organ Transplant. Clients who are frequently disappointed eventually go elsewhere; bringing with them many colorful stories. - Growth plans
Each year, executives are given MBOs. These objectives are tied to metrics. Ambitious goals and aggressive growth may require new tactics, new channels, new markets, new brands. If the tools at hand can’t deliver the results required, it’s time to shop for a better solution. - Budget cuts
Every dollar counts, especially nowadays. Senior executives are looking for ways to consolidate assets and reduce spending. Their jobs depend on it. Consolidating redundant programs with a single system that does more at lower costs always has leadership’s attention. - Reorganizations
It’s a small world. Every year at industry conferences, I see the same faces with new business cards. At many companies, there’s a new sheriff running ecommerce. Changing leadership may result from promotions, layoffs, merger activity, et cetera. Smart vendors know that fresh faces bring new ideas and a hunger for solutions that improve the odds of success. - Site overhauls
Ecommerce sites (like marketing plans) eventually need a facelift. When that day comes, improvements are rarely just skin deep. Building a better experience requires changes in the way the site functions. Functional changes require engineering work. So when it’s time for a facelift, another upgrade may be required just to deliver on the new spec. Nowhere is this more true than with solutions built in-house. Sometimes, you just can’t retrofit a minivan to safely function like a race car. - Competitive parity
Without one of the previously stated reasons, upgrading the ecommerce platform is hard to justify and rarely yields adequate returns. Nevertheless, it does take place when struggling merchants try to fill feature gaps to stem losses in market share. Unfortunately, the real problem may not be the technology at all – but a lack of leadership. This is a gap that no vendor can fill. Once a laggard client is compelled to act, they will look for a convenient solution for which they will gladly over-pay (and likely under-utilize). Vendor beware. Never allow clients to place more faith in the technology than in its users. Those who do will surely be disappointed.
Regardless of the reason for upgrades, B2C Partners can help with your ecommerce strategy and find solutions that fit any budget. Call for a free consultation. We can be reached at 781-585-0750.
Bill Mirabito is moderating a panel discussion at the ACCM Show in New Orleans on May 5 and doing scheduled 1-on-1 consultations at the show on May 6. Call for details, or follow us on Twitter at http://twitter.com/bmirabito.
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According to the IR500 data, most larger online sellers are still running on home-built systems, without a major commercial platform. Common wisdom is that these will, over time, convert from “build” to “buy”. What are your thoughts on this? At what rate do you think companies will stop building their own and buy a major platform?
Great question, Cliff! First of all, these terms do lead to confusion because build is not cost-free, and buy is not effortless. During roundtables at Luxury Interactive last year, I was surprised how few online business people know what ecommerce software they run. I sometimes wonder when “in-house” is just a euphamism for “un-sure.”
Having said all this, there are ways to determine if a prospect should start with a low-cost assembly kit (a.k.a. build), or choose a third-party package (a.k.a. buy). Our FAST Score
™method weighs and scores all selection criteria according to the client’s requirements. If the packages fail to make the grade, a build approach is best. This is more common for non-traditional ecommerce — for example, online services (travel, finance) versus physical goods.When retailers solicit objective knowledgeable guidance, they’re far more likely to find a third party solution that suits their needs. The most important consideration: “Do NOT re-create the wheel unless necessary.”
Without such guidance and a strong business case for investment, online retailers frequently underestimate the real costs and wrestle over the sheer number of options. When this occurs, cobbling together something in-house is the path of least resistance… and may lead to many sorrows.