E-commerce has truly come of age: it has turned into a valid sales channel both for classic brick and mortar stores broadening their customer reach, and for “pure” online vendors. Online shops have grown into a must have element and become a core component of many business plans. At the same time, most companies have raised the bar for their e-commerce strategies: On one hand, an increasingly global world means both pressure from international competition and opportunities for growth. On the other, they are pushed by digitally savvy customers whose shopping behaviour is modelled on what suits their lifestyle rather than traders’ channel models. This forces vendors to continually evolve their underlying technology. Together, these factors put considerable strain on (e)-commerce platforms, leading many traders to re-evaluate their current solutions in the search for the right balance between running a profitable and technologically-advanced online business.
Although many companies are painfully aware of the fact that their current solution has reached its limits, they often shy away from making the necessary change. Past investments in platforms, plus the daunting task of transferring vast amounts of data and reallocating existing business processes are often cited as the main reasons. However, over-spending budgets and major delays for new project implementations are often tell-tale signs that re-platforming an e-commerce solution has become inevitable. In a fast-evolving market, a growing number of vendors need to update their platform at least once every five years, or in some cases, even less, to successfully expand their business. This is despite the attached costs.
Many consultants advise that the key to making re-platforming as smooth as possible is a well thought through project plan that takes into account the multiple stakeholders from different business units. While rigid project management can certainly alleviate ‘growing pains’, companies should try and go to the root of the problem before doing any cosmetic trimming. Choosing the maximum available headroom for growth will decrease both the complexity and required investment in re-platforming.
Getting to the root of the problem
Vendors should pick a platform that is able to support seamless growth. When platform maintenance costs start to eat into profits, it is time to make the switch from a proprietary system developed in-house to a professional platform from a third party, or exchange the current e-commerce platform provider. However, that does not necessarily mean adopting an expensive, big name, all integrated on-premise license. Today’s e-commerce platforms range from transaction-based models for initial assessment to software-as-a service solutions that do not require large up front investments for soft- or hardware and can even be outsourced to third party management. At the high end, hosted solutions for extended scalability, plus both hybrid and full on-premise licenses for companies who want to keep their e-commerce business fully in-house, are available, but come with a similarly high-end price tag.
The key to profitability is to choose a professional platform that delivers the flexibility to cope with changing and as-yet-unpredictable business requirements. Solutions that come with various licensing models, for example, decrease complexity when transferring existing data and processes in growth stages. Implementation time is one of the largest hidden costs within any transformation project. Getting data up to speed for the requirements of a new system is in itself a significant challenge, let alone the time needed for importing new data sets and then managing test runs or retraining staff. Vendors should strive for a safe grip on the total cost of ownership: they need to factor in fixed costs such as hardware, annual monitoring and support. But in the long run there is certainly room to decrease overheads by choosing a platform with a common denominator between various licensing models.
Thinking ahead to move ahead
When choosing the best solution for near-future needs, vendors should also look beyond the pure (e)commerce platform choice. After all, on average, online retailers connect 15 technologies in a data centre to provide the needed e-commerce functionality. Any changes can cause serious process errors. Re-platforming potentially creates complexity at the back end, too. On the other hand, working with a ‘family concept’, where the core of the e-commerce platform remains the same and just the deployment model changes, can prevent major disruption while leaving more room for re-evaluating some business processes for further optimization.
Modular platforms are also a good choice, especially when vendors want to be well prepared for changing technological requirements. They enable them to start with a set of must-have functionality as the basis, avoiding the cost of buying functionality that they do not need. Companies that lack in-house capabilities or budgets for developing own applications can achieve required capacities by adding more modules as needed. This allows them to have a plan B in place even when they are not 100% certain what next big thing in e-commerce they might have to go after in a year from now.
Apart from the technological aspect, modular platforms are also a smart choice for companies that consider testing international markets. Different languages, character sets and currencies are just the tip of the iceberg. Tax systems, payment methods and payment providers, shipping costs, warranties and legal requirements also vary widely. Professional platforms enable vendors to centrally operate and manage multiple websites for individual regions while also maintaining all product data on the central system.
Conclusion: Maximum flexibility is the best way to avoid the re-platforming cost spiral. Platforms that are built on a ‘family concept’ with various licensing options based on a common platform core enable seamless growth. Choosing a modular e-commerce solution that is designed for the future makes it simpler to easily and cost-effectively add new capabilities on demand further down the track, without requiring a transfer of the entire e-commerce data sets to yet another platform. In the long run, this saving easily makes up for initially higher upfront costs.