E-retailers can cut technology costs by helping vendors market themselves
April 20, 2012 10:48 AM
Getting the most out of a limited technology budget begins with recruiting vendors who will work as partners and planning technology spending around a retailer’s core competency, says Bluefly Inc. vice president of technology Matt Raines.
Raines, who will be speaking June 5 from 9:30 a.m. to 10:30 a.m. at the 2012 Internet Retailer Conference & Exhibition in Chicago in a session titled “Getting the most out of your technology budget,” says one way to get a bigger return on investment on technology spending is to evaluate e-commerce application developers and service providers as partners rather than vendors—and to negotiate deals to save cash. That includes negotiating barter agreements in exchange for reduced fees or less cash up front.
Bluefly’s typical barter agreements include participating in a vendor’s marketing program, such as being the subject of a white paper, case study or webinar.
“Two of the best pieces of advice I will pass along to session attendees to get the most from technology spending are: make the right vendor a marketing partner and look to drive value in negotiations by seeing where you can save cash, defer payment or work on a barter arrangement,” Raines says. “See how you can grow together.”
At Bluefly, No. 173 in the Internet Retailer Top 500 Guide, the online apparel and accessories retailer spent $5.8 million on technology in 2011, up 7.4% from $5.4 million in 2010, according to the company’s recently filed annual report with the U.S. Securities & Exchange Commission. The increased spending was attributed to to short-term staffing expenses of $188,000, an increase in stock-based compensation expenses of $149,000 for technology employees and additional web site hosting expenses of $129,000, according to the report. The higher spending in some technology budget categories was partially offset by reducing software support expenses by approximately $112,000, Bluefly says.
Getting the most out of even a limited technology budget also begins with having a chief technology officer who understands the company’s financial process and strengths, Raines says.
“At Bluefly we manage technology spending by looking at technology expenses as a percentage of total revenue and other metrics,” Raines says. “Getting more from a budget means serious cash management.”
At his session Raines will also discuss when it makes sense to spend money on a commercial e-commerce product or service rather than doing the project in-house. “We look at our core competency, and for us technology spending is all about getting visitors into the conversion cycle from the shopping cart through checkout.”
Internet Retailer asked Raines to speak because he is an experienced e-commerce technology executive. Raines has spent more than 15 years implementing and supporting e-commerce systems. He joined Bluefly in 2002 and is responsible for all areas relating to information technology, including application development, quality assurance, project management, site operations, data warehousing and information systems. He led two e-commerce platform implementation projects, the most recent being the migration to an Oracle/ATG platform. Prior to joining Bluefly, Raines was director of site operations for Bigstep.com, an Internet start-up company focused on serving the e-commerce sites of small businesses.