Tough, but necessary

October 1, 2015 11:44 AM

Stephanie Bottner, general manager of greeting-card e-retailer Pear Tree Greetings, vetted 32 e-commerce platform vendors before finding a fit. The process, she says, was a complicated ordeal that was scary and worrisome.

“We had quotes as high as $1 million to do implementation, and lots of other quotes for $500,000-$600,000, as well as the lowest of $100,000,” she recalls, noting that she was surprised at the enormous range in vendor pricing. “We’d heard these horrifying replatforming stories—that it would take twice as long and be twice as expensive as planned to get to market—so it is complicated. It’s an ordeal involving all of your data, your products, and your whole business. It is scary.”

Bottner says her colleagues were so unnerved by the replatforming experiences, they told her, “It’s so bad, don’t even bother,” preferring instead to creak along on a 15-year-old platform that didn’t meet the business’ needs rather than contend with a replatforming project. But as Pear Tree’s search engine channel and sales started to decline, Bottner says she realized it was more expensive to do nothing.

Bottner winnowed Pear Tree’s choices down and was cautiously optimistic about Kalio Inc.’s web-hosted software-as-a-service e-commerce platform, software the vendor hosts and clients access via the web. But before going all in, the e-retailer required an eight-week proof-of-concept test with Kalio to see whether it could work with Pear Tree’s existing accounting and planning software to get personalized online orders to the printing press on time and on budget.

The test ran side-by-side with the existing site but was not for users to shop. It was a stripped-down version of the site, with no branding, minimal copy and images. Employees could see the site and place orders. “The point was not how to do the ‘sexy’ pieces because everyone can do those. The point was to connect the major systems because those were the elements of the largest unknown,” she says.

As the teams at Pear Tree and its two sister sites, Invitations by Dawn and Ann’s Bridal Bargains, saw their systems work, they grew confident about moving forward. The sites are now set to relaunch on the Kalio platform by the end of the year.

“The proof-of-concept was a risk and required an extra outlay of cash, but it sealed the deal,” Bottner says. “It took the fear out of replatforming; the fear that you’re missing something critical because you didn’t ask the right technical questions.” She says the test cost about a quarter of the full implementation cost. Most of that expense was ultimately folded in with the final bill once Pear Tree made a final decision to go ahead with the platform, she says, declining to give the exact figure. 

“There are implementation fees, implementation labor, then ongoing fees, and ongoing labor,” she says, adding that there’s rarely a perfect match with a vendor-provided platform because every e-retail business has its own platform requirements.

Pear Tree Greetings is just one of many e-commerce businesses going through the process of choosing a new e-retailing technology provider. More than half of e-retailers say they plan to replace their e-commerce platform in the next two years, according to a recent Internet Retailer survey. Peter Sheldon, principal analyst at Forrester Research Inc., says while the process can stretch on for years, it shouldn’t—if a retailer is well prepared. “When retailers first start talking about finding a new e-commerce platform to the time they ultimately complete the rollout, it can take five years end to end,” he says. “That’s too long. They need to find efficiencies during the front end of the process. Five years is an eternity in this industry.”

Among the ways to make the process more efficient is to come up with a detailed list of requirements, as Pear Tree did. Another, retailers have learned from hard experience, is to make sure all the data being moved to the new technology is in a standardized format.

E-retailers are collectively gritting their teeth and spending three months, on average, gathering the detailed requirements for an updated or new e-commerce platform. For larger retailers, completing a move can take 9-12 months and cost more than $50 million, according to Forrester data. Smaller retailers typically pay $300,000 for licensing, or a first year’s share of revenue, and then pay three to five times the cost of the initial software for implementation, for a total of $1.2 million-$1.8 million for the entire replatforming project, Sheldon says. Another consulting firm, FitForCommerce, estimates that small retailers can pay from $40,000-$1 million for implementation, and up to $400,000 over three years for the entire replatforming project.

Given the financial stakes and the risk to their businesses, retailers are filtering through dozens of vendors, making detailed checklists and taking steps to ensure that their top priorities will be met by the selected platform.

It took about two years for handbag, shoe and accessories retailer Elaine Turner to move through these steps, says Carrie Leader, the merchant’s e-commerce director. The retailer started by identifying that it wanted to use responsive design, which would adapt the look of the e-commerce site to the device the consumer is using. The team also wanted the platform to enable it to personalize search results and recommendations based on the shopper’s previous browsing and buying history with the retailer and an easy user interface that would allow staff to develop and test promotions and unique landing pages, without requiring IT involvement.

The merchant was comfortable with that pace because it wanted to make sure the platform could support the growth it is aiming for online. Leader says Elaine Turner aims to double its e-commerce business to 20% of yearly sales within the next two years and double its conversion rate. It ultimately invested 10-15% of its undisclosed yearly e-commerce revenue to move to Oracle Corp.’s web-based e-commerce platform Oracle Commerce Cloud. The e-retailer expects to recoup its investment within a couple of years, Leader says. Oracle does not disclose pricing for its cloud services, saying the amount varies with a project’s complexity, implementation size, number of features and ongoing usage costs.

“When evaluating an e-commerce platform, it requires getting into the details of what your platform is lacking and how that is impacting the bottom line,” Leader says. “We wanted a provider who would grow with us and who was very well established.”

Other merchants have been forced into making a platform decision more quickly. That’s what happened last year to Brian Van, founder and owner of Sportbike Track Gear. was running on the ProStores platform, one of several e-commerce platforms eBay Inc. acquired or launched and folded into its Magento division. Magento announced in mid-2014 plans to shut down ProStores as of Feb. 1, 2015, giving client merchants eight months’ notice.

Rather than bemoan its fate, Sportbike Track Gear considered the forced change an opportunity to solve problems it dealt with for years operating on ProStores. Those problems included slow-loading images, an inability to update inventory based on a live data feed and issues with inputting orders taken over the phone into the system. At the suggestion of its web-development agency, Intuit Solutions, it looked closely at two platforms: Magento and Bigcommerce. Bigcommerce had an edge, Van says, because it would be quicker for Sportbike Track Gear to implement and easier to manage long term.

Sportbike Track Gear, which projects to sell $15 million online this year, spent about two-and-a-half months and $30,000 for the migration to move onto the Bigcommerce platform. Van says the biggest challenge was migrating the data.

“I learned we had to fix a lot of old things that were not clean in order to move it,” Van says. He advises any merchant looking to change platforms prep its data thoroughly, such as reconciling inventory across all channels, and organizing product color swatches and case quantities.

“Organizing and formatting your data to create a complete picture of your store is very important because it helps set the foundation when you’re moving to the next platform,” he says.

For Sportbike Track Gear, better data management practices and the more streamlined order management systems allowed it to cut costs and increase sales. It dismissed four employees because there is less manual input work required, while at the same time increased its conversion rate from 1.5% to 3.0%. It also can more easily manage sales promotions for clearance goods, Van says.

“On the surface, the project seemed rather intimidating but once we rolled up our sleeves and got to work, it was pretty painless,” Van says. “With the support from Bigcommerce and Intuit Solutions, our confidence grew through the migration process, leaving us with a finished product I feel is one of the best on the platform today.”

Outdoor sports retailer Rock/Creek had a rougher transition. The retailer invested more than $1 million—about a tenth of its 2014 gross sales—to move its data to a new e-commerce platform hosted by a third-party integrator, only to have to postpone launching for the 2014 holiday season’s vital Black Friday and Cyber Monday promotions because it was still working out bugs.

Rock/Creek concedes it made mistakes in planning and executing the move, says Mark McKnight, e-commerce and marketing director. “We were overly aggressive on time and budget projections,” he says. While it ultimately straightened out its issues by the first week of February, the process involved “lots of cost, time, pain and suffering,” McKnight says.

Ultimately, Rock/Creek changed strategies and moved to Oracle Corp.’s new Commerce Cloud solution.

The upshot: Rock/Creek is saving “several hundred thousand dollars” in the first year and eliminated the need to manage five service providers. That’s because the e-retailer has no need to do its own programming, write custom code or manage infrastructure to handle holiday traffic spikes, McKnight says.

Rock/Creek eliminated its providers for hosting, content delivery and external search, as well as its web-monitoring service and managed services such as handling day-to-day technical issues and providing strategic planning for continued development. Oracle’s platform encompasses these services, McKnight says. The promise of less internal oversight by its internal staff is a major reason Rock/Creek chose the Oracle service, McKnight says.

The software-as-a-service platform, which Oracle introduced in May, marks a departure for Oracle from providing licensed software that retailers deploy on their own servers. The hosted, SaaS software is aimed at mid-market retailers with $50 million or less in yearly online revenue, says Katrina Gosek, director of commerce product strategy for Oracle.

Rock/Creek is channeling the saved money and employee hours into creating compelling stories about the company’s products that will help the e-retailer sell. It sends out the content in emails that work across mobile, desktop and other devices. The new, fully responsive storefront allows Rock/Creek to reach a wider audience across many more devices, McKnight says. And the administrative console that incorporates content, product and merchandising management will give Rock/Creek more control over making changes to the site, he says.

McKnight is hoping for a 20% increase in revenue at existing traffic levels because of the website and email improvements, and aims to post same-day videos from the company’s paddle-boarding classes to further engage its audience.

The technology “will save us millions in the long run,” says McKnight.

Rock/Creek’s hard-won lessons reflect a new level of sophistication in e-commerce platform technology, experts say. Karen M. Greenberg, senior vice president of sales and business development at FitForCommerce says retailers are looking for platforms that will support many more elements of their business—such as marketing and personalization—beyond the basics of managing orders and checkout.

“It’s a bigger strategy than one system,” Greenberg says. “You have to have the appropriate CRM [customer relationship management software] and a great email system, but you also need to know from the inventory systems that Karen, for example, likes purple dresses so you can bring that relevancy forward, or that Karen bought a pair of men’s shoes as a gift for her husband.”

E-retailers are sifting through their platform choices to find the multifaceted platform technology that will meet their business needs. Picking a platform and moving from an existing one to another can be challenging, but some e-retailers say the consumer-pleasing results mean they drive greater sales.




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