The growth of e-commerce over the past several years has magnified the importance of choosing the right technology partner for retailers.
“What is becoming increasingly clear is that online sales is way too large to ignore. In 2000, e-commerce represented 2% of all retail sales, and this year it’s going to be close to 7%,” said Michael Conn, senior vice president of business development for GSI Commerce, during eTail 2004, held Aug. 2-5 in Fort Lauderdale, FL.
“That is just amazing growth to go from 2% to 7% in a five-year period. But what is also very striking is the 7% has really started to matter and have a major influence on what’s going on in the overall retail landscape,” he said, adding that the vast majority of e-commerce is being done by offline retailers and brands – that approximately 75% of all e-commerce transactions are from multi-channel retailers.
This data poses an interesting challenge for those companies that are driving most of the e-commerce business considering that, oftentimes, e-commerce is not their core competency, nor is it the main reason these businesses have existed.
“When you think about being an offline company doing business online, you want to look for opportunities to partner, and opportunities to leverage the expertise of other companies that really have more expertise from an e-commerce perspective,” Conn said. “So whether you’re delivering your e-commerce solution internally, through a hybrid of different service providers working with a large-scale integrator or a comprehensive solution provider, there are some important factors to consider.”
While e-commerce involves technology, technology shouldn’t be thought of as driving e-commerce. Instead, it is should support e-commerce, which is still retail, and retail is about merchandising and marketing, according to Conn.
“When you are looking at partners for any component of your e-commerce business, regardless of whether it’s front end- or back end-related, it’s really important to evaluate the retail understanding of your partners and how they understand the practical application of what they are doing as opposed to just the technology aspect of what they are doing,” he said.
Another consideration in choosing a technology partner is knowing their motivations and whether they have your interests at heart.
“When evaluating opportunities to work with other companies, it’s easy to just focus on what they can do. What does their product do? How is that going to benefit us? But you also need to look at what the company is getting out of this and how that relates to your goals. It’s very important to make sure your interests are aligned with your partner’s interests,” Conn said.
Furthermore, it’s not enough that your technology partner is providing a service that merely does what you want it to do, according to Conn. The retailer must “take a look under the hood” to understand how it’s put together, and whether it is going to have the infrastructure that will support your business.
“Aggressive reinvestment is also very important. Don’t just think about how a partner or product is going to perform for you today, but think about where that partner and product is going,” Conn said.
“If [a company] is only going to be able to service you for today, it’s not going to be a successful partnership. Understanding the investment and reinvestment profiles of the companies that you are working with and how their products are going to evolve based on how you see your business is critical to any partnership,” he said.
