E-Partnerships Essential for Retailers

The growth of e-commerce over the past several years has magnified the importance of choosing the right technology partner for retailers.

“What’s 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 at GSI Commerce.

“That’s just amazing growth, to go from 2% to 7% in five years,” he said at the recent eTail 2004 conference in Fort Lauderdale, FL. “But what’s also very striking,” he added, “is [that] the 7% has really started to have a major influence on what’s going on in the overall retail landscape.”

The vast majority of e-commerce, Conn noted, is being done by offline retailers and brands — some 75% of all e-commerce transactions are from multichannel retailers.

This data poses an interesting challenge for those companies that are driving most of the e-commerce business, considering that often 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 solutions 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 should support e-commerce, which is still retail, and retail is about merchandising and marketing, Conn said.

“When you’re looking at partners for any component of your e-commerce business, whether it’s front-end or back-end-related, it’s really important to evaluate the retail [aptitude] of your partners and how they understand the practical application of what they’re doing.

“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.

“If [a company can] only service you for today, it’s not going to be a successful partnership,” he said. “Understanding the investment and reinvestment profiles of the companies you are working with and how their products are going to evolve based on how you see your business is critical to any partnership.”