eCommerce Ecosystem Complexity Gives Way to Pragmatism

I have blogged before about the increased importance of eCommerce to the business of retailing as well as the resulting complexity of solutions retailers have attempted to buy and develop to deliver to the needs of the business.  eCommerce is no longer tangential to what it means to be a retailer but instead is a core part of strategy. 

The solutions available to retailers in this space have multiplied at astonishing rates in the last five years to the extent that there are broad ecosystems in solution areas today that didn’t even exist five years ago.  eCommerce platform, Web Content Management, Order Management, Email Marketing, Reviews and Ratings, Rich Media, Search, Recommendations, Call Center, Store Locator Services, Affiliate Marketing, Content Delivery Networks, Web Analytics, Site Design, SEM, etc are all examples of capabilities that now have broad vendor ecosystems attached to them. 

I often remark to my colleagues that there is an easy way to determine the “hot” solution space in eCommerce and that is to peruse the show floor at an industry event like the Shop.org Annual Summit. I remember about three years ago the floor was saturated with email marketing vendors, indicating that was a solution area where retailers were hungry for capabilities. 

Also in a previous post I commented on the parallels I have seen between the growth of the Retail ERP market and the current state of the ‘digital marketing’ space.  Looking back to the early days of Retail ERP, what moved both retailers and their technology partners to build out diverse but complimentary capabilities into an integrated solution offering was the growing complexity and cost retailers faced of integrating solutions that were built based on the vendors’ myopic views of their responsibilities in the ecosystem.  Each independent vendor built their applications based on the piece of the pie they wanted to build share and revenue in.  While they developed partnerships and alliances as a way of growing their share (as well as sought out opportunities to own more of the stack with additional functionality) most were incented to be highly functional in their area of specialty and to sell into a customer base on those merits.  One of the historical results of this paradigm was the ‘ERP vs best-of-breed’ debate. 

Well as the eCommerce space continues to grow its universe of vendors I see a changing tide in the way retailers are looking at the landscape of solutions they “need” to deliver high quality experiences to their customers.  While the vast majority of retailers are on a sprint to acquire the best features and functions in all categories of eCommerce solutions - and in some cases supported in their pursuits by analysts and industry experts - there is a quiet minority consisting of retail eCommerce executives beginning to see a potential advantage to simplification. 

The ‘Digital ERP’ narrative I started in a previous post serves as a good description of this emerging perspective.  The crux of the argument is that there is competitive advantage to be gained in the form of integrated solution capability and lower costs when considering eCommerce solutions that are from the same family so-to-speak.  As an example of this view take the following hypothetical scenario:

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A retailers needs to select an eCommerce platform and Web content management solution. 

Choice A:

• Choose best of breed eCommerce platform
• Choose best of breed WCM
• Complete integration of solutions through in-house IT or SI of choice

Choice B:

• Select eCommerce platform and WCM from the same vendor, with native integration of WCM and eCommerce platform.

Both choices have inherent benefits and challenges.  While in Choice A the retailer has selected highly capable solutions in their own right, both are highly horizontal, as each vendor typically sells their solutions into standalone deployment scenarios where their products compete based on features/functions.  Integration will be the focus of the implementation effort and both solutions represent the highest loaded cost.

In Choice B the retailer has saved itself a great deal of integration headaches and the solutions should be complimentary.  The retailer will spend most of its efforts on extending or customizing functionality of the end solution to meet their specific requirements. 

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In Choice B the Retailer is investing in capabilities that positively impact their customers, vs spending time on integration.  The real point of this hypothetical isn’t to devalue the best-of-breed decision, as there are clear circumstances under which best-of-breed is the best choice, but as this space matures expect many retailers to find ways to exploit a competitive advantage in their technology decisions by simplifying their solution landscape.