This Holiday Shopping Season Seeing More Cloud-based E-Commerce

Everyone knows this is the time of year retailers yearn for.

e-  commerce, online shopping

Everyone knows this is the time of year retailers yearn for.

Take Stephen Enfield, founder of POS Supply, a company that provides point-of-sale receipt papers for registers and bank ATMs. Using an e-commerce platform from NetSuite, Enfield knows which customers last year stocked up on their purchases of receipt paper. This year, he'll be sending those customers and others like them promotional emails, complete with a custom landing page, offering a discount for bulk purchases. "I couldn't do it without it," he says about his back-end e-commerce platform.

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Forrester analyst Peter Sheldon says e-commerce platforms have become mandatory, must-have software for any retailer, be it a business-to-business or business-to-consumer entity. And there's a robust industry of e-commerce platforms available on the market, dominated by big software players such as IBM, Oracle and SAP. Like many industries, these e-commerce platforms are evolving with the times though, shifting from on-premise software packages to cloud-hosted software-as-a-service packages. And Sheldon says when a retail business goes to the cloud, it can open up a whole new can of worms.

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This migration to the cloud is being driven by a variety of factors. First and foremost, managing e-commerce has become extremely complex, so being able to outsource it to a vendor that specializes in this work can be a huge advantage. E-commerce makes up about 8% of total retail now, Sheldon adds. "This is not some nascent channel," he says. "An outage during the holiday season will cause some heads to roll and some CIOs to lose their jobs. That's a game changer." Mid-market retailers, he says, are "feverishly" looking to host their e-commerce platforms in the cloud, if they haven't already made the jump.

That doesn't mean it's an easy transition, though. Security controls, such as payment card industry (PCI) protocols and audits certifications, are must-haves for cloud-based e-commerce SaaS vendors. There can also be political issues that hold up launching of e-commerce programs.

While CIOs used to be in charge of e-commerce systems in-house, when that technology is outsourced, some companies have created new executive-level positions specifically to oversee online commerce, or it is rolled into a marketing officer's role because the technology is outsourced to a vendor. "Many CIOs are supportive of the move, but some see it as a job threat," Sheldon says.

It's getting to a point though where the migration is unavoidable for many organizations though, Sheldon says. E-commerce platforms aren't just about "e-commerce" anymore, either. The new and more appropriate term is a "commerce suite," because it handles not just the electronic channel sales, but also management tools for the entire process from creating a website for desktop, mobile and tablet browsing, to allocating the technical infrastructure on the back end to host it, to the order and shipping process when a customer makes a sale and inventory management.

IBM and Oracle are seen as the heavyweight leaders in the category. Just a few years ago almost all of these e-commerce platforms were hosted on a customer's site, which IBM WebSphere Commerce dominated. Since then IBM and Oracle went on multibillion-dollar spending sprees to build out their portfolios of e-commerce tools. Demandware has since come onto the market as a SaaS vendor completely in the cloud. Hybris and NetSuite are other competitors and there are others in specific verticals, Sheldon notes.

Andy Lloyd, NetSuite's e-commerce GM, says given the complexity of managing e-commerce platforms, it was a no-brainer for the company -- which has specialized in cloud-hosted ERP systems -- to get into e-commerce. Imagine a retailer that has three separate brands it sells under, he says. It wants to optimize its websites for each of those brands for mobile, tablet and desktop browsing, while being able to handle transactions from the U.S., Europe and Canada in three different currencies. It's not an uncommon request, he says, but "that complexity is daunting. It's potentially three websites, times three websites, times three websites. Or, you can run it on a single system with responsive design that knows what platform the customer is accessing the site on and from where."

E-commerce isn't just about the global 500 brands selling their widgets or retail across the world, though. It's also about helping the little guys. Mike Flynn is IT director of On Deck Sports, a small supplier of sporting goods outside of Boston. When Flynn came onboard, the company's order process included a Salesforce platform for managing customer relations, QuickBooks for financials and a simple Excel spreadsheet to manage inventory. A typical order on the company's primitive website would have initiated an email that was forwarded to a sales rep, who would then manually input order into QuickBooks and process the shipping. If the sales rep remembered, a spreadsheet would be updated noting the change in inventory.

On Deck launched NetSuite's SuiteCommerce platform, which not only manages the website, but automates the order processing, adds a shopping cart feature to the Web page, allows customers to calculate pricing, and reduces the manual steps in the process from a handful down to two. Online sales have jumped 200% after the three-month guided implementation of the SuiteCommerce platform, he says. Since then, On Deck has launched a new site specifically for artificial turf sales, which it saw momentum in after tracking purchases using the new platform. Flynn says none of that would have been possible without an e-commerce platform. Many other businesses are realizing the same fruits after embracing an e-commerce system.

Network World staff writer Brandon Butler covers cloud computing and social collaboration. He can be reached at and found on Twitter at @BButlerNWW.

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This story, "This Holiday Shopping Season Seeing More Cloud-based E-Commerce" was originally published by Network World.

Copyright © 2012 IDG Communications, Inc.

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