E-Commerce Platforms.
Editor’s Note : Before we begin, let me apologize. I’m going to oversimplify what is a wide, complex and ever growing body of work. However, consider this a primer – we will cover all these topics in the detail they deserve as we progress.
What is an e-commerce platform?
For our current purposes, let’s define it as all the required components to enable customers to complete a transaction online. As you can see, this is an oblique and vague definition.
What exactly are the ‘required components’ you ask?
Viaweb Home Page November of 1996
That’s the Viaweb Home Page in 1996 – one of the very first “e-commerce platforms”.
As you can see – Edit, Orders, and Info were the three required components then.
Moving on to the end of 1996, you can see additional components showing up…
Viaweb Home Page at the end of 1996
Search, Contact, Edit, Orders, and ViaMall – the online approximation of a real world mall are now the pieces that fit together.
Searching for products, and the ability to initiate contact had become required components.
I use these flashbacks merely to illustrate the point that needs and requirements are ever evolving. Especially now as the web matures, and starts to become its own medium, instead of another channel where we try to emulate the “real” world.
People interact, behave, and execute differently online than they do in real life. While we don’t fully understand the intricacies of these differences, we all intuitively know that the experience someone has when they walk into a brick and mortar store, are greeted by a human sales person, and walk the aisles, touching, and feeling objects is not the same as entering a URL in a browser, bringing up an e-commerce store, and interacting with “Live Chat” representatives.
So in today’s world – what does an e-commerce platform actually do?
Let’s start with the concept of a person walking into a store, and see what all would be ‘necessary’ in order to complete a transaction.
- The first thing obviously is before the customer even walks into the store, they grab a ‘cart’ in order to temporarily dump things into it as they walk around the store (The cart).
- The items in the cart, are taken from shelves, therefore we can safely conclude that they are in stock and available at the time the customer walks into the store – she (the customer) can’t possibly throw something into her cart that isn’t in the store (Inventory Management).
- She also spends several minutes, looking at, listening to, touching, playing with, feeling, tossing, or even tasting the, (and other verbs, ) product the question. All this is in an attempt to gather information on the product to enable her to make an informed choice. She might even ask a sales person a question or two (How does this perform in low-light conditions? What about no-light conditions?). She will compare two products against each other taking into account the various factors that are important to her (Product Information).
- As she picks up Product A, and adds it to the cart, she sees accessories for Product A – the holder, the paper, the handler, the thingamagettingjiggywithit, sitting right there on the shelf, and realizes that she’s going to need those as well, so she reaches over and adds them to the cart as well (Merchandising).
- She continues strolling through the aisles looking at other products – she might ask a sales person if she can’t find a product she’s looking for. All the products compete for shelf space in an attempt to make sure they are visible to potential customers. (Searching and Navigation).
- Eventually she makes her selection, and walks up to the the counter to pay, at which point a transaction takes place, between her and the establishment (Transactions).
- Once the customer leaves, the fact that a sale was made needs to be recorded and stored somewhere, and appropriate inventory changes, restocking etc. needs to take place in order to make sure that the next customer has access to the same experience and products if they should so desire (Order Management).
So from the above we have, a Cart, Inventory Management, Product Information Management, Customer Management, Merchandising, Search and Navigation, and the ability to execute a transaction. These aren’t in any particular order of importance. Obviously not all of these features were created equal – some, such as Merchandising, are probably not as important as the ability to actually transact.
What are the issues facing e-commerce vendors today?
There’s no shortage of issues facing e-commerce stores today – but from a very high view, its usually possible to bucket them into two types
- Not enough traffic to the store.
- Not converting enough of the traffic that you’re getting into the store.
Now, neither of these are issues unique to the online world – we’ve all heard the old adage of “location, location, location”, and the importance of foot-traffic etc.
Foot Traffic
However the solutions to these problems do differ between the brick and mortar world and the online world. Links (the currency of the web), authority, content, organic search engine listings, advertisements, recommendations, trust, security, usability of the website, ability of the search engine to return the desired products, etc. are the factors to consider.
What does the next generation of e-commerce platform look like?
Above we’ve covered some of the basics that are required in order to fulfill the requirements of being able to complete a transaction. Now let’s start to discuss the areas where the web starts to distinguish itself from other channels. One of the advantages of the web is that we have access to a lot more information than ever before – it wasn’t that long ago that the internet was referred to as the ‘information super highway’.
The wealth of information hidden in this information is still only just being discovered, but we can already start to see some of the benefits.
Product Information Management : It is very difficult to compensate for the lack of tactile connection to the object that we enforce when people shop online. One way to attempt to get over this hurdle is to provide the end user with all the relevant product information in a manner that they can consume and understand. As the number of products, and markets increases this becomes an ever more difficult task to accomplish. Product Information Management systems can enable the ability to create, monitor, update and manage product data in multiple markets, formats, languages, delivery mechanisms, and mediums in order to be able to provide the end user with a consistent, and comprehensive message. This is a difficult challenge, and one that requires a lot of forethought since every vendor approaches this problem from a different angle, there hasn’t been a consistent definition of what Product Information Management actually refers to. For now, lets consider it a comprehensive set of tools that allow you to import, change, reformat, and deliver in any format necessary, all the media and data that is attached to a product – including pictures, video, etc. Without this ability merchandisers will find themselves struggling as customers fragment further in the myriad ways they interact with the data, mobile devices, social media websites, content syndication services etc. and the locations of all the end users.
User Generated Content : Its easier than ever to let users interact with each other – either asynchronously through content that they create once, but can consume several different times and ways – or synchronously via chat etc. One of the areas that has experienced an explosion in terms of the amount of content available in this space has been ratings and reviews. We will see more and more content being created here – especially in the areas of peer guidance – whether its on products, resellers, retailers, even on such things as route selection, shipping choices, and especially support levels etc.
Merchandising : As we learn more about customers, and their buying habits – we start to see thousands of variations on the central concept of ‘which product do I show in this space’. Even though, real estate online isn’t limited in the same manner as shelf space in a brick and mortar store is, there is a limit to customer attention. Every extra link, gesture, or keystroke that a customer needs to endure will introduce friction into the system. Every such point of friction will experience a bounce rate – a certain number of people will take the required action, while the rest will just leave.
Merchandising started with the simple concept of domain knowledge experts grouping products together and presenting them to the customer. If you were looking at a camera for example you might be shown a list of accessories including memory cards, batteries, cases, etc.
Accessories for a Canon Powershot A1000
This is similar to how products are placed on shelves in a store. The location of products are decided manually, and then manually restocked, and moved, etc.
As technology progressed, we started seeing other implementations of merchandising such as the now famous, “People who bought this, also bought…” as executed by Amazon.
People who bought this, also bought... as seen on Amazon.com
In the area of Fast Moving Consumer Goods, freshness is a factor of tantmount importance. This along with editorial selection, and ratings and reviews brings forth several different mechanisms that allow for merchandising.
Sephora Home Page displaying several different Merchandising Strategies
As you can see above – we have Top Rated Products, Just Arrived!, What’s Hot Now, Weekly Specials, and a few other merchandising strategies (free shipping, free returns, free samples etc.) all on the Sephora Home Page. As technology progresses and our insight into what is important to customers expands, more and more such strategies will develop. The next generation of e-commerce platforms will enable the creative merchandisers to execute against their vision for how they want to merchandising their selection of products.
Customer Profiling : As we learn more and more about the customers, we want to be able to move from People who bought this also bought … to … People like YOU who bought this, also did … This brings up the question of how do we determine which other users are like you? Is it geography? Income? Race, Color, Creed, Gender, Number of children, Hair Color, Eye Color, Foot Size, Profession, or some other random factors that matter? The answer is the ever true “it depends”. There is no one right answer for which factors matter in an attempt to place your customers in buckets – it depends on the business you’re in and what you’re trying to deliver – is it movies, or shoes, or diapers? The platform needs to be able to provide the flexibility needed to slice, dice, and group customers along any axes needed in an attempt to better understand an individual’s proclivity towards one product vs another.
Personalization : If we can accurately understand and profile customers then we can make predictions on their future behaviors.
Predictions at Amazon.
This includes whether or not they might be interested in a particular product, or service, what product releases would be of interest to them, etc. We might even be able to predict when it is time to refresh a purchase made in the past. How we compute this, and deliver it to the customer will be extremely important to avoid mishaps, and distrust. The next generation of e-commerce platforms will need to be able to provide the ability to personalize the content, and very fine grain controls on how to change the decisions. Since its such a tough problem, we will see several black box approaches to the problem for a while before people begin to understand how it works, and start experimenting with the controls in an attempt to correctly personalize to an wider and wider audience base.
Syndication, and distribution : As the web starts to develop into a more mature medium with its own behavioral quirks etc. we will find that users will interact with content in many different ways – whether that’s over mobile devices, through social networks such as facebook and myspace, or through shared / passed links on twitter etc. The ability for an e-commerce platform to integrate with all these different channels, and distribute its content via all these mediums will become a requisite in order to ‘go where the customer is’ instead of waiting for them to come to you. This will include the ability to syndicate your content to micro afiiliates such as indivudals with blogs writing about a particular product or set of products, or through a customer’s facebook page, describing the purchase they just completed etc.
This is not a comprehensive list by any means – its just the most obvious areas of flexiblity and ability that we’d be looking for as we start to explore what a platform would need to provide in order to stay relevant and competitive today. We haven’t even begun to talk about marketing initiatives and the needed toolset there in order to provide customers the information they want, and might find useful and relevant, via a medium they are willing to accept (SMS, Email, RSS etc.) or order and inventory management, or fulfillment requirements etc.
So far we’ve discussed briefly the basics of what an e-commerce platform requires in order to allow it to be competitive today, as well as some of the features that are on must have list in order to be competitive in today’s marketplace. E-commerce, the internet, and our behaviour online is constantly evolving – hence the emphasis on flexibility in our previous discussions. In upcoming posts we’ll talk about the technology, as well as the business of e-commerce platforms, and what we consider important factors in choosing one.