Wednesday 6 January 2010

eCommerce Archeology: The 3 Ages of eComm


Everybody seems to be talking about eCommerce re-platforming. It's got me thinking about how retailers have evolved their use of eComm over time. I kind of see it as 3 ages, of which we are now entering the 3rd age.

The 1st Age - The toe in the water (mid 90s - early 2000's)

The goldrush starts and retailers begin carving out their marketshare. The key was speed to market, very few eCommerce platform vendors existed and those that did were in their infancy. Many Bricks & Mortar retailers believed they could build it themselves, and set out on that path.

The 2nd Age - Handling the success (mid 2000's - late 2000's)

eCommerce gathers pace, as consumers opt for the convenience. The success of the likes of Amazon and eBay show the way and the growth of shopping on the web is exponential.
Those that built it themselves see cost of ownership spiralling to support increased traffic, but the ability to make changes slows. All contrary to what is required by the business stakeholders who see competitors adding capabilities.
The stakeholders lose faith in the existing platform. Many traditional Retailers at this point decide to outsource to the experts, to remove the application/infrastructure headache and concentrate on what they know buying and merchandising - this was also aligned with the trend toward outsourcing the commodity IT functions of their primary business.

Those that implemented an early platform, may have taken the same outsourcing route or decided on the upgrade path.

It was toward the end of this period that new innovations began to gather pace, many termed it Web2.0, in general it revolved around the concepts of User Generated Content. Whereby the wisdom of the masses was being used by consumers to inform purchases.


The 3rd Age - Masters of destiny (2010+?)

This brings us to now, as retailers look to harness and leverage the new concepts and put them to use. Business Stakeholders have realised eCommerce is no longer that web thing that contributed negligible revenues. The term Multichannel, having risen to prominence halfway through the previous period, and dismissed, begins to gain traction again.
Those that outsourced, realise that the size of their eCommerce business and the cost model, whether it be revenue-share based or traffic based, are no longer sustainable. A combination of this and frustrations with their suppliers has led back to insourcing, the attraction of leveraging the wealth of experience in the skills marketplace and potential agility of an in-house team is just too great an attraction. It also positions them to compete more effectively with the pure-plays.


The fight is on for the next generation of eCommerce and to be ready for the upturn in consumer confidence and a share of their pockets.


I predict this next age will be an exciting one! It'll be interesting in around 5yrs to reflect upon this 3rd period and the trends that occur.