RFP. E-COMMERCE: How to partner for Success EXECUTIVE SUMMARY AUGUST 2014

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1 AUGUST 2014 E-COMMERCE: How to partner for Success CHOOSING AN E-COMMERCE PLATFORM THAT FITS 1 - Understand the tiering of platforms - Know your business case - Know your budget - What s your anticipated turnover? EXECUTIVE SUMMARY As more companies seek to create an effective ecommerce platform, the market is being flooded with Requests for Proposals to solution providers. But these RFPs often miss their target and don t get to the heart of what is required for the effective delivery of a well performing online store. While features and benefits of various platforms are undoubtedly a necessary foundation, there are far more important factors which go into the successful delivery of a platform that delivers the results and returns you want. 2 CHOOSING THE RIGHT IMPLEMENTATION PARTNER - Availability of case studies and referenceable sites - Proof of ROI that is delivered to clients Chief among these factors is the necessity to partner with a supplier who understands your strategy, has the capability and capacity to deliver, and has the ability to support your ecommerce initiatives well beyond the deployment phase. RFP - Availability of after sales support and services - Availability to deliver in line with an appropriate project methodology 3 DOES THE PARTNER HAVE THE CAPACITY TO DELIVER? - Staff and resource availability - Implementation timeline But before you choose a partner, you have to know which ecommerce platform is suitable for your online business and that depends on a back to basics approach where the business case is matched to available solutions. In this whitepaper, Vaimo, a leading provider of ecommerce solutions based on the Magento platform, reveals the considerations prospective online merchants should build into their Requests for Proposals. In so doing, these clients can ensure they query the market appropriately to get the best fit and ongoing value from their investment in an ecommerce solution. Magento is an ebay, Inc company 1

2 1 CHOOSING AN E-COMMERCE PLATFORM THAT FITS While your implementation partner will largely determine how successfully your ecommerce platform is deployed, it is firstly necessary to select the appropriate platform. After all, once the platform is identified, the partner can be selected. Choosing your platform independently means the freedom to evaluate the whole market, not just those that any one potential solution provider might advocate. It is essential to evaluate the offering of any one vendor against that of another in the same tier There are several tiers of platform available. The higher the tier*, the more capability, support and options (in terms of quality partners) there are to choose from. Many clients don t fully grasp the nature of tiering in the ecommerce platform market; when comparing platforms, it is essential to evaluate the offering of any one vendor against that of another in the same tier. If this isn t done, there is a fundamental mismatch: you are not comparing similar items. In terms of identifying the appropriate tier for your initiative, it is necessary to go back to basics and have a clear business case, with forecasts of anticipated sales and traffic and the understanding of your own budget. The business case is, obviously, specific to your industry. It will depend on the nature and extent of the catalogue of products which will be made available for sale, the anticipated number of transactions and the source of the products (through affiliates or your own warehousing/stock). A realistic anticipation of how your initiative is likely to grow is also necessary to establish the necessity for scalability. * Learn about tiering on the next page 2

3 1 * UNDERSTANDING TIERING An understanding of tiering and your business case is the first step before knowing which tier of available solutions you should be considering. With this established, most platforms are easily analysed and evaluated in terms of their capability to handle key performance indicators such as turnover and traffic volume. Since you are shopping for a solution, at this point, your budget is an essential factor. There s no avoiding the fact that a bigger budget will deliver a better solution should you partner with a good implementation provider. The two most important components of selecting the right tier for your initiative are budget and anticipated turnover. It should be noted that scoping an online store isn t without its challenges. While achieving traffic and turnover is no simple feat, it does occasionally happen that a new merchant experiences demand far beyond that initially anticipated. In today s crowded online market, this is considered a luxury problem. If you have selected a higher tiered solution, it will scale further than a lowertiered one but there is typically considerable margin for scale within any tier. With the determination of the appropriate tier for your initiative, the available platforms within that tier do not differ widely in terms of capability (features). Instead, the next step is a key determinant of the success you are likely to achieve: the selection of an implementation partner. TIER 4 - Turnover below 0.5 M$ - Hundreds of thousands new sites/year - Half won t survive their first year - Hundreds of thousands of sites TIER 3 - Sites doing 2-20 M$ online - Have means & needs - Low failure rate/year - An estimated sites TIER 2 - Big sites doing M$ online - Retailers, brands, B2B sites, pure players - Stable business, in growth - Counts approx sites TIER 1 - Major internet sites, > 200 M$ online - Few frameworks here, monthly custom dev. - Margins are often lower, but huge turnovers - Counts around sites 3

4 ... 2 CHOOSING THE RIGHT IMPLEMENTATION PARTNER Just how important is your choice of implementation partner? It is pivotal. It is even more crucial to success than the selection of an appropriate ecommerce platform, as a good partner can make a deficient platform work, while a poor partner can cause even the best platform to fail. Getting the best partner, however, depends on querying the market appropriately. What you ask for in your RFP will determine how well you can evaluate the solution providers which are available to meet your ecommerce platform requirements. A good partner can make a deficient platform work, while a poor partner can cause even the best platform to fail RFPs typically focus on ecommerce platform features and benefits, a reality which underscores the typical underestimation of the effort required to issue an effective RFP. When an RFP which focuses on features and benefits is issued, it is very difficult to discern the response of one solution provider from that of any other. After all, most available platforms within the same tier will deliver a roughly equivalent feature set. All you are getting back is a set of forms with ticked boxes. The focus of the RFP should instead be on the effectiveness of the solution provider and not the effectiveness of the platform. After all, in your initial work to identify an appropriate platform, this should be largely settled (and it is arguably better assessed independently, outside of the recommendations of solution providers which are, in any event, typically aligned with one platform or another). Critical tools for assessment include: The availability of case studies and referenceable sites. If the partner doesn t have at least 50 successfully completed projects, including those of suitable and recognised brand names, ask yourself if you are the test case (and are you comfortable with that). Proof of the return on investment that is delivered to clients: increase in online turnover, improved conversion rates, increase in visitors, more brand loyalty, 4

5 2 higher uptime and improved page load times as some examples. Proof of after sales support and service: what does the solution provider do after the implementation, what Service Level Agreements are in place, how does the organisation help and support customers. Look for evidence. Proof of the ability to deliver in line with an appropriate project methodology (waterfall, Agile, Rapid Application Development, etc). CRITICAL TOOLS FOR ASSESSMENT - At least 50 successfully completed projects - Proof of the return on investment - Proof of after sales support and service - Proof of the ability to deliver in line with an project methodology 5

6 3 DOES THE PARTNER HAVE THE CAPACITY TO DELIVER? The identification of the best partner to implement your ecommerce platform doesn t yet guarantee a successful project. Now you need to assess of the solution provider s capacity (as opposed to ability) to deliver. Staff/resource availability and the implementation timeline are critical factors. Most good solution providers are very busy and it is difficult for any to say no to a new sales opportunity. When you decide to make the investment into an ecommerce operation, timelines are typically tight: Combined with overstretched partners, this is a deadly combination which too often results in missed deadlines and potentially botched projects. Your solution provider should have the ability to allocate sufficient capacity to your project without taking away more than 5% of its available capacity When the timeline is tight, it is important to gauge the solution provider s ability to deliver. This can be done through simple calculations which reveal some magic numbers. For example, if the organisation has 100 developers, it has a total capacity of 120 hours development time per individual per month and a cumulative total of hours per month. The solution provider should have the ability to allocate sufficient capacity to your project without taking away more than 5% of its available capacity; in the hypothetical example, that means your project should not require more than 600 hours per month. If your project requires more than that, you are in 50-40% trouble. of the capacity available for The next question is to assess how much time is spent on existing customers and how much is available to address new business. new projects The magic numbers you are looking for is a solution provider which spends 50 to 60% of its capacity on existing customers, with between 50 and 40% available for new projects % of the capacity on existing customers 6

7 3 The importance of these numbers goes beyond assessing the ability to delivery your project and here s why. Implementation of the ecommerce platform is perhaps 20% of the total effort required for a successful online shop. Once deployed, support, fine tuning and ongoing customisation are practical inevitabilities. The world today moves fast; ecommerce moves even faster. If the candidate solution provider is spending too much time on new projects, then this is a sure sign that it is not delivering the requisite support to existing customers. This is a danger sign. Conversely, if the solution provider is spending 70-80% of its time on existing projects, then it is not learning on new projects and designs, and is therefore unlikely to be keeping up in an industry which changes incredibly rapidly. 7

8 ! CONCLUSION Invest time and effort in the RFP process for long term project outcome By asking the right questions and evaluating solution providers against metrics that matter (outside of technical capabilities and specifications), those looking to create a successful ecommerce presence stand a far improved chance of success. The choice of platform is critical, but the choice of implementation partner is even more important. When the RFP interrogates the ability of the implementation partner to deliver not only the initial project, but also ongoing support, advice and expertise, the potential for success in a highly competitive marketplace is optimised. By spending more time on the RFP itself and giving solution providers more time to respond with detailed and verifiable evidence, your project is likely to be delivered better, perform smoothly and become profitable faster. For more information on Vaimo s solutions and services please visit: www. vaimo.com 8