TRANSCENDING THE LIMITS OF LEGACY ECOMMERCE SOLUTIONS

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1 TRANSCENDING THE LIMITS OF LEGACY ECOMMERCE SOLUTIONS Today s Challenges and What Enterprises Will Need for Tomorrow s Market JASON WALLIS, VP OF ARCHITECTURE

2 The rapid rise of consumer technology is creating new challenges for retailers that strive to provide experiences that meet consumers expectations. Legacy commerce platforms struggle to keep up, yet due to their relatively high upfront capital costs, businesses often resist upgrading, causing them to lack the flexibility needed to meet shopper demands. And recently, the prolific consumer adoption of smartphones that emerged in 2007 has dramatically transformed online shopping behaviors. And as a result, retailers must now create a seamless experience both on and offline while juggling the proliferating number of sales channels available to consumers. For businesses faced with a need to continually improve mobile, browsing and purchasing experiences, tackling a new geography, launching new brand specific sites, or providing customers with a seamless brand experience across channels and sites, the demands placed on their commerce platform have evolved dramatically in the past few years. 2

3 Retailers must now create a seamless experience both on and offline while juggling the proliferating number of sales channels available to consumers. Though ecommerce began taking shape in the 1990s, the experience has transformed dramatically, a transformation that has largely been the result of consumer-driven personal technology. The 21st Century brought the rapid adoption of mobile devices, compelling retailers to maintain both traditional and mobile-friendly sites. Retailers must now create a seamless experience both on and offline while juggling the proliferating number of sales channels available to consumers. THE FUTURE OF THE ECOMMERCE LANDSCAPE: CHALLENGES AND OPPORTUNITIES Forrester Research, forecasting the future of online retail, expects ecommerce sales ecommerce to grow at a compound annual growth rate of 9% between 2012 and Key drivers include: Significant investments in multichannel capabilities by large retailers; The rapid adoption of smartphones and tablets; and US online consumers increased comfort with web shopping. 1 According to the Pew Research Center, 71% of U.S. adults shop online and 78% use the Internet to research services or products they are considering purchasing. 2 Forrester predicts these trends to grow, with the average U.S. online consumer increasing the amount they spend online by 44% over the next five years (cited in a report from 2012), from an average of $1,200 in 2011 to $1,700 by

4 CHALLENGE 1 Consumers are increasingly moving to mobile for purchasing and now demand mobile-optimized experiences. The mobile experience has redefined the human experience. According to Cisco, at the end of last year, mobile devices outnumbered the world s population. 4 The new realities of our connected world reveal new consumer habits. Digital media recently surpassed television as the most consumed type, and the average American now spends over 12 hours per day in front of a at least one screen. 5 IGS shows in their 2013 Mobile Survey of over 25,000 global participants that the use of personal technology is influencing the way consumers purchase today more than ever. Their study revealed that 56% of smartphone owners and 73% of tablet owners use their device to shop online. 6 And now, we see that the digital reality reshapes and influences not just our retail world, but also our physical world. Ongoing innovation, the subsequent evolving excellence of finetuned responsive consumer personal devices and inventions that now integrate the virtual with the physical such as Google Glass have surpassed the achievements of just a year ago. Forrester Research predicts the arrival and importance of several ecommerce trends during 2014, and topping their list, they note that: Mobile traffic and sales will continue to climb. In 2014, the percentage of traffic and total online orders placed via mobile devices are set to increase in virtually every market worldwide, and Forrester expects that a growing number of brands will launch new mobile websites and apps in response. 7 However, because most ecommerce platforms were built before the advent of our mobile lifelines and because their derivatives are still largely in use today both customers and companies suffer the frustrations and fallout of these legacy software and hardware systems that fail to adapt to the evolving need of consumers. As a result, the gap between their current commerce platform and their customers continues to widen. MOZU SOLUTION 1 Responsive design and mobile APIs are built into the very core of Mozu, allowing businesses to quickly build and innovate their mobile shopping experiences. Consumers expect consistent, seamless experiences across all touchpoints throughout their retail experience; businesses that can t provide consistent product selection, promotions, pricing and service experiences consistently across the brand and all devices will fail to satisfy consumers rapidly changing needs. Responsive is a core philosophy within Mozu, not a just a part of the technology. A wholly modern architecture that powers innovation and differentiation without roadblocks, Mozu delivers beautiful design, accessible for any user on any device, including the following: Single code base for all web experiences Single site for all web experiences Reduction in maintenance risks and release cycle times Single, device-agnostic URL structure 4

5 Non-competing SEO format Consistent and optimized experience across all web-enabled touchpoints Mozu is also specifically designed to account for emerging devices such as wearable technology and unforeseen devices not yet available in the market through its extremely flexible API that can easily adapt to new user interface technologies. CHALLENGE 2 Consumers will now demand a seamless experience across business channels. Consumers do not see channels, they only see brands. Channels are a construct invented by retailers to run their business with greater efficiency, but this paradigm is now collapsing in the shadow of a consumer-driven world and only creates walls that the consumer neither recognizes nor respects. Ideally, as consumers enter the commerce experience, no barriers exist among retail brick-andmortar storefronts, mobile commerce and online shopping experiences. Contemporary businesses must reflect the omni-channel experience so seamlessly that it feels that there are no distinguishable channels; the evolving marketplace demands a modern ecommerce platform that provides limitless extensions. Shoppers expect to be recognized when purchasing regardless of their retail touchpoint and demand real-time access to product inventories and data, information that empowers them to make informed, unrestricted purchases and delivery options of their choice, no matter how the supply chain is managed. MOZU SOLUTION 2 Delivering rich, streamlined digital experiences, Mozu creates a seamless brand experience not limited by devices, channels, locations or operations. At its core, omni-channel is about visibility. Retailers and shoppers both seek easy access to content, inventory and transactional data across what have traditionally been distinctly separate channels. Additionally, consumers continue to demand fulfillment options that defy these channels and meet the personal terms of the mobile purchasing experience. Retailers will be forced to break down long-standing walls between business processes and data to provide a holistic view of the consumer relationship: product, search, inventory and transactions. Also, providing consistent content across the retail experience regardless of location will become paramount. To scale operations and increase efficiencies, commerce platforms must seamlessly integrate content and commerce, while managing in-store and online experiences from a unified, central content catalog. Mozu s central content catalog plus the powerful ability to easily reuse and override product or content elements as needed allows retailers to provide exceptional yet consistent brand experiences for customers and prospects. 5

6 CHALLENGE 3 Legacy systems cause enterprises to throw good money after bad. Most ecommerce systems available to enterprises today were created before multidevice and omni-channel commerce were even a consideration. But the invention of the iphone in 2007 disrupted both the market and consumer expectations; the retail experience now fit in the palm of our hand. Commerce platforms were inherently out of sync with the native experience the iphone created and consumers quickly craved. As enterprises attempted to respond, problems naturally arose. These problems continue to occur today and will accelerate as enterprises acquire and layer ecommerce solutions over time with various platforms and code bases s ECOMMERCE IS BORN Early vendors supplied the basics of ecommerce: listing products and accepting payments 2000 s MOBILE RISES Rapid adoption of mobile devices forced retailers to maintain both traditional and mobile-friendly sites 2010 s MULTI-CHANNEL EXPLODES Proliferating sales channels require retailers to create a seamless experience both on and offline TODAY LIMITLESS COMMERCE Today s business is truly omni-channel, requiring a modern platform that provides limitless extensions This patchwork of systems often results in wasted time and expense. And, in the long run, produces a still-inferior and frustrating ecommerce platform that promises future complexities and cost when upgrading to new software versions. These complex, misaligned and overlapping systems create barriers to innovation and cause retailers to struggle in their quest to get ahead of consumer behavior shifts. While the primary desktop site may be highly optimized, providing a fully functional, mobile experience with the range of fulfillment options that consumers demand is clearly another matter. Deploying new site experiences outside of a primary site is almost always cumbersome for retailers. Legacy platforms are, by definition, unwieldy for enterprises struggling to provide a seamless experience across devices and channels for consumers. For many onpremise systems, the substantial upfront cost and time involved in an implementation make it difficult to justify adding expense, compounding already substantial, resourceintensive projects in order to migrate to a modern platform. As customers are now just a click away from the competition even while standing in your store a modern, strategic solution that builds on SaaS as a platform delivery model but enables the platform to serve a role within the business in an ever more channelor touchpoint-agnostic fashion 8 empowers companies to augment the core platform and reach customers where they are and will be in the future. 6

7 Forrester states that Commerce-as-a-Service (CaaS) platform providers will focus not only on core platform processes, such as catalog, promotion, content, offer, transaction, and customer account, but also on managing secure, robust, available, measurable, and wellsupported APIs. 9 Whenever a system requires a strong degree of openness or extensibility, the most effective way to provide that is by using the same public API within the primary functions of the system that is available to third parties. We have entered what Forrester Research calls The Era of Agile Commerce, where ecommerce application programming interfaces (APIs) are becoming a key business strategy, to the point where entire businesses are built off them. According to Forrester, two key areas in which ebusiness leaders will leverage to develop their business case for commerce APIs and CaaS solution strategies include: fostering and propelling internal innovation to unlock the potential of developers working on behalf of the business; and enabling new and innovative business relationships partnering and business development take on a whole new dimension when businesses enable commerce APIs. 10 MOZU SOLUTION 3 Enterprises and IT teams get complete access to the same API used to build the Mozu platform simplifying integrations with third party applications that offer a level of customizability previously found only in on-premise platforms. Mozu s API is designed to power the entire system: the public API was constructed first, and the rest of the platform was built on top, not separately as with private APIs. As a result, the Mozu API is much more robust. Additionally, Mozu offers Open Source SDKs, empowering enterprises to innovate in the language of your choice. This gives developers the power to add features and functionality, giving Mozu the level of customization on par with an on-premise level of customization. Unencumbered by legacy concepts or outdated technologies, innovation occurs at a much faster pace with Mozu s clean underlying architecture, which translates into a more streamlined usability, improved performance and increased stability. Any tooling that is built for the developers of the platform can also be shared with third-party developers, making their development easier and more productive. Businesses as a whole gain greater openness and extensibility because, as features are added to the platform, they are immediately available in the public API. This alleviates the primary issue of legacy software; enterprises can now respond to market challenges and competitive environments rapidly and enable businesses to tailor the platform to their unique needs. 7

8 Unlimited development sandboxes and unlimited developer accounts foster further innovation within a retailer s business. Mozu s versatile sandbox environment allows businesses to easily experiment and develop with ease as the platform manages all infrastructure complexity and supports rapid business innovation. CHALLENGE 4 Innovation and agility suffer at the expense of long upgrade cycles. In addition to the frustrations experienced by enterprises with legacy systems, many businesses suffer a compounded effect when high maintenance hardware systems limit their ability to respond to today s competitive market. According to Forrester Research, the way we now think of commerce technology has fundamentally changed due to far-reaching customer touchpoints, and must seek to innovate and optimize the customer experience They can do this by leveraging an agile commerce platform, one that can be exposed through services, managed in the cloud, and extended to support changing business needs over time. 11 Forrester asserts that, to remain competitive and meet the evolving retail needs of consumers, retailers must enhance their commerce platforms with SaaS options to provide clients with more streamlined support. A recent Retail Systems Research (RSR) report supports Forrester s findings, stating, a majority [of retailers] cite investment in a streamlined technology platform as a way to overcome their [organizational] inhibitors. 12 Though IT budgets and the staff required to manage new technologies are equally limited, a single streamlined technology platform actually addresses both these challenges. Until recently, most businesses invested in hosted, on-premise or homegrown commerce solutions, relying heavily on internal resources or partnerships. However, today s enterprises are increasingly adding SaaS offerings that allow them to simultaneously streamline and expand their commerce platform offerings and meet the needs of their customers. MOZU SOLUTION 4 Mozu s multi-tenant SaaS platform enables innovation in enterprises with rapid deployment, easy maintenance and the regular release of new features that will never disrupt your business. Why make a huge investment in bringing a platform only to a single market, just to find that you can t go where your business needs to be tomorrow? When enterprises cannot respond quickly to the market, opportunities are lost. And the market is moving faster than ever businesses must streamline processes and unify a coherent brand message while simultaneously diversifying product offerings. Mozu provides the simplicity of a smarter SaaS with no hardware headaches, easy maintenance and the regular release of new features you can predict. Most enterprises are familiar with the delays and IT dependency that hardware headaches and high maintenance systems create, but to move forward and deliver innovation into business environments, SaaS is the best model for several reasons: 8

9 SaaS platforms deliver features directly to retailers significantly faster than onpremise or on-demand software. The latter have extremely long development cycles (ranging between months) and long, expensive upgrade cycles (ranging between 3-9 months). Mozu s multi-tenant SaaS platform does not struggle with these delayed cycles instead, Mozu launches features quarterly and can react to changes in the market much faster, making your business more nimble and competitive. BENEFITS OF SAAS YOU EXPECT On-Premise Large upfront capital expenditure Long lead time between product upgrades Heavy IT investment in maintenance and integrations SaaS IT resources focused on innovation Predictable feature release cycle Vendor managed hosting, hardware infrastructure and security BENEFITS OF EVEN SMARTER SAAS Traditional SaaS Smarter SaaS SaaS is a fundamentally different software development model and not just a hosting model Mozu multi-tenant SaaS provides customers with increased security, load balancing and failover rates, resulting in greater uptimes and content delivery speeds. Punishes success with revenue share On-Demand, or Single- Tenant Inability to customize Locked into vendor s roadmap and timelines Encourages innovation with usage based pricing Multi-Tenant SaaS designed to be highly configurable & customizable Instant access to infinite number of sandbox development environments By having an automated infrastructure management process that uses true multitenant SaaS, enterprises streamline the creation of new sites. There is no need to involve IT resources; business units are empowered to launch microsites independently as a self-serve activity. Mozu s core features are designed to support content in specific regions and specific rules, pricing and integrations with regionally unique providers and supply chains. The ability to experiment, perform A/B tests and develop unique microsites empowers Marketing and Merchandising teams to self-serve with rapid turnaround gone are the days of looking to system administration or dependence on IT, resulting in delayed launch dates or missed market opportunities. By delivering a highly flexible SaaS platform built with the considerations of future business needs and consumer behaviors in mind, Mozu possesses the intrinsic ability to easily accommodate new user experiences by providing: strong content management capabilities to allow for targeted content reuse; flexibility to reuse and override when differences are desired; visibility into all dimensions of the ecommerce experience (i.e., inventory, customer interactions, etc.) without sacrificing the ability to quickly stand up new and unique profiles. 9

10 The streamlined architecture and easy-tointegrate features allow IT departments to focus on the future of commerce rather than wasting resources on legacy systems and antiquated hardware. SaaS automation means businesses can stand up websites in any region with any selection of customized products with just one click. Merchandising teams can seamlessly manage products, catalogs, orders and locations through Mozu s intuitive interface. Business units are empowered with tools that allow them to independently manage categories, attributes and search filters everything needed to ensure customers can easily find the most relevant products and information. Content, configuration, catalog data and site design can either be adapted from existing resources or created from scratch. Because Mozu s automated platform seamlessly manages the details of provisioning regardless of how many sites your business requires non-it business teams can create and launch new public sites without any technical support. CHALLENGE 5 Enterprise commerce platforms are plagued by outdated payment models, challenging them to balance budget limitations against investing in the future. How enterprises budget for and invest in their commerce platforms impacts both the shortand long-term financial health of the overall business. Retailers using legacy or homegrown commerce platforms should be seriously concerned whether their solutions will scale to support even conservatively forecasted ecommerce growth or provide the necessary flexibility to adapt to a rapidly changing market and competitive environments. Enterprises housing legacy solutions are frozen in time, unable to achieve essential agility and innovation and instead settle for the short-term ease of their comfort zone while sacrificing long-term vision and growth. A streamlined, fully integrated platform that allows for global expansion, responds to the reality of consumer needs, and offers a fully integrated, omni-channel experience is critical to business agility that encourages future growth. While enterprises make significant financial investments in their ecommerce platforms, as their success grows, so do their expenses, as these businesses often discover that outdated financial models are a penalty for their success over time. Revenue share-based SaaS fails to provide a natural incentive for retailers to improve conversion and revenue per order since they must sacrifice a portion of their revenue to their platform provider. Revenue sharebased models may be appropriate for businesses with very low revenue or very limited growth, but is that the expectation businesses want to set? Revenue sharebased SaaS does not intrinsically calibrate with actual system costs and usage. In stark contrast, usage-based pricing models achieve a true partnership with retailers and shared success without unfair penalties. Usage-based models also align with our omni-channel world where revenue aggregates among the many channels; however, that order data must be available within the commerce platform. In addition, if in-house enterprise IT teams are trained in languages other than ones offered by ecommerce platform providers, businesses are then pigeon-holed into using 10

11 a complicated ecosystem of system integrators (SIs), and costs will rise with every change and every project. Enterprises aren t in control of budget sand only have a gray area for what it takes to make it work. The financial model of using external SIs to implement expensive software coupled with large upfront licensing costs does not foster innovation as the disallows essential process of experimentation failing fast and succeeding fast and learning as you go which provides the optimal environment for business innovation. These burdensome, up-front expenses of revenue-share pricing instill a fear of failure from the beginning, and this fear quickly becomes a barrier to trial and error, healthy risk tasking and business innovation. Punishment for Mistakes Falling Behind Rewards for Success Leap Ahead Risk Aversion RISK AVERSION VICIOUS CYCLE Embrace Risk RISK EMBRACING VIRTUOUS CYCLE Reliance on the Past Missing New Trends Looking to the Future Anticipate New Trends MOZU SOLUTION 5 With pricing based on usage and not revenue, the success and profits of your enterprise are yours to keep. Our predictable, usage-based pricing model supports and encourages innovation, allowing businesses to accurately forecast and manage IT budgets and dramatically reduce upfront implementation costs. We don t charge for revenue coming from outside the platform but still allow order data to be imported into Mozu without any additional cost to retailers. Mozu infrastructure costs are amortized over a larger pool of spends, with usage-based pricing rather than large up-front capital expenditures. The project and capital cost of deploying major releases is eliminated. Because the intrinsic SaaS model wholly differs from on-premise development, enterprises can choose their level and method of customization and integration: use your own developers, the Mozu professional services team or your own partner all with less time and resources invested in maintenance. Mozu s multi-tenant SaaS platform is fundamentally democratic and stems from the core belief that once businesses make the investment, they will have full access to all features as soon as the development is complete. The ability to quickly roll out new features means no costly or expensive upgrades and no long waiting periods for features releases or the pain of a complex and capital-intensive upgrade. 11

12 Mozu deploys a major functional release to all customers once per quarter, with minor patch releases on a quarterly schedule as well. Customers and developers will know in advance which features will be on the roadmap, and all API releases will be backwards compatible. With Mozu, enterprises will not be caught off guard by software upgrades and business processes will not be disrupted. 12

13 NEW RULES FOR THE NEW ENTERPRISE Commerce is increasingly shifting to online. U.S. ecommerce growth reached $262 BIL this year, a solid 13% higher than And yet, with Forrester predicting what they describe as the Age of the Customer for the coming year, the focus on and momentum behind enterprise commerce technologies and the connection to the consumer has never been more vital or more tenuous. 14 Enterprises poised for a future of success will adopt and invest in progressive solutions that both streamline and build these connections by tapping into the rapid rise of consumer technology and the personal devices that have become 24/7 virtual lifelines for our society. The new rules for enterprise commerce environments may have created unique challenges for retailers, but they also represent a new opportunity to meet consumers rising expectations. 13

14 REFERENCES 1. Mulpuru, S. Forrester Research, Inc. (March 2013). US Online Retail Forecast, 2012 To 2017: US Online Retail Will Reach $262 Billion In Pew Research Center s Internet & American Life Project. (2013). What Internet Users Do Online. Retrieved at 3. Mulpuru, S. Forrester Research, Inc. (November 2012). The ecommerce Juggernaut Dominates Retail. 4. Digby. (2013). Mobile Commerce and Engagement Stats. Retrieved at 5. Thomas-Aguilar, B. (2013). Screen Fiends Infographic Reveals Shocking Truths on Technology Usage and Screen Time. Retrieved at pgi.com/2013/10/screen-fiends-infographic-reveals-shocking-truthstechnology-usage-screen-time/ 6. IGS Mobile Study. (2013). Mobile User Behavior: How is the Mobile Audience Engaging Online? Retrieved at blog/2013/11/mobile-user-habits-study-infographic/ 7. Forrester Research, Inc. (January 2014). Top Five Global ecommerce Predictions for Retrieved via The Wall Street Journal at online.wsj.com/article/pr-co html 8. Gill, M. Forrester Research, Inc. (March 2013). Selecting Tools That Enable Agility. 9. Ibid. 10. Ibid. 11. Ibid. 12. Rosenblum, P. and Rowen, S. Retail Systems Research. (2013). The Great Leveler: ecommerce s Next Move, Benchmark Report Mulpuru, S. Forrester Research, Inc. (March 2013). US Online Retail Forecast, 2012 To 2017: US Online Retail Will Reach $262 Billion In Forrester Research, Inc. (January 2014). Top Five Global ecommerce Predictions for Retrieved via The Wall Street Journal at online.wsj.com/article/pr-co html 14

15 ABOUT MOZU Mozu is a commerce platform for the new global marketplace. With Mozu, retailers can manage their commerce, content and customer experience across every channel, on any platform, around the world. With endless extensibility, customizations and refreshing usability, Mozu provides truly limitless commerce to an ever-changing business landscape. To learn more, visit 15