Will there be impact of economic downturn on eCommerce platform investments?
The answer is an obvious yes. In eCommerce or in multi channel retailing the focus is on cost of effective fulfillment options, reducing working capital and inventory. In the last 6 months there has been no extreme step such as eCommerce program put on hold due to the ongoing crisis. While long term strategy will be intact but eCommerce investment is likely to be spread over longer horizon. There is definitely much more emphasis on prioritizing eCommerce platform technology investments.
While long term strategy will be intact but eCommerce investment is likely to be spread over longer horizon. There is definitely much more emphasis on prioritizing eCommerce platform technology investments. In one of the recent engagements where Supply Chain practice is involved in eCommerce platform re-architecture, the client wants to first consider “critical” requirements to be implemented in the first phase and also wants to ensure maximize product stack usage and minimize customization to avoid cost overruns. The investment is likely to be spread over a period of 2-3 years instead of aggressive approach of 1-2 years of solution deployment. However, it should be noted that there is no change in the long term strategy and roadmap for the eCommerce platform re-architecture. eCommerce will continue to be profitable business making it is sweep spot for many retailers.
Accountability and importance on Short term ROI. There seems to be so much importance on faster implementation and quick wins before moving to the further improvements on the eCommerce solution. Even though eCommerce technology investments are relatively small in the context of overall technology spend, in the current situation, quick wins are important and clients are looking at “time bound” solution deployment at a fixed cost. The eCommerce solution implementation partners will be accountable for the success of the program than never before.
On demand eCommerce solutions could be a better value proposition for smaller multi channel retailers . It is obvious that smaller eCommerce retailers may come under tremendous pressure under current economy situation. This may force them to focus on “core” business and ensure keep a check on cost of eCommerce investments. This essentially means that they will look at SaaS or platform based solution offerings which are directly related to their sales / order volumes or transactions. However one word of caution would be that the service provider should be a financially stable and long term provider of such on demand solutions. Cheaper options may be attractive in a short term but there is a great risk in these crisis times as some of these solution providers may not survive and put business at risk. We had one of the customers asking us to help them to replace their existing vendor fulfillment infrastructure which was an on demand solution but the services provider is shutting down with 2 months notice!
Long term roadmap and investment on eCommerce and/or multi channel retailing remains the same. The current impact of economy would be probably on “core” business and eCommerce investment impact is yet to be felt but there is a cautious approach and tremendous pressure on solution providers to bring down the cost and guarantee short term wins. Accelerated deployment will be the need of the hour. The recent Forrester‘s report (http://www.forrester.com/Research/Document/Excerpt/0,7211,47546,00.html) on impact of economic crisis on ecommerce suggest that while there has been some fallout, the overall industry still remains strong. Many companies still think the B2B and B2C has been one of the growth strategies and will continue to be!