Do u want to go e commerce?

Do u want to go e-commerce?
SEARCH – EVALUATE - IMPLEMENT

RETAIL INDUSTRY

Thought Leadership Kumaran Media & Information Communication Technology Practice

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ABOUT THE AUTHOR

Imran Shah Head - APAC Business, part of the Media and Telecommunication Practice at Kumaran Systems Inc., responsible for shaping and executing business turn-
around strategy. Execution focus has been on New Market Sensitization & launching New Service Offerings - managing the entire Lead to Cash cycles for the
Telecommunication Vertical and can be reached at imran.shah@kumaran.com

KUMARAN SYSTEMS INC.
Kumaran Systems, founded in 1990 at Toronto, Canada with global delivery centers across Americas and India is a Major Software Services and Solution provider.

With 20+ years of customer orientation, over 1600 engagements across Media, Telecom, Education, Shipping and Banking & Financial services spread across the globe.
Kumaran stands as a key advisor to some of the largest Fortune 500 companies in their business driven technology enablement drive.
Kumaran Systems growth has been evolutionary that began with Migration Products to address industry challenges for legacy modernization to a Business driven Technology
enabler aligned to focused verticals. Over the past two decades Kumaran System customer orientation has enabled its recognition as a major Technology enabler across
industry segments delivering enhanced business value for its clients across the globe

Kumaran System Customer Orientation is driven by a global delivery business model giving its customers to choose between an Onshore-Nearshore-Offshore mix. The
delivery models enable multilevel touch points between the client, partner networks and Kumaran Systems enabling business driven customer sensitivity and agility.

With 500+ employees across the Globe, Kumaran Systems offers comprehensive capabilities, resources, facilities (Onsite, Offsite and Offshore) and highly skilled personnel to
meet your complex challenges for multiple domains and industries


Do u want to go e-commerce?

As eCommerce extends the reach of regional business to the global marketplace, merchants are presented with huge revenue and growth opportunities. Until recently,
organizations often engaged in eCommerce by building a single Web site and then driving traffic to it from around the world.

While some companies still rely on this model, the one-size-fits-all approach is increasingly being displaced by cross-border eCommerce. In this scenario, optimized, country-
specific sites and eCommerce solutions are deployed for each major market. For example, iconic American motorcycle company Harley-Davidson now has 25 cross-border
sites around the globe.

Country-specific sites work better to attract and service customers in those countries than the multinational approach, but they present a host of challenges for merchants
unfamiliar with the territory. The challenges include maintaining information in multiple languages, greater product differentiation, customer service issues and a more complex
supply chain. Additionally, the business must deal with a host of payment-related issues, including increased fraud risk, currency conversion, merchant banking relationships
and regulatory requirements.

This paper is for any business that is either already engaged in global commerce or is considering expanding beyond current domestic markets. We intend to give you – our
reader – a prescription from market dynamics to the right eCommerce strategy enablement for your Brand

Market Forecast

Though developed economies continue to look weak, the worst of
the 2008-2009 global financial crises appears to have passed.
Thanks in part to government stimulus programs; the retail and
consumer product sectors globally have seen a return to growth
in 2010. Although Asia's retail market was not spared the
slowdown cause by the financial crisis, the region has rebounded
well, particularly relative to Western Europe and North America

As we look back on the year 2011, eCommerce organizations
continued to expand their global reach. A growing number of US
and European retailers started shipping internationally. Brands
enabled eCommerce on their own websites in new markets and


launched online stores on marketplaces in multiple countries. Other companies with an interest in global eCommerce used the
year to gain insights into new markets, determining which ones to prioritize in the years ahead.

For many companies, however, the globalization process is still just beginning. Aside from a handful of companies that operate
eCommerce sites around the world, few companies have a truly global online footprint. The growing number of US- and
European-based companies that ship internationally will see revenues increase from these markets, but will start to hit a
language ceiling: Close to two-thirds of online consumers in both France and Germany, for example, agreed with the statement, “I
only shop from websites in my native language.” In the UK, the percentage is close to three-quarters.

Even as sales through traditional channels declined, online retail formats provided some respite for retailers as global online retail
sales grew by 14.5 percent in 2009 to reach $348.6 billion USD1. Electronics was the largest segment in global online retail
sales, contributing around 22.6 percent. While the online retail sales sector continues to outperform, its magnitude remains small
with 2.5 percent of total global retail sales. On an average basis, globally, online sales account for 6.6 percent of total sales for
the top 100 retailers in 2009.

The US remains the biggest market for online retail with 37.2 percent market share. Total spending reached $129.8 billion USD in
20093, marginally lower than $130.1 billion USD in 2008. A high level of product differentiation together with low fixed costs and
dynamic market revenue growth is seen in the US market. However, it also creates competition in the market with a large number
of active players and the absence of consumer switching costs.

The online channel is outperforming wider retail as it has a number of counter-recessionary characteristics. The online channel offers considerable benefits to retailers.
Relatively low operating costs (compared to an equivalent store network) allows them to pass benefits to customers in terms of low cost, and can be operated 24x7. The rise in
Internet penetration and a change in view of consumer mindsets is happening as more consumers feel more comfortable purchasing and using their credit cards online.

In summary, the Internet has evolved into an important retail channel. An increase in tech-savvy consumers, an increase in Internet access and growing confidence in payment
security and privacy have advanced this retail channel.

Between 2005 and 2009, the global Internet population increased from 1 billion to more than 1.6 billion and by 2014 it is projected to grow by another 42 percent, reaching a
level of 2.3 billion1.

Most of the growth in online population is expected to come from the Asia Pacific, Middle East and Africa, which had very low Internet penetration levels of 19.7 percent as of
June 2010. These regions will represent 54.9 percent of the online population in 2014, whereas North America and Europe will represent 34.1 percent. Other emerging Asian


countries such as Vietnam and Indonesia are expected to have nearly 10 percent of global online users by 2014, but Apple is the only online retailer in the US which operates
a transactional Web site for these countries.

While Internet penetration growth does not show a direct relationship with online retail market growth, online retail market dynamics will change as the global Internet
penetration changes, boosting international expansion for most retailers.Also, the level of adoption of online shopping does not always reflect the level of online spending. For
example, North America has one of the highest online spending rates per person, while the overall penetration of online buyers is relatively low compared with other markets.
Along similar lines, Asian e-commerce giants such as Japan and South Korea are climbing the levels in online spending because of improved access through technology and
wider selection of online stores. Altogether, the market potential is huge with increasing Internet penetration levels.

Traditionally, there was a tendency among online retailers in terms of not changing content according to local requirements and languages. This strategy had its disadvantages
in terms of repelling customers who were not comfortable with the English language and standard layout across the globe. It catered largely to English-speaking markets.
Today, however, online retailers are adopting the strategy of "localization", i.e. Web sites with local languages along with regional customs — even if with a small amount of
content at first. These retailers are better equipped to take the advantage of an increasingly diverse global online user base than their counterparts with English-only Web sites.

It is worth noting that there is a strong preference for local-language content in European markets such as France, while more than 95 percent of online users indicate a
preference for local-language content in Asian markets such as Japan and Korea2. Even though localization strategy is being adopted by the global retailers, a lot still needs to
be done. For example, while 5 percent of the global population speaks Arabic, just 1 percent of online content is estimated to be available in the language.

Similar to local language preference, customer behavior and expectations also vary across countries. More customized online strategy is required for the regions such as the
Middle East or Latin America. Indeed, companies have started operating localization initiatives such as IP mapping techniques to localize prices, directing customers to local
stores with products on display in the local language and having a local office in the country. Strategies of localizing content and understanding online customer behavior and
preference are likely to boost online sales.

With all these inhibitors, in the long run, the keen interest in the Web in the post-recession economy and the growth spurt in Web-related technology will continue to drive the
growth of the online retail segment, subject to the online business innovations by e-retailers. With its clear price advantage over the bricks-and-mortar channel, online retail will
become more attractive to recession-hit shoppers. By 2014, global online retail sales are expected to be $778.6 billion USD3, increasing at a CAGR of 22.2 percent. The major
regions such as US and Western Europe are forecast to reach $248.7 billion USD and $158.5 billion USD by 2014, respectively.


The Retail Industry

The retail industry is composed of individuals and companies engaged in the sale of finished products to end-user consumers. It implies that retailing is the final step in the
distribution of merchandise—the last point in the supply chain—connecting the bulk producers of commodities to the final consumers, Retailing covers diverse products such
as food, apparels, consumer goods, financial services, leisure, etc.
Considering the nature of the business, retailing is extremely competitive and the failure rate of retail establishments is relatively high. While price is the most
important arena of competition, other factors such as location, selection and display of merchandise, attractiveness of the establishment and reputation also matter.
Retail is usually classified by the type of products as follows: - Food products - Soft goods: clothing, apparel and other fabrics - Hard goods (hardline retailers):
appliances, electronics, furniture, sporting goods, etc.
Traditionally, the retail business was dominated by smaller family-run or regionally targeted stores, but this market is increasingly being taken over by multinational
conglomerates such as Wal- Mart and Sears, indicating the era of “retail globalization.”

These larger retailers have managed to set up huge supply/ distribution chains, inventory management systems, financing pacts and wide-scale marketing plans. This dynamic
nature of the retail business has created different business models and a wide range of new formats such as vending machines, door-to-door and telephone sales, direct-mail
marketing, online retailing1, and traditional formats such as discount houses, specialty stores, department stores, supermarkets, and consumer cooperatives. This has led to
the emergence of multichannel retailing, which refers to the concept of selling goods through multiple channels rather than just one, such as traditional stores.

Global retail sales declined 3.7 percent in 2009 to 13.9 trillion USD1. While sales for 2009 were low, it is worthwhile to note that sales of the global retail industry have
doubled since 2003 when worldwide retail sales were $7 trillion USD.
Along with sales growth, profitability for most retailers was also sharply affected. Profit margins of the 200 largest retailers in the world fell to 2.4 percent from 4.1
percent during fiscal 2008-09 with more than 30 retailers reporting operating losses2. This trend affected almost every retail category and geographical area except
Africa and the Middle East where retailers saw an increase in profitability.
The composition of the top 10 retailers in the world remained the same in 2009 compared to the previous year. This group now accounts for more than 30 percent of
total retail sales of the top 250 retailers. Wal-Mart remained the world’s largest retailer, ahead of Carrefour Group.
In major markets such as the US and UK, retail spending is expected to decline, while emerging markets such as China and India should have strong growth in 2010.
There are signs of improvement for US consumers, but the recent destruction of wealth is expected to limit consumer spending. Asia is believed to represent the best
growth prospects for retailers and consumer-product companies in 2010.


Among developed countries, the UK continues to lead the world as the most international retail market. Europe maintains its ability to attract the world’s top retailers in
2009, with 58% of the world’s top 250 retailers having a presence in Europe. The UK outperformed other major European economies such as Spain, France,
Germany and Italy, ranking first among the top 15 most
international retail markets. European retailers are more prone to
globalization than American retailers because they face
restrictions on development in their home markets. In France, due
to regulations, hypermarkets cannot open new stores in their
home market easily. Consequently, they principally seek growth in
other markets. This is why the lion’s share of global retailers is
based in Europe. The US was 10th globally, with 39% of
international retailers. This can be attributed, at least in part, to the
size, maturity and strength of its domestic market. US retailers
tend to penetrate their vast national market extensively before
considering international expansion. Although Europe continues to
dominate, with eight out of the top 15 most international retail
locations, emerging economies such as China, Russia and the
UAE have gained significant ground in the past 12 months.
According to a recent survey of 60 retail executives from around
the world3, the BRIC4 region remains the highest priority markets
for retail expansion, with nearly 80 percent of respondents citing
one of these markets as part of their firm’s plans for short-term
international growth. Along with developed market players,
emerging market-based local retailers have begun expanding
outside their region. In a similar survey, 92 percent of respondents
from emerging markets are looking to expand beyond their home
market, with close to 30 percent of those saying a developed
country is among their top three expansion targets. These
emerging market retailers are using their unique insights into local business and culture to expand regionally in a trend that will impact the global retail landscape. In
addition, retailers are looking for a shorter payback period of three years, compared to five to seven years in 2005.
Despite the global economic slowdown, many retailers such as cash-rich private companies have continued their expansion plans throughout the past 12 months. A
survey of 280 retailers5 saw them expand their international presence by two more countries than in the previous year. This was primarily in clothing, footwear and
accessories.


Rise of online retailing 2012 will not be the year that eCommerce organizations blanket the globe
Global online retail sales grew by 14.5 percent in 2009 to reach 348.6 billion USD8. with localized offerings – they will, however, continue stepping into
Electronics is the largest segment in global online retail sales, contributing around international waters. Next year we expect to see:
22.6 percent.
More brands will sell direct in international markets. It is now
The US is the biggest market for online retail sales with 37.2 percent market share,
commonplace to see large consumer brands operating their own
whose total retail e-commerce spending reached 129.8 billion USD in 20099, eCommerce-enabled sites in markets such as the US and the UK.
marginally lower than the 2008 level of 130.1 billion USD. A high level of product However, only a handful such as Dell and Burberry operate transactional
differentiation together with low fixed costs and dynamic market revenue growth is websites in dozens of markets around the globe. Next year, an increasing
seen in the US market. However, it also creates rivalry in the market as a large number will look to extend their reach online globally, with brands
number of players are active along with the absence of consumer switching costs. expanding beyond French-, German- and English-language eCommerce
sites in Europe, and increasingly enabling transactional sites in Asian
Online retail sales still account for only 2.5 percent of total retail sales on a global
markets such as Korea and China. Stay tuned for a more in-depth look at
basis. On an average, online sales account for 6.6 per cent of total sales for the top this topic in our upcoming report, due out within the next few weeks.
100 retailers in the world10. Hence, most retailers have yet to make a strong online International shippers will focus on consumers in specific markets. A
push through multi-channel retailing. growing number of online retailers embraced international shipping this
By 2014, global online retail sales are expected to be 778.6 billion USD11, past year, with well-known US brands such as Crate and Barrel, Williams-
increasing at a CAGR of 22.2 percent. To sustain this level of sales, internet Sonoma and Bloomingdale’s all launching global shipping in 2011. In
penetration in North America, Europe and Asia- Pacific is expected to increase by 2012, however, retailers will start to target customers in specific countries.
The era of simply shipping to dozens of global markets while paying little
10.6 percent, or no attention to any individual one will give way to a more focused
approach. Companies will invest more in localized landing pages, spend
more on paid search and create shipping promotions targeted at
Growth Drivers shoppers in key markets. The most aggressive of the international
shippers will look to improve the customer experience in their most
The Internet has evolved into an important retail channel, with millions of online consumers lucrative global markets by exploring local fulfillment options.
across the globe turning to it to make their purchases. Despite the financial crisis and eCommerce companies’ “Tier 1” markets will include multiple emerging
markets. In the past, eCommerce globalization for many companies
recession, the Internet and other new channels continue to drive long-term shifts in con-
meant launching a handful of sites in North America and Europe, with
sumers’ purchase behavior and the way products and services are distributed. Japan frequently representing the sole eCommerce offering in Asia. By
2012, however, eCommerce organizations with global aspirations will
Convenience, value, and selection – key catalyst for growth: The online retail have put the big emerging markets on their list of the most strategically
channel has consistently outperformed in comparison to store growth and important markets, lavishing funds on teams in or preparing to launch in
weathered the recession well because most consumers are valuing low and these countries. Brands selling through traditional offline channels
transparent prices, convenience, and comprehensive assortment of goods and recognized the importance of emerging markets many years ago: In
services. As per the survey1 conducted in the North American region which is the 2012, these markets will be equally important in brands’ online initiatives.


largest market for online retail, 67 percent of online buyers find the products online that they cannot find in stores easily; 65 percent of the US-based Web buyers buy
the products online as they save time by shopping online, and 63 percent of Web buyers find better deals online.
Increase in global internet penetration: Between 2005 and 2009, the global Internet population increased from 1 billion to more than 1.6 billion and by 2014, it is
projected to grow by another 42 percent, reaching a level of 2.3 billion2. While Internet penetration growth does not have a direct relationship with online retail market
growth, online retail market dynamics change as the global internet penetration changes. Also, rapid expansion in online population boosts international expansion for
most retailers.
- Most of the growth in online population is expected to come from Asia Pacific, Middle East and Africa regions, which has a very low internet penetration level
of 19.7 percent as of June 2010. These regions will represent 54.9 percent of the online population in 2014. Compared to this, developed regions such as
North America and Europe will represent 34.1 percent of total population in 2014 against their proportion of 41.3 percent in 2009.
- Other emerging Asian countries such as Vietnam and Indonesia are expected to have nearly 10 percent of global online users by 2014, but Apple is the only
online retailer in the US which operates a transactional Web site for these countries.
 Furthermore, the level of adoption of online shopping does not always reflect the level of online spends. For example, North America has one of the
highest online spending rates
- per person, while the overall penetration of online buyers is relatively low compared with other markets. On similar lines, Asian e-Commerce giants such as
Japan and South Korea are climbing the levels in online spending because of improved access through technology and wider selection of online stores.
These new online shoppers today certainly enjoy a far richer e- Commerce experience than the consumers had 10 years ago.
 Altogether, the market potential is huge. Online retailers who want to capture the growing number of online users — and their growing funds spent
online — will need to look beyond the markets of North America and Europe and think globally about their online strategies.
Region wide/customized strategy: In simple words, localization is expected to boost the online retail market. Traditionally, there was a tendency among online retailers
in terms of not changing content according to local requirements and languages. This strategy had its disadvantages in terms of repelling customers who were not
comfortable with the english language and standard layout across the globe. It catered largely to English-speaking markets. However, nowadays, online retailers are
adopting the strategy of “Localization” i.e. websites into local languages along with regional customs — even if with a small amount of content at first. These retailers
are better equipped to take the advantage of an increasingly diverse global online user base than their counterparts with English-only Web sites.
- There is a strong preference for local-language content in European markets like France, while more than 95% of online users indicate a preference for
local-language content in Asian markets like Japan and Korea3. And while 5% of the global population speaks Arabic, just 1% of online content is estimated
to be available in the language.
- Similar to local language preference, customer behavior and expectations also vary across countries. A more customized online strategy is required for
regions like the Middle East or Latin America. Indeed, companies have started operating such online initiatives tailored to individual markets in the region
along with a local office in the country.
- Strategies of localizing content and understanding online customer behavior and preference are likely to boost online sales.


So what is 2013 bringing the world of eBusiness technology?

Can eBusiness stand the heat and share the love? CEOs everywhere are waking up to eCommerce’s role across channels. eCommerce is one of a small number
of bright spots in 2011, with year-over-year numbers ranging from +15 to +25%. It is no longer a rounding error on the year end results. As a result, investment in
eCommerce and how it integrates to and within other channels has skyrocketed in priority. (CEOs still think in “channels”, for now.) eBusiness leaders and their
technology peers suddenly find themselves tossed in the back of a getaway car. Suddenly there is lots of cash, urgent deadlines, unclear direction, and lots of people
yelling directions at each other. Who is driving this thing? Educating senior leadership on what agile commerce means, setting a technology direction, and planning a
transformation roadmap will be critical to a successful, organized getaway. (See below for the analogy)
Mobile commerce is ready for its close-up. 2011 was the year that mobile commerce proved itself. Traffic and sales through smart phones and tablets have
registered meaningful numbers. It is not uncommon for clients to describe mobile commerce in the 5-15% of web traffic with conversions in the 75% of web range
(Them's real dollars, my friend). Often this is with companies’ still delivering terrible user experiences flush with Flash, roll-overs, and static templates that were
designed for 19” monitors not your smartphone. In 2012 expect mobile commerce to hit the mainstream as devices gain share, and customers become comfortable.
Gone are the questions of whether customers buy via mobile. eBusiness leaders are responding by significantly raising their investments in mobile commerce, tripling
or quadrupling mobile commerce budgets to add or redo sites and apps. And don’t think this is just a retail or B2C thing, mobile will penetrate every business and
customer interaction and impacting multiple customer touch points.
APIs, APIs, Oh My. APIs are nothing new. But in 2012 it will become a key topic for business leaders needing increased flexibility from their technology platforms and
applications. Adding new customer touch points, driving integrations across channels, and mashing up your business with new partners will accelerate investment in
APIs. This will drive a lot of business to commerce services providers and third-party API management companies to help develop and manage APIs that will be used
internally and increasingly externally. Your IT department can develop an API, but are they going to support it and drive it? eBusiness leaders will need to add a new
hybrid role of the API manager who will combine product management, developer, marketer, and business development skills. Yet another role it will be hard for the
eBusiness leader to hire for.


Evolving Niche Markets of Interest
I. m-Commerce
A number of retailers and third-party developers have introduced mobile applications that give consumers powerful new shopping tools and added convenience. But most
retailers are either standing on the sidelines or in the midst of planning their mobile commerce strategy.
m-commerce which began in the last decade, similar to mobile banking, has expanded very little. Despite the massive numbers of mobile users in the US and UK,
those using their phones to make purchases is still few. Tepid demand among consumers, technological limitations and lack of standardization in application has
constrained the widespread proliferation of m-commerce. Currently, web-enabled mobile phone users are using their devices to get weather forecasts, read news, find
movie times and bank online than to buy products.
While m-commerce is still immature and the least commonly preferrred customer service channel, retailers are showing interest in this channel with the idea of getting
support from mobile commerce and promotional efforts. As per a study by the National Retail Federation in the US, 74 percent of online retailers either have in place
or are developing mobile commerce strategies, while 20 percent have already implemented their complete plans.
Also, people who download mobile applications, including shopping apps, are a highly coveted consumer segment. Mobile buyers tend to be repeat purchasers with a
higher order value than the average consumer, and it can be important for them to complete transactions with ease even if it means spending more. As per mobile
payments firm Billing Revolution, on-the-go consumers are happy to purchase small-ticket items like pizza and movie tickets through the mobile. According to
Millennial and comScore research, there is a new retail audience that can only be reached through mobile and that means it is imperative to invest now in mobile for
this holiday season or risk missing out on revenue that can only be tapped through mobile in 2010.
Hence, a number of recognized retail brands have launched mobile commerce programs so they can be where their customers go. In m-commerce, eBay is the
outstanding leader with their iPhone application launched in 2008, and Blackberry and Android applications that launched in 2009 and 2010. In 2009, the company
saw more than 600 million USD in goods sold via the mobile application, which was a 200 percent increase from 2008. On new launch, MLB Advanced Media, the
Philadelphia Phillies and Aramark have started allowing consumers to use their iPhone to order food and have the items delivered to their seat. Sears has effectively
used mobile for customer service by sending text alerts to confirm that a Web order is ready for in-store pickup and allowing customers to contact customer service
via their mobile device by SMS, phone, or email.
Going forward, by 2015, shoppers from around the world will spend about 119 billion USD on goods and services bought via their mobile phones3. In the US alone,
mobile shopping rose from 396 million USD in 2008 to 1.2 billion USD in 2009, and is forecast to reach about 2.2 billion USD in 2010.

II. Online grocery shopping
Online grocery shopping has continued to experience a rapid evolution in recent years, facilitated by the ongoing development of the internet and related technologies such as
mobile communications. From a consumer perspective, the convenience factor of placing an order online and having goods delivered to the door is perhaps the biggest appeal
to consumers looking for ways to save time or have physical difficulty of carrying products.


The UK is the most developed online grocery market globally, with 15 percent of adults who have shopped for their groceries online in 2009. The UK market had
grown at a CAGR of 24.9 percent during the period of 2004 to 2009, reaching a level of 7.8 billion USD in 2009 and with expectations of reaching 11.8 billion USD by
20144. Another major market is the US, which is also catching up with online grocery shopping habits. With its vast online population, the US tops the online grocery
shopping arena with a total market size of 9.1 billion USD in 2009. However, the per capita spending is still less for US consumers when compared to the UK market.
However, one key difference with grocery products is freshness: many consumers still prefer to see the produce before purchase, which remains a significant hurdle
for the development of the online market. Furthermore, the time lag between placing the order and delivery means that online grocery purchasing only fits with regular,
planned shopping rather than impulse or top-up shopping.

III. Online healthcare
Online healthcare helps online consumers: Nowadays, healthcare consumers gather information online which includes healthcare related information and services, looking for
doctors, researching medicines, sharing personal health details and tracking health conditions for themselves. While consumers are becoming more self-reliant and
empowered, healthcare providers are beginning to offer their services online and learning how to become more consumer-focused.

Given this evolution, online healthcare marketers in the US have the opportunity to build a bridge between healthcare providers and patients. It is estimated that the
market for Electronic Health Records will reach about 5 billion USD, by 2015, according to Kalorama Information. In order to capture this vast potential, Google and
Wal-Mart have together invested significantly in online healthcare services.


Challenges – Linking the real and virtual world

As anyone who has participated in setting up international businesses or cross-border Web sites will tell you, these are non-trivial endeavors. Most successful eMerchants will
say it is well worth the effort, but newcomers will face a few challenges.

Language: Modern content management systems make handling multiple Web sites in different languages easier than before. Nonetheless, all content needs to be
initially translated, then localized and then tested to make sure it is appropriate for the country or locale. This goes for site content, shopping carts, sales comparators
and other related tools.

Local product differentiation/inventory issues: Obviously, Amazon does not want to feature Japanese books on its French Web site. The same applies to other
companies that must maintain multiple SKUs, product descriptions and images, safety and regulatory guidelines, and other information on multiple sites.

Distribution/shipping costs/timing: To launch eCommerce in a new country, retailers face a host of local and global supply chain issues, including transportation,
logistics and warehousing. This is why many companies, especially smaller ones, rely on outsourced regional experts known as third-party logistics (3PL) companies.
These companies handle distribution, warehousing, inventory management and even enterprise resource planning (ERP) system management for a fee.

Local competition/pricing: Obviously, each local market is competitive in its own right. For large eMerchants, like Nokia, these differences can be startling. For
example, in Europe, mobile phones are largely sold independent of carrier plans or promotions. In the U.S., this is completely different and most phones are
purchased “bundled” with carrier plans. Marketers, webmasters and others involved in cross-border sites must be constantly attentive to the latest changes in
localized consumer habits, Web traffic, promotions, and other related marketing and sales issues.

Customer service: Historically, the online channel was developed as a self-serve model for consumers who had little expectation of customer service or support.
That has changed—customers now expect brick-and-mortar levels of service from eMerchants. So, how is customer service handled? Is it facilitated by a 24x7x365
centralized facility, or by a string of regional centers? What about returns, or the “reverse supply chain” as it is called? These are just two of the many important in-
country customer service issues that must be handled

Currency Conversion: The cost of currency conversion is usually borne by the buyer—rarely by the seller or merchant. So, if German buyers want to buy an
American item that is offered for sale only in U.S. dollars, then they pay a fee to have the currency converted to euros on their next card statement. Of course,
depending upon exchange rates at the time, they may wish to pay directly in euros, if that is an option. Until recently, merchants could offer consumers few choices for
currency conversion or purchasing options. This inhibited global eCommerce by effectively passing on currency surcharges to consumers. That problem is rapidly diminishing,
because currency conversion options are now easily available from eCommerce providers like First Data and others. This enables cardholders to make an informed decision
during the checkout process to either pay in their own currency at a competitive and fully disclosed exchange rate inclusive of any fees, or to allow the card association to


convert the transaction at an unknown exchange rate and assess a conversion fee. The proliferation of choice and customer control is expected to rapidly accelerate global
eCommerce.

Taxes (VAT):Value-added tax (VAT) is a tax paid by buyers located in the European Union, Canada, Australia and many other countries. If you sell online to
someone located in Europe, you have to calculate the VAT and pay it to the country in which the item was sold. Complicating the issue, each country can set its own
VAT rates. The good news for the merchant is that the buyer pays the VAT. The bad news is that merchants have to collect it and submit it to the proper authority.
One of the advantages of using third-party payment networks is that they can handle these complex VAT issues for you.

Global Network of Acquiring Banks:To conduct business online and accept credit cards and some other forms of payments, merchants must establish merchant
banking relationships. The merchant’s bank is known as the acquiring bank, and the consumer’s bank that issued the credit card is known as the issuer bank. To
provide global eCommerce services, many companies have traditionally set up relationships with multiple acquiring banks in the various regions they do business in.
Sometimes this is because it was the only viable solution. In other cases, foreign countries may insist upon an in-country banking relationship as a prerequisite for
doing business in that country. Merchants often pay a price for these multiple banking relationships in the form of higher fees as well as the increased complexity of
reporting and managing multiple relationships. Next-generation eCommerce infrastructure is now providing for a single acquiring relationship, which is helping to
reduce the cost and complexity of global eCommerce.

Fraud and Credit Risk Prevention: With the increased sophistication of hackers and the proliferation of stolen identities, global merchants must protect themselves
with better mechanisms for mitigating fraud and reducing risks. Fraud prevention and reduction is one of the most important aspects of global and cross-border
eCommerce for merchants. Online fraud is still relativelyhigh. For example, according to a 2008 Association of Financial Professionals (AFP) Payments survey, in
2007, 10 percent of organizations that accepted electronic payments from consumers were victims of attempted or actual consumer fraud. There are many fraud-
prevention methods, including address matching, card security code validation and explicit password authorization. The critical decision for merchants is to choose the
right technique or techniques that will minimize fraud but not result in too many false positives that turn away honest customers. Merchants must also be sure to
choose a solution that accounts for the nuances in fraud activityand compliance standards across different geographies and cultures.


Evaluation considerations - E-Commerce Platforms
I. Scalability

1.1 Will the site perform efficiently through traffic peaks and valleys?

Scalability may be one of the most overused terms in IT marketing. Software makers would have you believe that every application ever written was destined to be scalable
from inception. But if any application has to be scalable, it is certainly a major e-commerce Website. Sluggish internal applications are annoying, but unresponsive customer-
facing applications will frustrate your customers, drive them to your competitors, and kill your online business.
An e-commerce Website is only as good as its ability to handle its peak traffic. As your Website popularity increases, it needs to scale with minimal effort so you can avoid
incurring disproportionate infrastructure management costs.
When evaluating e-commerce applications, look for businesses that are similar in size and profile to yours. Ask yourself the following questions:

What is the peak number of visits (or open sessions) the site has supported?
How many orders per day does the site take?
How many page views per visit does each visitor make on average?
How big or complex is the product catalog, and how many categories, products, and stock-keeping units (SKUs) are in it?
What is the average response time of the home page and typical detail pages?
How much hardware, software, and infrastructure are required to handle these volumes?

II. The Product Catalog

Will today’s catalog schema meet tomorrow’s demands?
Your product catalog is the online repository for every item you sell. It has to effectively promote the items you most want to push, and simultaneously help your customers find
the items they are looking for. But poorly constructed product catalogs can be rigid and uncompromising, especially if the product attributes you want to store don’t naturally
align with the definitions set in your e-commerce application. To make an inflexible product catalog accommodate business realities, companies end up misusing data fields,
filling irrelevant mandatory data fields with gibberish, duplicating data in multiple places, and inventing esoteric codes to artificially accommodate information the catalog
doesn’t natively support.


It can be difficult to predict what kind of products you will be selling in the future, and what other applications may need to populate your catalogs. You have to prepare for the
unknown. The combination of an inflexible application and short-sighted business planning results in potentially catastrophic inflexibility. Companies lose the agility needed to
quickly adjust offers and promotions and to continually adapt to changing e-commerce business needs.

When evaluating e-commerce applications, understand how flexible the product catalog really is. Ask yourself the following questions:

Can the catalog represent different types of products with different attributes, and what are the limitations?
How many product categories and subcategories will the catalog support?
Can a single product or subcategory exist in multiple categories without data duplication?
Can different catalogs be defined for purposes other than a business-to-consumer (B2C) store?
How easy is it to relate accessories and create bundles?

III. Business User Control

Will my application directly empower my merchandisers, marketing managers, and other business owners?
Many IT managers long for a world where there are no demanding business users. They long for the end of business requests that seemingly come from left field, or arrive
urgently at the last minute. They crave a way to offload day-to-day updates and edits back to the business. Many e-commerce applications require IT resources for daily
maintenance, let alone major projects. As a result, your business users are totally disconnected from the daily workings of your e-commerce site. They send their change
requests to IT, and IT has no choice but to react. IT has difficulty planning and prioritizing, as they deal with a continual barrage of urgent high-priority updates.

But business users like to take control, and every task that they can safely do themselves means one less task that IT will have to do.
When evaluating e-commerce applications, you must make sure that the application you choose will be technically and architecturally sound with proven capabilities. But also
look for tools that your business managers can use themselves. Ask yourself the following questions:

Can product and category managers control their parts of the catalog?
Can merchandisers define promotions and discounts on products, orders, and shipments without IT involvement?
Can a targeted e-mail campaign be sent without IT extracting the customer lists?
Can executives pull their own standard reports, and even create their own new ones?
Can business users directly manage critical and constantly changing content such as the home page?
Can business users do all these activities with the confidence that they won’t “break” the Website?

IV. Search

How easily can customers find what they want, and how easily can I promote the products I want to push based on customer searches?


The search box is often the first tool an e-commerce customer uses. There was a time when expectations of search were pretty low. Today, users expect search to not only
find but also guide them to the products they’re looking for. A search experience that really works for your customers can significantly increase online revenue. However, your
own site search is just one piece of the puzzle. External search engines such as Yahoo! and Google also need to find your products. This causes headaches for site managers
with dynamically generated e-commerce pages, because search engine spiders are likely to misinterpret what they find on a dynamically generated page. As we all know from
our own online experiences, there is nothing more frustrating to customers than searching for but not finding something that we know is on your site somewhere.
When evaluating e-commerce applications, look for business controls that support a compelling and personal search experience. Ask yourself the following questions:

How easily can I integrate an e-commerce search experience into my online store?
What product attributes can customers search on?
What happens if customers search using terms that are similar to but not the exact words of my product descriptions? What if they make spelling mistakes?
Can I learn about my customers based on their searches?
Is the search engine preintegrated and catalog aware?
Can I present relevant promotions as customers search my site?
What business control do I have in creating filtering and navigation paths?
How easily can external search spiders index my dynamic site?

V. Agility

How easily can I implement business requests to monitor and respond to an individual Web visitor’s behavior?
Imagine this scenario and see if it rings any bells: The marketing team of an electronics e-tailer wants to push high-definition televisions (HDTVs) over the next two weeks. For
every Web visitor who looks at more than five HDTVs and for whom they have an e-mail address, they want to send an e-mail presenting the special offers.

IT: Sounds doable with a little coding.
Marketing: Here’s a new wrinkle—we want to send the e-mail to anyone viewing the five HDTVs within the two-week period, not in a single session.
IT: That’s trickier. We’ll need to store and increment a value, which means a database schema change.
Marketing: We don’t want a customer to receive more than one e-mail if they look at ten HDTVs.
IT: This is turning into a pretty big effort for a two-week promotion. I’m not sure I can even get the changes complete and tested in two weeks.
Marketing: We want a report on results.
IT: You’ve got to be kidding me!
Similar dramas are played out in every online business. IT is frustrated that marketers don’t appreciate the difficulty of implementing their requests, especially with their tight
time frames. But this type of business need is exactly what e-commerce platforms must support. In an ideal world, an e-commerce application would implement these kinds of
requests without any page, code, or database changes. A manager would simply describe what to monitor and what should happen when the application finds activity that fits
the criteria. The application would take it from there.


When evaluating e-commerce applications, look for a solution that can monitor customer activity on your site, and can then take action based on identified behavior. Ask
yourself the following questions:

What Website behaviors can be easily monitored?
Is monitoring restricted to a single Web visit, or can it span multiple sessions?
What automatic actions can I take once I recognize a desired behavior?
How do I manage business rules and marketing scenarios?
Most importantly, how much time and resources will be required to implement these activities, and can they be reused?

VI. Reporting and Analytics

Do I have all the features I need to understand my online business?
Your e-commerce Website stores a treasure trove of information about your customers, their behavior, and their preferences. But businesses typically struggle to figure out
how to leverage the business value this data holds. Configuring your site to capture and log all the available information can be an arduous job, especially when the data is
coming from a large variety of sources. Furthermore, you may be using the data in different ways over time, and you may need new information to drive specific campaigns.
Or, you may want to base campaigns on different behavior from what you’ve been tracking.

When evaluating e-commerce applications, remember that you can’t control what you can’t measure. Having rich insight into the running of your online store is critical to your
ongoing success. Ask yourself the following questions:

How does the site capture and store both historic and behavioral data?
What insights can I get from customers’ searches?
What preintegrated tools extract business intelligence from this data?
What reports and dashboards offer visibility into my business?
How easy is it to monitor business metrics like conversion rates and average order sizes?
Do the reports allow me to drill down to find the data behind the results?
How easily can I create ad hoc reports to get quick answers to specific questions?
Can I merge Web data with my non-Web data to see a multichannel view of my business?

VII. Standards

Is the application built on a standards-based platform?


You’ve probably seen some nice applications that solve all sorts of business problems, only to later discover that they were coded in a language, database, or framework not
supported by the skills of your people. If you adopt the application and train your staff to support it, they’ll be concerned about career limitations by tying themselves too closely
to this esoteric solution.
E-commerce is no longer a renegade outpost of IT. It’s a fundamental, mission-critical organization within a business’ systems portfolio. It must run on a standards-based
platform that can be supported by standard skill sets across the organization and in the wider marketplace. You’ll want the flexibility to go to a broad selection of agencies and
systems integrators for development. In today’s enterprise applications, the technology playing field has narrowed to either a Java/J2EE or Microsoft .NET architecture.
Furthermore, industry analysts such as Gartner strongly recommend that businesses adopt a “buy” rather than a “build” approach when looking for e-commerce applications.

VIII. Integration

How easily can the application integrate with my other systems?

The e-commerce Website, once a standalone silo, is now a highly integrated application that touches many other systems and processes. The team that develops and
supports it contains a mix of technical and business professionals who drive an important part of the corporate strategy. As businesses become more imaginative about how
they mix their Web channel with other customer touchpoints, clean and easy integration is mandatory. Just about every element of an e-commerce application may be either
self-contained or driven by other systems.
When evaluating e-commerce applications, look for modularity, which will let you customize or tweak each individual aspect of the application to meet your unique business
requirements. In addition, with a modular solution, you won’t compromise the integrity of the rest of your site in the process. Ask yourself the following questions:

Where does the application store customer data?
Which system owns the master product catalog?
for in-store pickup or returns processing?

IX. Interoperability

Does the application function within a service-oriented architecture?

Many forward-thinking businesses want their different applications to be able to “play together” so that new composite applications and businesses processes can be quickly
assembled to increase market competitiveness. Service-oriented architecture (SOA) and the ability to wire applications together based upon a Web services backbone will be
important elements in improving a business’s ability to respond to changing business conditions. Your e-commerce application may be an integral part of any such architecture.
This is true both for the data your e-commerce application stores (such as information on customers, products, and pricing) and for the business processes it supports (such as
order placement and inventory updates).
When evaluating e-commerce applications, look for flexible enterprise architectures and think carefully about how the application can interoperate with other systems. Ask
yourself the following questions:


Can the application support business-to-business (B2B) and business-to-business-to-consumer (B2B2C) business processes?
Can the application support other interactions beyond shopping, such as Web self-service or customer care?
What information in the e-commerce application is presented through Web services, and how does the application do this?
Which business processes are available as Web services, so that other applications can easily invoke them?
How can the application connect to my enterprise SOA, to stay aware of important business events happening elsewhere in my business?

X. Synergy

Will the application support business models beyond B2C e-commerce?
IT organizations everywhere are looking for every opportunity to maximize their technology investments across their enterprise. Some are recognizing similarities among the
solutions for different business channels, including B2C Websites, different brand sites, small business e-commerce sites, enterprise accounts portals, and channel partner
portals. They imagine that it might be easy to consolidate these channels onto a single platform. Although initially your business probably selected an e-commerce application
based on its ability to meet the needs of one part of your business, it’s a good idea to look at where and how that application could support your other business relationships.
Simple B2C e-commerce applications are built to support individual customers, orders, and credit cards, but business relationships can get much more complicated than that.
When your top-tier business accounts buy in volume from you, they don’t want to enter a credit card number for every order they place.

When evaluating e-commerce applications, expect that you will eventually want to leverage your e-commerce application investment in other parts of your business.
Understand how the application can support those requirements up front. Ask yourself the following questions:

Can the e-commerce application support customer profiles and organizational profiles such as an “account” or a “business”?
Can different contract types, catalogs, price lists, and discounting structures be set up, perhaps for every company I do business with?
Can the application support tiered and volume discounting structures?
Can purchase limits and approval processes be easily implemented?
Can purchases be made against cost centers and purchase orders, as well as be followed up with invoicing?

Conclusion

When so many e-commerce applications appear to share the same set of functions and features at the “checkbox level,” the real differences don’t become apparent
until you examine the fine print. With a heritage of powering the e-commerce sites of some of the largest businesses in the world, and with best-in-class ratings from leading
analysts, Kumaran Systems can expertly guide you through the key questions to ask and criteria to consider as you prepare to invest in an e-commerce platform that will help
your business succeed in a competitive market.


Do u want to go e commerce?

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