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Buyer's Guide

by Justin Guinn,
Market Research Associate
Last Updated: February 22, 2017


Ecommerce software is an invaluable tool for many retail businesses today. While in-store revenue still makes up the bulk of retail sales, more and more customers are shopping online. A forecast by eMarketer projects ecommerce sales will soar to $2.5 trillion by 2018.

We’ve created this Buyer’s Guide to help you better understand the market so you can get your online store up and running quickly. Here’s what we’ll cover:

What Is Ecommerce Software?
What Type of Ecommerce Software Buyer Are You?
Common Functionality of Ecommerce Platforms
Market Trends to Understand
Key Integrations for Your Online Business
Recent Events

What Is Ecommerce Software?

If you’ve ever shopped online, you’ve interacted with ecommerce software. This type of software is a combination of:

  • Website design
  • Product listings
  • Online payment capabilities
  • Inventory management
  • Sales reporting
  • Customer management

Just as retail point of sale (POS) systems support in-store purchases, ecommerce platforms make it possible for businesses to sell online. While some POS systems offer ecommerce capabilities, there are plenty of specialized platforms built solely for online stores.

Ecommerce platforms are created to support different aspects of the online purchase process. As the chart below shows, this goes far beyond creating a digital storefront:

Purchase process

When choosing your new ecommerce software, you’ll need to know the differences between:

  • Hosted platforms vs. self-hosted platforms
  • Cloud-based software vs. open source software

Hosted means your ecommerce platform lives on a server that’s managed by someone else. Cloud-based software often requires a regular fee, but vendors manage the updates, capabilities, modifications, security etc.

Self-hosted means your ecommerce platform lives on a server that you manage yourself or pay a third party to manage. Open source software enables you to modify and add functionality to the source code. Open source solutions are almost always self-hosted.

Patrick Rauland, a product manager at WooCommerce—an open source ecommerce solution—uses an analogy to clarify the differences. He compares the difference between self-hosted and/or open source options with hosted platforms (which are usually cloud-based) to the difference between owning a car and using public transit:

Rauland says:

"Cars [self-hosted/open source] allow you to go anywhere, anytime you want. You can paint your car any color you like; you can customize it in just about any way you can dream. You can choose how fast you get to your destination and you can choose what radio station to listen to."

And as for public transit:

"Public transportation [hosted/cloud-based] goes to where most people want to go; it goes at a decent speed (sometimes even beating cars) and is maintenance-free (for you). There are usually reasonable monthly fees, instead of a big upfront cost when purchasing a car."

Rauland’s metaphor paints a positive picture for both options, but there are drawbacks to each as well:

Self-hosted/open source: You’re responsible for not only operating your online store but also for your website domain, development, maintenance and the upfront cost of the software.

Hosted/cloud-based: You must follow the rules of your provider when it comes to the look, feel and functionality of your website and the backend managing capabilities. If you change systems, you have to learn an entirely new platform.

The chart below gives more detail about the major implications and benefits of each option:

Ecommerce comparison

The options discussed above are for businesses that are building or rebuilding their online store. If you already have a viable website, then you may wish to explore a best-of-breed option.

Best-of-Breed: Specialized software that focuses on one particular area or function. If you want to add a shopping cart feature to an existing website, for example, you can add dedicated shopping cart software. Shopping cart software enables purchases, but typically doesn’t provide advanced features such as sales reporting and inventory management.

Regardless of what type of system you choose for your online store, here are some core features that are typically included:

Shopping cart Allows visitors to save and manage items for purchase while continuing to shop. Carts support checkout and purchase completion.
Customer relationship management (CRM) Includes functions such as email marketing, search engine optimization (SEO) tools, customer/product reviews, social media integration, customer accounts/profiles and database management.
Reporting and analytics Helps users create dashboards with reports of site-wide and product-specific sales, as well as site analysis from internal platforms and external ones such as Google Analytics.
Inventory management Automatically tracks quantities and physical locations of products. Many systems sync in-store and online sales to create one transparent inventory for all channels.
Order fulfillment Includes estimating shipping and handling costs at the point of purchase and manages the logistics for getting an order from inventory to delivery.
Shipping management Populates shipping and handling rates at the point of sale and sends customer delivery information to third-party shipping providers.
Mobile store (m-commerce) Makes an ecommerce website available from a mobile browser or app.
Marketplace management/integration Manages the sales of products across various ecommerce markets outside of the actual website (e.g., Amazon, Ebay, Etsy, Facebook, Pinterest).

Market Trends to Understand

Keep these trends in mind when reviewing ecommerce platforms:

Growth of m-commerce. Reports estimate ecommerce purchases made from mobile devices will add up to $153 billion by 2019. It’s best to ensure your online store is optimized for mobile.

New digital marketplaces. You want your online store to be perfect, but it’s no longer the only place to showcase and sell your products. Many systems integrate with Amazon, Ebay, Etsy and other online marketplaces, so you can sell on multiple platforms from a central system.

Enabling social selling. Just as systems are integrating with marketplaces, many platforms are also enabling purchases directly from social sites such as Facebook, Twitter, Pinterest and Instagram.

Payment options. There are many payment options for online shoppers besides their credit and debit cards, e.g., PayPal, Google Wallet and Amazon Payments. It’s wise to offer as many as possible.

Key Integrations for Your Online Business

If you have a smaller business, you may manage order fulfillment and shipping without the need for additional systems. Your “warehouse” may be in your house, garage or brick-and-mortar store. All you have to do is note the order in your inventory management system, package it and ship it.

If you’re a larger business, the process is more complex. You may find that you need more robust additional capabilities, such as:

Our report on these integrations highlights the profoundly positive impact they have on ecommerce businesses:

Impact of integrations

You’ll also want your online store to integrate with any customer management software you have in place. You can manage customers across channels, track purchases, send more meaningful marketing materials and administer loyalty rewards.

The same is true for any sales reporting and analytics systems you may already be using. You don’t want to rely on disparate systems and reports for performance analysis because you’ll get a more accurate snapshot of sales data across all your properties from one cohesive system.

Recent Events

Lightspeed POS acquires ecommerce software company SEOshop. The vendor now offers Lightspeed eCom for online and multichannel retailers. Prior to the acquisition, Lightspeed was identified as the most popular retail POS system, based on Software Advice’s methodology.

Shopify debuts social selling on Facebook, Twitter and Pinterest. Merchants can now sell goods on social sites by:

  • Integrating online stores with Facebook profiles
  • Including “Buy Now” buttons into Twitter posts
  • Offering products on buyable Pinterest pins

 

 

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