Return of the ASP II

As promised, here is the second part of the ASP blog…

In the third iteration, companies such as Venda have done a good job of addressing the most pressing issues for Internet Retailers, such as Conversion Ratios, Shipping and Returns and Cart Abandonment. Venda for one promises a predictable pricing model for their hosted solutions (approximately $10,000 per month depending upon what combination you pick). There is little differentiation among the companies. They by and large offer similar solutions that are either hosted or server based, although they seem to have different pricing models. Many of them offer ‘real time’ solutions that track customer behavior, among other things. Clearly, this is a good start to the new generation of products. None of the companies mentioned here have ventured too far from the previous “e-commerce suites”, such as Blue Martini among others. They are catering to a slightly different customer, usually smaller retailers under ($200 Million) than the Blue Martini’s of the world, who despite their claims, were focus on large corporations.

Now, what did surprise me, and will possibly surprise you, is that none of the vendors seem to have a coherent strategy for improving profitability for the mid-market Internet Retailer. Most address certain inefficiencies (which is great) and automate other processes (which is also great), but they don’t address the profit motive directly. Yes, conversion ratios help; yes, managing shipping and other back end functions, helps- but still, there are vast regions that are simply left unaddressed.

Furthermore, there is very little these vendors offer in terms of Optimization or Real Time Analytics, whether it relates to price or presentation or another function. There seems to be little, “intelligence” in these systems (the one’s I have read about or seen). From what I understand (and I don’t know best), Internet Retailers need a system that can be installed (or hosted) in a modular fashion, addressing the most urgent “profitability” issues first and progressively, over time, resolving other back-end and customer facing issues. Internet Retailers of today and tomorrow, need cost effective systems that will give them a clearer picture of their customer. They need answers to questions like: What products do my customers prefer to purchase from me? How do they behave if the price changes? What happens if I run this promotion as opposed to that? How do they see my prices or products as compared to my competition?

The new e-commerce ASP’s-on-the-block, have made a good start – but they have miles to go before you buy.

(I will be watching these vendors and the progress they make closely. If you have any suggestions on other interesting companies or issues, please post your comments or email me. I would love to hear from you)

Comments

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