Online retailers to increase technology investment
By Peter Dinham
Thursday, 13 October 2011 19:36
IT Industry –
Market
A surge in online retailing is driving a massive investment in technology by Australian retailers as they face the need for enhanced website features, superior business management tools, and closely integrated systems.
According to a recent survey of the online retailing market market by Forrester Research, Australia’s online and multichannel retailers are experiencing extraordinary growth at present, leading many merchants to boost their technology expenditure and embark on ambitious projects like changing their core ecommerce platforms.
Forrester found that three quarters of retailers plan to increase their investment in technology in the year ahead, with half either planning to replace their core ecommerce platforms in the next 24 months or are doing so already.
Forrester reports, however, that retailers are flocking to open source platform, Magento while steering clear of SaaS, and trying to manage as much of their software development and site administration as possible using in-house IT staff, rather than partners.
However, according to Forrester senior analyst, Steven Noble, retailers will have to continually rethink their current approaches in response to market and technical limits. “As a result, the growing use of open source eCommerce platforms will plateau in Australia, product content management will become an important area of focus in its own right, and skills shortages will place pressure on current staffing models.”
Forrester says the industry is in a period of rapid expansion and significant growth, from A$16.9 billion in 2009 to a forecast A$33.3 billion in 2015. Some of this growth, Noble says, reflects the arrival of new market entrants, each of which will require technology to get started. It says, however, that much of this growth is from existing players.
According to Noble, while online retail has been dominated by smaller, pure-play merchants, by mid-2011, more high-street retailers started to move aggressively into the space. “In line with this, multichannel integration is now a top technology investment priority for Australian online retailers. Australian multichannel retailers are acutely aware of the need to create consistent experiences across all customer touchpoints — and of how far they are falling short of this goal. “ More than half of these retailers nominate IT issues as key challenges that they must address to be highly successful multichannel businesses,” Nobel suggests.
The rapid growth of the sector has led to increased technology investment, with 28% of survey respondents saying they will expand their technology investment significantly in the year ahead, and 75% planning some sort of growth.
Forrester also found that half of all merchants are embracing core technology makeovers, and as their technology ambitions increase, many Australian online retailers are finding that their core ecommerce platforms are not up to the task.
“They are realizing that a whole range of desirable initiatives — from using customer ratings and reviews to publishing more product content more efficiently — are more difficult than necessary with the entry-level ecommerce platforms that many of them deployed in the earliest stages of their growth, Noble says.
As a result, 50 percent of surveyed online professionals say they are planning to replace their core ecommerce platform in the next 24 months or already have a replatforming program underway.
Other technology investment priorities, Forrester says, include mobile commerce, back-office integration, and technology to support multichannel retail.
And, Forrester also reports that online retailers are telling it that recruitment is a challenge for their business, with acute skills shortages placing pressure on current staffing models.
“Australia has one of the lowest unemployment rates in the industrialized world. As they increase their investment in technology while seeking to manage as much as possible in-house, more and more Australian online retailers are telling Forrester that recruitment is a challenge for their business,” Noble says.
“As these problems compound in the future, Australian online retailers will have no choice other than to engage with system integrators and other technical partners to meet some of their software development needs. Integrators that can deliver quality results effectively using offshore software developers will have an advantage in Australia’s tight labor market.”
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