Battle of the shopping carts

WHEN YOU’RE A chief technologist for an online retailer, is it gauche to shop other sites? Not if you’re human. And not if you’re interested in innovation, says Neil Roseman, vice president of software development at Amazon.com.

“Personally, I use the Web constantly and buy from many places in addition to Amazon.com,” says Roseman, who defines the business strategies and oversees development of technologies used by Amazon and its e-commerce partners.

Even so, Roseman doesn’t place much importance on time as an online customer. “I try to keep up with developments in the technologies and software important to my business … rather than focusing on competitive e-tail sites. … Business and technology closely fit together with Amazon as an innovative technology company,” he says.

With millions spent on IT to turn clicks into dollars and browsers into buyers, Roseman and other CTOs are redefining an industry turned on its ear by the dot-com upstarts of the late 1990s and the ever-changing expectations of today’s tech-savvy consumers (see ” IT spending comparison “).

Thus, these executives are central players in most business decisions and initiatives, says David Willen, CTO of New York-based Barnes & Noble. Willen oversees some 100 technologists and reports directly to the CEO. “Technology is key to everything that we do — from marketing to merchandising from our product catalog database.”

According to Stamford, Conn.-based research company Gartner, Internet retail sales reached $25.3 billion worldwide in fourth quarter 2001. That represents less than 3 percent of total retail sales. Still the importance of an online presence is not lost on many retailers.

According to the Gartner report “Trends in the Global Retailing Market 2002,” this will be the year of “retail optimization” as Type A retailers — leading-edge adopters of technology — wrestle with squeezing out performance increases in technology purchased in the e-commerce rush. Conversely, the report states that Type B retailers — mainstream adopters — will begin to see the benefits of radically improved technologies and will adopt these maturing technologies.

A tangled Web CTOs weave

Much of what has happened in the past few years hasn’t surprised industry observers. There’s been a wholesale change in how specialty retailers and e-tailers present their brands and in what they’re actually selling. Much of this is being fueled by the work of Amazon.com’s Roseman and his team.

Take the case of bookstore giant Borders Group. What you see is a Borders site — powered by Amazon technology. Ann Arbor, Mich.-based Borders Group, with more than 380 brick fronts, has partnered for more than a year with the giant e-tailer. Amazon not only hosts the Borders site but also handles order fulfillment. In effect, Amazon controls the Borders Web site as a co-branded entity, offering products from both companies.

“Amazon is the market leader in e-commerce features,” says Bob Edington, Borders’ director of retail convergence services. He is charged with unifying his company’s online and offline strategies. He sees the relationship with Amazon as crucial to Borders’ drive to increase efficiencies and extend technical capabilities. “The partnership allows us to focus IT resources on other projects,” he says.

Others concur. Target, Circuit City, Drugstore.com, and Toys “R” Us are a handful of the companies that purchase Amazon technologies or are Amazon co-branded partners. The advantages flow both ways. “Partnering with Amazon.com gave Target a visibility that they never had before. This also drives people through Amazon.com,” says Geri Speiler, an analyst at GartnerG2 in San Jose, Calif.

Amazon’s move to sell the technology that sells the books — and more — changes the company from pure-play e-tailer to IT developer and peddler. “Most of the technologies we use are written in-house,” says Amazon.com’s Roseman. “We use some basic building blocks. We run Linux on HP hardware in many places [and] use Oracle and BEA for middle tier. Other than that we don’t use off-the-shelf solutions above the infrastructure.”

As Amazon extends its reach, branding will likely keep the company from abandoning its roots. “I don’t think that Amazon.com would ever leave the book biz. That’s where [Amazon founder] Jeff Bezos made his mark,” Speiler says.

CTOs reaching readers

Beyond branding, one challenge facing online retail industry CTOs comes from the customers served: These companies have to capture the dollars of a fickle and technology-smart buyer.

The problem can be compounded, says B&N’s Willen, because the retailer doesn’t always know how the consumer is using a site. Sometimes buyers do research on one site and hit another site to complete a transaction or head out and complete book purchases in-store.

Willen and his team have used Web analytics to uncover how customers use the B&N site. “We are looking at developing and using more efficient Web analytics. We collect a lot of data. … Data is our lifeblood at Barnes & Noble. That’s true for any online retailer,” he says.

What the CTO has found is that there are two user classes: the “directed search” customer and the browser. “We determined we wanted to do more for [the browser],” Willen says. With the May launch of Barnes&Noble.com’s Book Browser search engine, he hopes to increase visitors’ site satisfaction and thus capture more dollars.

The Book Browser technology, which took approximately four months to develop, is a knowledge-based fuzzy search engine. With more than one million deeply cataloged titles. As an example Willen says the browser can search specifically for murder mysteries set in Paris in 1800 and actually find five titles.

Speiler says Book Browser is currently the specialty retail industry’s best search engine — something that Amazon’s Roseman refutes. “We work hard on our product search and believe it is one of our best technologies. However, we also know we have lots to do in this area,” he says.

Driving from site to store

Amazon started online, but Borders and B&N are brick-and-mortar traditions, leaving their CTOs to marry offline and online strategies and develop technologies to integrate and support both.

“The brick front and online generally have not come together well,” says Russell Jones, vice president of retail industry practice at Gap Gemini Ernst & Young in Vienna, Va. Jones has yet to see a significant reason why consumers will ID themselves online and and then with the retailer in-store. This leaves a gap in retailers’ understanding of the buying public.

CTOs are working to direct the online loyalties to the physical stores. Still, B&N’s Willen sees the online and in-store channels as two separate entities. “We look at points of integration and points of leverage.” He points to B&N’s feature that allows a site visitor to direct delivery of a book purchase to the B&N store of their choice.

Borders will also have features to direct customers to stores. For example, in the next several months the company will introduce a similar feature, allowing Web site customers to order from either the Amazon or Borders site and pick it up at a Borders store, Edington says.

Additionally, customers can locate books through a store inventory on the Borders Web site, which suggests alternate, nearby locations if one store is out of a particular book. Borders has also placed some 3,600 kiosks in stores that enable customers to locate information on books. “We are committed to being a multichannel retailer,” Edington says.

And that’s where things comes full circle, says Cap Gemini’s Jones. Branding and extending sales channels will grow more complicated as Amazon moves to develop more e-commerce relationships. “You wonder if it doesn’t make sense for many retailers [to make an Amazon] channel their predominant online channel,” Jones says.

Source: www.infoworld.com