Welcome!

Adobe Flex Authors: Matthew Lobas, PR.com Newswire, Shelly Palmer, Kevin Benedict

Related Topics: Adobe Flex, ColdFusion, Agile Computing

Adobe Flex: Article

E-Commerce 2.0

The quiet revolution

With all the noise the Web 2.0 revolutionaries are making, it's easy to ignore another-this time velvet-revolution. E-commerce 2.0 is coming into maturity and getting ready to relieve its now 10+ year old predecessor. It's about time.

What makes an e-commerce 2.0 site? Well, as Supreme Court Justice Stewart's famous saying (about pornography) goes: "I know it when I see it." This may not be a satisfactory answer but it's an honest one. It's too early to tell. E-commerce 2.0 sites look better, they are easier to use but, most importantly, they drive better economics. Let's look at the e-commerce 2.0 drivers, the trends that define the transition and the architectures and technologies that enable it.

What drives the change? For starters, maturity and perspective. E-commerce has been around for over a decade now. Online retail spending will near $100B in 2006 with close to 20% Y/Y growth. The Internet influences an increasing portion of total retail sales. JupiterResearch predicts the number to go from 27% in 2005 to over 50% in 2010. E-commerce has become strategic. Businesses need to find differentiation because, as Esther Dyson puts it, "You can no longer tell people about your brand; you have to let them experience it." Well, there is something wrong when the real-world Old Navy and Banana Republic stores, both owned by Gap, look nothing like each other yet have identical online experiences.

Another driver is entropy. Many of the largest etailers are running systems that are 6-8 years old, built by long-gone bubble-time integrators on top of highly customized e-commerce platform infrastructure. Brand managers and merchandisers have to talk to IT to get things done. Everything takes too long because IT is understaffed and they often care more about running a site well than about the site making lots of money. These are some of the factors that make Forrester predict a major re-platforming of e-commerce sites, starting this year.

Online consumer behaviors have also changed. Trust in online shopping and payment mechanisms has increased. Consumers are buying more online and they are buying more complex products as well. On the flip side, they are becoming pickier. A survey by Allurent found that when consumers are faced with a frustrating experience, 82% are less likely to return to the site, 55% form a negative impression of the retailer and 28% are less likely to shop at the retailer's physical store. That last one really hurts...

Last but not least, broadband penetration has gotten to a point where etailers can safely start downplaying dial-up traffic and experimenting with richer content and experiences.

I see three big trends framing the evolution of e-commerce 2.0 and helping address the challenges of finding shoppers, turning them into buyers and collecting payment.

First, expect a significant move to more interactive user experiences delivered through rich internet applications (RIAs). The early signs are everywhere: from Gap's QuickLook to Amazon's & Angara's Diamond Search to MyRatePlan's phone chooser to Harvey Davidson's bike configurator. This is just the beginning. With e-commerce 2.0, RIAs will dominate. The main goal will be reducing shopping cart & checkout abandonment which, believe it or not, is sometimes in excess of 50% and is the key ingredient of low conversion rates (some of the best etailers are in the 3-4% range). In a world where shoppers can increasingly get the same product from ever more etailers, innovation will also target search integration and optimizing consumers' browsing & product selection experiences to attract a bigger audience.

The second trend is accelerating disaggregation, brought about by the dual forces of focusing on core competencies and leveraging network effects. Disaggregation is not foreign to e-commerce 1.0. Some businesses have pushed it to the extreme, outsourcing their entire online operations to Amazon, GSI Commerce and the like. For years, Amazon's affiliate Web services have allowed businesses to build sites using the Amazon catalog and backend. That's nothing new, though even more highly-customized, audience-specific sites will serve the Long Tail of consumer interests. What's new in e-commerce 2.0 are network-wide services that provide only a portion of the e-commerce experience yet benefit from focused network effects. Ratings and reviews are a good example. E-commerce 1.0 has aggregators such as NexTag and Epinions. E-commerce 2.0 has BazaarVoice and PowerReviews, which bring ratings & reviews capabilities to all sites. Payment is another good example. E-commerce 1.0 has PayPal while Google Checkout belongs in 2.0. The key distinguishing features of the 2.0 services are tight integration with the e-commerce experience and the ability to go beyond simple hosting and leverage network effects. The most successful services will reduce the barriers to purchase across sites. Google Checkout and ARPU are two early innovators that merit keeping a close watch on. It is also interesting to ponder whether there is a 2.0 version of e-commerce analytics driven by the following trend.

The third trend is social commerce, which comes in two flavors: content-driven and interaction-driven, or passive vs. active. Examples of content-driven social commerce are already present, albeit not automated. Our purchase choices are influenced by those in our social networks. Brands know that. That's why promotion on MySpace is the cool new thing. What about being able to see what products your friends have viewed or purchased? It's coming to an e-commerce site near you. Interaction-driven social commerce is different yet, again, a new spin on an offline idea-multi-level marketing. Remember Tupperware house parties? Well, the company has started hosting these online. Why can't iTunes start offering incentives to people who recommend songs to others? And, since any individual can become an Amazon affiliate, anyone can have product links in their social network profiles that reward them for sending interested buyers to Amazon. With e-commerce 2.0 these types of social interactions will infiltrate the shopping experience. Combined with disaggregation, it means that social commerce will happen everywhere, not just on the e-commerce sites.

There are three architecture elements that define e-commerce 2.0 sites and help break the virtual store (everything under the same roof) mentality:

  • A composite front end that integrates disaggregated services into a coherent, fluid user experience. How is this different from a portal? In a portal, the various pieces of content are often independent of one another. Here, everything is highly integrated from a data and user experience standpoint. The front end will initially run in parallel to the existing e-commerce 1.0 site because etailers will experiment and make the switch to e-commerce 2.0 gradually. Pieces of the front end will be embeddable in other sites. (Yes, even as MySpace widgets.)
  • A backend suite with three main purposes: (1) tying into existing e-commerce functionality that doesn't need to be replaced such as the catalog, order processing and customer service, (2) creating an intermediate data layer optimized to support the user experience and (3) maintaining interaction state, a task which becomes a lot more complicated with disaggregation.
  • A sophisticated battery of tools for brand managers, merchandisers and analysts that takes IT out of the equation. Control of content, promotions, design, layout, interactivity and analytics should be firmly in the hands of business users and the creative types. IT should worry about scalability, reliability and security.
Great e-commerce 2.0 sites leverage a multitude of technologies, many of which are unfamiliar to e-commerce 1.0 developers.

Rich interactivity requires some combination of Flash and AJAX. Going from simple mashups to flexible composite front ends becomes easier with advanced platforms such as Flex & Atlas from Adobe and Microsoft. Audio and video usage will increase, bringing new tools and servers into the mix. Looking at the work of companies such as Kaon Interactive, I even expect 3D to get a second chance in certain verticals. Core Web services protocols enable disaggregation with a special role for Atom/RSS in dynamic syndication. Social commerce brings in the rest of the Web 2.0 compendium such as user-generated content (some of it pulled from blogs & wikis, the rest captured on e-commerce sites), trust/reputation building and information discovery & management through folksonomies and social networks. Of course, all of this has to be tightly integrated with both horizontal and vertical search, which is no small task. Backend innovations will target complex product configuration (often an information architecture problem more than a presentation problem), navigation path optimization (for example, see Endeca) and new kinds of personalization (based on social context, real-time site activity, etc.). Agile response to user behavior requires integrating real-time business intelligence with traffic flow modeling.

That's a lot of technologies to wrap in a solution bundle. It begs the question about what will the e-commerce platform vendors do. Existing e-commerce platforms are too tied to HTML on the presentation side and lack sophisticated data processing and state management capabilities. Incumbent e-commerce vendors' attempts to make an evolutionary transition to e-commerce 2.0 will fail until they commit to significant re-architecture. This creates an opportunity for three kinds of players: (a) system integrators who move quickly to assemble necessary pieces into solutions, (b) a new generation of e-commerce platform companies such as Allurent, which I'm an investor in, and (c) the network-wide service providers such as ARPU, Google, BazaarVoice and PowerReviews.

This is but a quick glimpse into the future. For etailers, consumers and everyone building Web sites, it'll be exciting times ahead. Know of any e-commerce 2.0 sites & services? Let me know at simeons.wordpress.com.

More Stories By Simeon Simeonov

Simeon Simeonov is CEO of FastIgnite, where he invests in and advises startups. He was chief architect or CTO at companies such as Allaire, Macromedia, Better Advertising and Thing Labs. He blogs at blog.simeonov.com, tweets as @simeons and lives in the Greater Boston area with his wife, son and an adopted dog named Tye.

Comments (4) View Comments

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Most Recent Comments
NN 07/16/08 06:40:56 PM EDT

No it is not a concern. If they are thinking people are not waiting for site to load and run away. It is myth because HTML page also takes time to load apart from home page loads little faster compare to web 2.0 home page.

HTML base site won't make your site popular overnight or get 1 million order on first day.

I like what I show and thought wow someone made e-commerce site and that also looks and perform better compare to HTML wants to switch back...

I know PHP might perform better but looks and easy of using site if you come back next time will be way way fast. You can switch back unless you will get traffic like ebay or amazon otherwise you are fine in performance wise.

Peter De Ranter 05/22/08 04:32:53 PM EDT

Hi,
We created www.cotswoldoutdoor.com as a technology provider (not designed it). The customer is doubting that consumers don't wait for the LOADING of the site. Is this a concern ? They even think of switching back to html.

Brian 05/16/08 02:55:25 AM EDT

I think we're heading in the right direction, but we've still got some work to do. Search engine support, for example, is something that is still a big problem for RIAs.

j j 09/30/06 11:15:25 AM EDT

With all the noise the Web 2.0 revolutionaries are making, it's easy to ignore another-this time velvet-revolution. E-commerce 2.0 is coming into maturity and getting ready to relieve its now 10+ year old predecessor. It's about time.

@ThingsExpo Stories
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abilit...
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settl...
In his session at @ThingsExpo, Dr. Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, presented the findings of a series of six detailed case studies of how large corporations are implementing IoT. The session explored how IoT has improved their economic performance, had major impacts on business models and resulted in impressive ROIs. The companies covered span manufacturing and services firms. He also explored servicification, how manufacturing firms shift from se...
IoT is at the core or many Digital Transformation initiatives with the goal of re-inventing a company's business model. We all agree that collecting relevant IoT data will result in massive amounts of data needing to be stored. However, with the rapid development of IoT devices and ongoing business model transformation, we are not able to predict the volume and growth of IoT data. And with the lack of IoT history, traditional methods of IT and infrastructure planning based on the past do not app...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
The best way to leverage your CloudEXPO | DXWorldEXPO presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering CloudEXPO | DXWorldEXPO will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at CloudEXPO. Product announcements during our show provide your company with the most reach through our targeted audienc...
DXWorldEXPO LLC announced today that All in Mobile, a mobile app development company from Poland, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. All In Mobile is a mobile app development company from Poland. Since 2014, they maintain passion for developing mobile applications for enterprises and startups worldwide.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
JETRO showcased Japan Digital Transformation Pavilion at SYS-CON's 21st International Cloud Expo® at the Santa Clara Convention Center in Santa Clara, CA. The Japan External Trade Organization (JETRO) is a non-profit organization that provides business support services to companies expanding to Japan. With the support of JETRO's dedicated staff, clients can incorporate their business; receive visa, immigration, and HR support; find dedicated office space; identify local government subsidies; get...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
"We view the cloud not as a specific technology but as a way of doing business and that way of doing business is transforming the way software, infrastructure and services are being delivered to business," explained Matthew Rosen, CEO and Director at Fusion, in this SYS-CON.tv interview at 18th Cloud Expo (http://www.CloudComputingExpo.com), held June 7-9 at the Javits Center in New York City, NY.
DXWorldEXPO LLC announced today that the upcoming DXWorldEXPO | CloudEXPO New York event will feature 10 companies from Poland to participate at the "Poland Digital Transformation Pavilion" on November 12-13, 2018.
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
DXWorldEXPO LLC announced today that ICC-USA, a computer systems integrator and server manufacturing company focused on developing products and product appliances, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City. ICC is a computer systems integrator and server manufacturing company focused on developing products and product appliances to meet a wide range of ...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smart...
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...