When I was in the market for a new car recently, I evaluated my priorities and needs meticulously. I needed a car large enough for bulky child seats, good gas mileage and with all-wheel drive to handle snowy Boston winters. I did a lot of research to ensure that I would get the best value for my investment, something I wish I’d done before buying that impractical two-seater years ago.
Although the stakes are much, much higher, the same concept can be applied to retailers choosing digital commerce platforms: You get the best return on your investment when you evaluate your needs and capabilities in detail and investigate all the options.
Like any important purchase, a helpful guide can be a great asset to inform the decision. (think cars, homes, diamonds and computers to name a few)
The latest edition of FitforCommerce’s white paper series, “Cost Plus Value: An Equation for Maximum Return on Your Digital Platform Investment,” is such a guide. It compartmentalizes the often confusing and overwhelming process of choosing a digital commerce platform into a methodical, sequential and objective approach.
For starters, do you really need a new ecommerce platform? If the answer is yes, the next question is why?
Some of the questions to consider to come to a conclusion:
- Can your commerce site take you where you need to go?
- Are you falling behind the competition?
- Are you missing key benchmarks?
- Are your internal costs unsustainable?
- Are you making a strategic change? New products, a merger, global expansion?
- Are you experiencing performance or security problems?
The answers to these questions will raise more questions. Namely, what type of approach to digital commerce will fulfill your needs? On-premise, licensed software managed by you, licensed software managed by a third party or a cloud model?
The answer is, it depends. For example, some platforms are better equipped for cross-border marketing, merchandising and shipping and have native functionality to support international digital commerce. This means that new country sites can be added quickly. Other platforms allow for deeper customization and control, if that is what the retailer requires.
One of the most scrutinized factors when selecting a digital commerce platform is the Total Cost of Ownership (TCO). However, those that compare platforms solely on price can overlook the comparative value that one platform can deliver over another. It is imperative to include both cost and value throughout the evaluation process to effectively calculate a comprehensive return on investment.
Bear in mind that there is no one magic formula, and each company will value different components differently. Human judgment plays a vital role in decision-making – numbers are important, but not everything can be reduced to a number, such as the cultural fit between your organization and the provider. However, when trying to make pragmatic sense out of an abundance of nuanced information, employing a methodology that assigns weights to your highest priorities, then applies the weights to how you’ve scored those components for each solution, can provide a view to the ROI that you may not otherwise be able to see.
Given everything at stake when making a significant investment in a new technology platform, including the investment of time, money and effort, taking the time to consider and define your value components and priorities in addition to the cost of each potential solution, is a critical part of understanding the potential return on that investment.
Download the full report here.