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Building the business case for replatforming your ecommerce store

How to find out exactly what you need to take your business to the next level and get buy-in from the rest of the business

 

Each ecommerce platform has its sweet spot. It may be that you’ve outgrown yours already, or that your business objectives mean you’ll find yourself in that exact position in the next 12 to 24 months. But as you probably already know, replatforming is no picnic. It requires a great deal of investment and resources, as well as a panel of trusted suppliers to take you through to the other end. So before jumping in feet first, how can you make sure you should even be thinking about switching to your next technology partner? And more importantly, how do you convince the rest of the business to come along for the ride?

At Aurora, we’ve gone through hundreds of replatforming projects with clients of all shapes and sizes, and our main piece of advice remains the same: preparation. And the greatest weapon in your arsenal to ensure you base your decision to switch platform on solid data? Your business case. Because replatforming is about more than getting fancy newfangled functionality or displaying analytics every time a user clicks on your site. It’s about doing a deep dive and assessing your current challenges, finding out what you need to put in place to reach your ecommerce objectives and mapping out a technology roadmap that will get you there. Your roadmap may of course involve changing technology partner, but creating a business case could uncover unexpected information that takes you in a completely new direction. So before you get your replatforming wheels in motion, here is the Aurora method for finding out if the risk is worth the biscuit, and where to focus your technology efforts.

 

Why switch enterprise ecommerce platform?

If you’re thinking of switching, your pain level must be fairly high already:

  • You may be experiencing regular downtimes or slow load times, impacting your customer experience as well as your search engine rankings.
  • You may have experienced security issues and lost trust in your platform.
  • Your staff are spending a great deal of time on tasks that could be better managed, such as data entry, manual imports or order errors.
  • Your long-term plans may involve functionality your platform doesn’t offer, such as international shipping. Or it requires a multitude of plug-ins and your stack is starting to look as complex as a map of the Tokyo underground system.

All the above examples of ecommerce woes should be good indicators that it’s time to consider a platform change, as staying with your current provider could be more costly than actually moving on.

 

Business case step 1: Review your needs

Replatforming may sound like it’s all about getting new technology, and as much as we like new gadgets and shiny code, it actually goes much deeper than that. It’s about finding the perfect tool that will scale up with you and allow you to reach your full potential. This begins with benchmarking your start point, and clearly understanding the challenges you are facing as an ecommerce retailer so that you can focus on what truly matters, without getting swayed by fancy new tech. The first section of your business case should therefore include a comprehensive review of your ecommerce operation, including:

 

Your business goals

Ask yourself, where do you want to be in six months? What about in a year? Are you focused on driving up revenue? Reducing operating costs? Do you want to increase market share and need additional marketing capabilities? Are you expanding to new markets and need international options in terms of shipping and warehousing? Do you need better product recommendations that will drive up average basket value? Or do you need a redesign of your site to become more mobile-friendly?

Whichever goals your business needs to work towards, getting clarity from the start will help you stay on track throughout the decision making process. And those strategy discussions you are bound to have throughout this process will help you in more ways than one: first, by giving you a clear picture of the business needs, and second as a way to start gathering buy-in from the rest of the business.

 

Current KPIs and sales indicator

The first step was about where you see yourself in the future. This section is all about painting a realistic picture of where you are now. Pull out your key performance indicators and review the data, including traffic figures, conversion rates, average order size, customers lifetime value. Which data you look at will of course depend on your objectives, so make this section your own. Going back at least 12 to 24 months will allow you to spot trends and account for seasonal peaks.

 

Current capacity

Is your platform already limiting your business? Ask yourself how many orders it can process in a day, and what your cost per order is. Add time spent by staff supplementing your ecommerce platform’s capacity through manual handling into the equation. Based on your long-term goals, do you expect to reach a point soon when you will exceed your daily processing or shipping capacity and start to negatively affect your customers’ experience?

 

Your customer base

Optimising your customer experience probably is one of your main ecommerce goals. So getting to know those who already shop with you is a great place to start. Review your customer trends, find out about their demographics and pull out acquisition rates, lifetime value and shopping habits. This will allow you to come up with possible improvements to attract and retain customers, as well as highlight any issues with your current provider that may be limiting your customer experience potential.

Now that you’ve got a clear portrait of your ecommerce operation, present and future, here comes the crunchy part. Determining the best way forward by figuring out a cost/benefit ratio that will help you make the best decision for your business. Or as The Clash so eloquently said: Should I stay or should I go?

 

Business case step 2: Choose the right option

As you've read this far, you’re probably fairly convinced you’re missing something in order to reach your ecommerce goals. Like the kind of capability that can scale up and support your growth plans. And the truth is, if you already feel like you are missing out, you may be years behind by the time you actually launch a new feature or add-on, so replatforming may be the right choice at this point. Still, we like to lay everything on the table, so below are all the options available to you.

 

Do nothing

Yes, that’s an option. But choosing door number one shouldn’t simply be the result of inertia. If this is the way to go for your ecommerce strategy, make sure it is a conscious decision born out of carefully weighing the cost of change versus the cost of staying put. Ask yourself: what’s the real cost of not moving? Calculate the potential sales growth you will be setting aside before making a decision. It could be that any additional feature would be a nice-to-have but may not directly contribute to your business growth. Think back on what you thought was missing at the beginning of this exercise and calculate the financial impact of any missed opportunity over the next few years to determine if investing in development is worth it at this point.

 

Add-ons

It is possible that the feature or functionality you need to implement to get that extra capability could be developed independently, purchased as an add-on, plug-in or integration. If so, that’s great. But again, make sure you add up the real cost of any new technology build within your cost calculations, from integration development to upfront purchase fees, licence fees or maintenance over the next 3 to 5 years for this new bit of kit.

 

Replatforming

If your calculations seem to indicate that replatforming is the way to go and that the efficiencies you’ll gain from going through a switch of provider outweigh the cost of the project, here are a few guidelines on presenting a cost-benefit analysis that leaves no room for surprises.

 

Business case step 3: Calculate your true ROI

A replatforming project is easy enough (ish) to cost. But to get a feel for the real thing, you’ll need to go further than just the initial setup phase. At Aurora, we use TCO, or Total Cost of Ownership. This model includes everything but the kitchen sink, over the lifetime of your platform. For us, it means calculating the total cost, including licence fees and maintenance, over the next 3 years. A bit like a car. There is initial purchase and customisation of course, but you’ll expect to pay for MOTs, road tax, breakdowns, routine maintenance and insurance. So here is a list of costs you should probably think of including in your business case:

  • Initial setup (including development, internal resources and time, marketing, branding and design and SEO)
  • Platform licensing fees
  • Any add-ons and third-party plug-ins you may need
  • Hosting
  • Ongoing build and development support over the next 3 to 5 years
  • The technical debt that comes along with any platform (depending on the complexity of your stack and the effort you’ll need to put in to keep it performing)

These should be balanced out against the savings you’ll make by running a more efficient operation, and the increased revenues you’ll expect from improved customer acquisition and better lifetime value for each buyer. Do you expect a 10-20% increase in revenue year on year from your new platform? If so, include the flipside of switching into your calculations.

 

Conclusion

We hope the above has helped you get started on your replatforming business case. It can of course be a tricky exercise to go through as there is no one-size-fits-all template. Every ecommerce business is different, and depending on your long-term objectives, each element mentioned above may weight differently in the balance. Not all performance indicators are created equal. Whether your focus is on reducing inefficiencies, improving search engine optimisation rankings, launching into new markets or getting better customer behaviour analytics, your business case will help you stay on track and avoid getting lost in a sea of fancy demos and sales pitches with posh biscuits. And if you’re still wondering if switching provider is the right option for you, give us a call. We’ve gone through hundreds of replatforming projects and can help you navigate the process.

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