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eCommerce Software Market Musing

Friday, May 28th, 2010

eCommerce Software Market
B2C Partners estimates the size of the total US market for online retail software last year to be $415 million. (http://bit.ly/NSzsg)) That seems too small to me.

B2C Partners uses the following method for arriving at their estimate:
$ 166 billion online revenue (2008)
A. x 3% of revenue for development & technology
B. x 50% of dev/tech for site improvement (v. support)
C. x 50% of eCommerce platforms third party (v. in-house)
D. x 33.3% of Year 1 costs on software (v. services to deploy)

(I have added the A. – D. line labels for ease of reference.)

Let’s start with A. — the percentage of revenue spent on software development and technology. According to B2C Partner’s very respectable sources (SORO Report 2007, Forrester Research and Shop.org) the range is actually 3% – 5%, and I suppose using 5% would have a large impact. In fact, it pushes that $415 million dollar market size up to over $690 million, which I like better.

Moving on to B., apart from the difficulty that sometimes comes with distinguishing between improvements and support, I do not see any big problems there.

When we get to C. and D., however, things start to get interesting. At HotWax Media we have an enterprise software services business that specializes in Apache OFBiz, which is a suite of open source enterprise e-commerce and ERP applications. As we have worked with a variety of businesses on many different types of projects over the years, we have found that some customers think of Apache OFBiz as a 3rd party platform, while others think of OFBiz as the root of their own in-house platform. Both concepts can work out great, and it generally depends on the client’s internal technology staffing as to whether the client’s behaviors are more inline with a traditional 3rd party platform project, or more what we would expect with a traditional in-house platform project. We regularly see projects that blur the line.

As OFBiz implementation experts, I suspect that this would have the effect of making the market relatively larger from our perspective (given that we could theoretically count revenue from the 50% who implement a 3rd party platform as well as the other 50% who use an “in-house” system). Great, we’ll take that extra $2 billion dollars in market opportunity!

Then there is the question of line D., which divides the software spend by 1/3 to differentiate between the cost of licensing versus services to deploy. Apache OFBiz is free and open source, so our service engagement customers do not need to think about it this way (nor do they need to sacrifice 1/3 of their year 1 budget on licensing fees). So for HotWax Media’s enterprise software implementation services business, we can really leave line D. out of the equation, since there are no licensing fees.

So when we add in the extra $2 billion to cover the 3rd party versus in-house distinction, and we refrain from pulling out the 33.3% to represent licensing fees, using the 5% of revenue number mentioned above, our enterprise e-commerce and ERP online retail software services market size is actually well north of $4 billion. (And that’s just in retail.) Quite a big difference from $415 million estimate with which we began.

I see a 3-part moral of the story:

1. a system has an advantage if it offers the client the options of in-house development or 3rd party reliance;

2. software that does not require a licensing fee can present a huge opportunity for increased returns on project investment; and

3. vendors that are well positioned to deliver implementation services on open source enterprise systems have a lot of budget to go out and win if they can make the case effectively to online retail business owners and corporate CIOs!

Author’s note: I realize that over the course of the post I have transitioned from “online retail software” market size to “online retail software services” market size, but I hope the transition was instructive in some ways, especially as it relates to the potential value in using open source software to reduce or eliminate licensing fees.

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
Mike Bates - OFBiz Expert

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Posted in Apache OFBiz, Enterprise eCommerce, HotWax Media | No Comments »

Enterprise E-Commerce and ERP: Common Questions Series Part 2

Thursday, April 8th, 2010

enterprise-ecommerce

For HotWax Media an Apache OFBiz development firm, 2010 is delivering a great batch of new open source e-commerce and ERP projects. Whether from existing clients looking to invest in system enhancements or new clients ready to invest after a cautious 2009, HotWax Media is seeing a good deal of activity in the form of active projects and a healthy sales pipeline.

Along with a boost in free cash flow, this activity continues to generate great input from clients, which fits in nicely with my ongoing series discussing common questions related to open source e-commerce and ERP projects.

Enterprise eCommerce and ERP projects can have a lot of moving pieces. As businesses grow, old systems can limit potential. It can be painful for businesses to identify these limitations and understand the impact they are having on current profitability and future growth. At HotWax Media, it is our mission help our clients understand these problems, and then to make the problems go away.

Let’s dive into the next round of common questions and talk about answers. The answers here are meant to be relatively short and sweet. If you are looking for additional detail or are more interested in learning how HotWax Media can help you optimize your e-commerce and ERP for your business, contact us without delay!

The first questions pertains to both existing and new businesses who want to take a measured approach:

1. Can we do this in phases?

Yes. HotWax Media implements e-commerce and ERP systems using Apache OFBiz. OFBiz consists of a complete set of individual ERP applications, including a robust e-commerce system. The data model in OFBiz, furthermore, allows HotWax Media to account for just about anything that is going on in a given legacy system, and integrate where needed in order to facilitate a phased approach.

For example, if your business is running on NetSuite, but you want a better e-commerce solution, phase 1 of your project can consist of an affordable, powerful B2C e-commerce site upgrade that is completely integrated with your NetSuite back end. In subsequent phases, you can replace NetSuite completely — at your own pace, in discrete, manageable steps.

The second question usually comes from clients who have been burned in the past by irresponsible promises from proprietary software vendors:

2. Can we customize the system (without blowing our budget)?

Yes. As I mentioned above, HotWax Media implements ERP systems using Apache OFBiz. OFBiz is meant to be customized. As part of a standard OFBiz ERP implementation, HotWax Media works with clients to understand the nuances of their business requirements and workflows, and then implements a system that accommodates those specific needs.

It amazes me to hear from clients, as I have repeatedly, that they paid for an expensive proprietary ERP system only to learn later that it could not do what they needed it to do. And by the way, they do not own the system, and they are on the hook to pay recurring licensing fees in order to keep using it. Never mind the principle of it all — strategically, that sucks.

The nature of open source software in general, and of Apache OFBiz specifically, is to be transparent and customizable. My general statement to clients is, “If we can define a consistent set of requirements together, we can absolutely make OFBiz meet those requirements.”

The final question applies to everyone:

3. How many different companies will we need to work with in order to implement our system?

One. HotWax Media. We offer a complete set of e-commerce and ERP implementation services, ranging from business analysis through graphic design and UI to development and testing. We provide the project management and collaboration tools to accommodate all aspects of the project, and we will even handle hardware, infrastructure and hosting in partnership with our colleagues at Contegix.

Keeping your project under one roof improves quality and saves money. It’s that simple.

Feel free to let us know if you have other common questions you would like to see addressed in this series, or contact us today to learn more about how HotWax Media can help you build and grow your e-commerce business.

View my previous post where I covered other commonly asked questioned about Enterprise E-Commerce and ERP deployment or expansion.

- Mike

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
OFBiz Expert

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Posted in Apache OFBiz, Apache OFBiz Development, Enterprise eCommerce, HotWax Media, OFBiz, OFBiz Development, OFBiz eCommerce | No Comments »

Enterprise E-Commerce and ERP: Common Questions Series Part 1

Thursday, February 18th, 2010

hotwax-media-ofbiz-expert

2010 is off to a great start at HotWax Media. We are working with a steady stream of clients who are interested in enterprise eCommerce and ERP. The main client pain points we encounter are 1. a growing business outpaces an old system, or 2. business processes are more sophisticated than a limited e-commerce systems will support. At HotWax Media, it is our mission to make these pain points go away for our clients.

As we continue with our mission and the new year delivers a resurgence of tangible, budget-backed interest in enterprise e-commerce/ERP and OFBiz, I thought it would be useful to start building a list of some common questions our prospective clients face as they make their e-commerce/ERP purchase decisions. I plan to add to this list from time to time with subsequent blog posts. For now, we will begin with the following three common questions we have heard from sales prospects over the last month.

The answers here are meant to be relatively short and sweet. If you are looking for additional detail or are more generally interested in learning how HotWax Media can help you create or enhance your e-commerce/ERP system, contact us without delay!

1. What are my options related to product organization and display?

The first example today is related to product taxonomy and product content options. In this case, the sales prospect needed the ability to create quite a few categories, sub-categories, sub-sub-categories, and so on. She also needed the ability to deliver personalized content at each of these hierarchical levels based on user type. A competitor she had been speaking with was unable to support these requirements, so we were glad to be able to talk her down out of the tree (pun intended). The bottom line is that with OFBiz, you can create a product organization tree that has as many branches as you need to get the job done. There is no system-imposed limit to the number of categories you can create and use to organize and display your products in an OFBiz e-commerce storefront built by the OFBiz experts here at HotWax Media. Furthermore, you can deliver personalized content at any step along the way assuming you know who your user is (i.e. he has logged in or been somehow otherwise identified by the system). While you can personalize any product content at any step along the way, this capability requirement is especially common in B2B environments.

2. Can my system automate sales tax, payment processing, and shipping?

The short answer related to sales tax, payment processing, and shipping: No problem. A HotWax Media/OFBiz solution will empower you to handle sales tax, payment processing, and shipping however it will best suit your business. Sales tax is typically handled by 3rd party tax tables which provide sales tax requirement details all the way down to that specific split zip code you were wondering about in San Jose – no problem. Payment processing will generally be handled by one of the many integrations available out-of-the-box with OFBiz (PayFlow Pro, Authorize.net, Chase Orbital, etc.). In the event that you have a special requirement to use a different payment processor, the expert OFBiz developers at HotWax Media can implement a new payment processor integration in no time. Finally, with HotWax Media and OFBiz you will find a rich variety of shipping options from which to choose. These include integrations with USPS, FedEx, UPS, DHL, and many other shipping companies. The integrations also let you rely solely on automated quotes from the shipping companies, manual overrides, or a combination. With relative ease, you can control every aspect of your shipping revenue/expense related to your enterprise e-commerce storefront.

3. Can we do inventory management in this system?

Yes indeed, as a full-featured open source ERP framework, OFBiz offers great inventory management features that support everything from ATP/QOH-driven product display to inventory moves and re-order points. If your business is growing, you may already have and wish to integrate with an existing inventory management system. OFBiz makes that as easy as possible using XML-RPC, SOAP, or most any other common protocol designed for that type of synchronization. If you do not already have an inventory management system or are looking to replace the one you have, then you are in a great position to leverage the fully featured inventory management in OFBiz as part of an architecture that will already be integrated with your e-commerce storefront. Bonus!

Feel free to let us know if you have other common questions you would like to see addressed in this series, or contact us today to learn more about how HotWax Media can help you build and grow your e-commerce business.

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
Mike Bates - OFBiz Expert

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Posted in Apache OFBiz, Apache OFBiz Development, HotWax Media, OFBiz, OFBiz Development, OFBiz eCommerce | No Comments »

In Other News…. HotWax Media does more than just OFBiz

Thursday, January 14th, 2010

HotWax Media has extensive expertise and a unique focus on Apache OFBiz. You can see that throughout our web site, we are active in the OFBiz community, and we write about OFBiz regularly on this blog. But OFBiz is not all we do. I thought it was about time we gave some attention to the other things we do here at HotWax Media — let’s call them the non-OFBiz things. So, here we go. The only rule for today’s post: Whatever it is, it can’t include OFBiz.

We build amazing Flash microsites

Let’s begin with one of our most recent and most effective microsites: Black Diamond’s Fall 2010 Efficient Series Skis and Boots product launch microsite.

Working with the über-talented marketing/creative team at Black Diamond, we put together a highly effective microsite in support of Black Diamond’s Fall 2010 product line. Of course, the site features breathtaking imagery along with a whole bunch of the very latest in superb Black Diamond gear. There is also some thoughtful interaction design that becomes evident in the clean navigation, well-placed video, mouse-over product highlights, and 360-degree product spins from the good folks at 3DVO.

All things considered, this is the way you roll out a product line in style. The vehicle is useful, the information is rich, and the value is clear.

Black Diamond Boots Skis

Over the past 3+ years, we have also built dozens of Flash microsites on behalf of Swarmbuilder / 3POINT5 — these include sites for Patagonia, GORE-TEX, Pearl Izumi, Leatherman, Thule, and literally dozens and dozens of other brands that you probably know and love. This intensive production work has given us great experience working directly with the marketing and creative teams at some world-class brands.

Some have strict style guides; in that case, we demonstrate our mastery of UI functionality and design by strictly adhering to those pre-established guidelines as we create new microsites. In other words, for these companies, we color inside the lines, and our technical design skills are fantastic. Other companies have less established branding guidelines; for those companies, we show creativity and leadership by creating strong, innovative designs that can inform future branding efforts. In either case, and in all those cases that are somewhere in between, the common theme is that we enjoy gaining the experience points that come from working with such a wide variety of very talented folks. Also, it makes us proud that we are working for some of the absolute coolest outdoor companies in the world.

3point5

We offer complete creative services

HotWax Media has been doing design for more than 12 years now. Along the way we have instituted a process to back up the creative skills that go into corporate ID, print collateral, and web UIs. We have done numerous logos, business cards, letterheads, envelopes, brochures, post cards, t-shirts, hats, and…the list goes on. We have great relationships with local and national printers and can handle jobs of any size. Here are just a few examples of our more recent pieces:

Salt Lake Creative Services

We build good-looking, affordable CMS web sites

Alas, not every company wants or needs enterprise e-commerce. Some companies simply want to use the web to present information about their company! It’s a quaint idea, but hey, we like it too. Simple content management systems, like Joomla! and a whole bunch of others, make it quick, easy, and inexpensive to create a professional web site with content management capability. Often times these sites are appropriate for companies that sell services as opposed to products. These companies want to be able to easily control and update the information about their offerings, but they do not want to sell their services directly over the web. For these companies, the most important ideas are high-quality visual presentation and ease of use. On both counts, HotWax Media delivers.

Salt Lake Logos & Business Cards

We’ll stop here for now. This post has highlighted some of HotWax Media’s strengths that live outside of OFBiz-proper, and I hope it has been interesting. With all of that said, OFBiz remains our main focus in a big, big way. The Flash, creative, traditional web development, and other skills we have cultivated as a company over the last dozen years contribute directly to our ability to deliver the best OFBiz e-commerce and ERP systems in the world today, and that won’t change. But hey — we have a 12-year history and a broad range of skills to show for it, and that is definitely worth acknowledging.

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
Mike Bates - OFBiz Expert

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Posted in Apache OFBiz, Apache OFBiz Development, HotWax Media, OFBiz, OFBiz Development, OFBiz eCommerce | No Comments »

OFBiz E-commerce and ERP: 3rd Party Integrations

Saturday, December 26th, 2009

Apache Open For Business (OFBiz) offers an amazing amount of functionality across a wide variety of business processes. The scope of OFBiz, as with most ERP systems, is very broad — including e-commerce, inventory and order management, accounting, manufacturing, and much more. As you consider all of the ground covered by OFBiz, it follows that any given OFBiz system is likely to encounter other systems with which it needs to gracefully interact.

3rd party integrations can sometimes become very complex. For my post today, however, let’s consider a few simple example together: we will look at three types of integrations commonly used by online e-tailers running OFBiz direct-to-consumer e-commerce storefronts.

There are many ways that HotWax Media helps our customers drive traffic to their e-commerce sites, including various SEO (search engine optimization) and PPC (pay per click) tactics, but we will leave detailed discussions of those tactics for a separate post. For our example today, our story begins with a visitor arriving at the OFBiz e-commerce storefront.

Upon arriving at the merchant’s OFBiz e-commerce site, the visitor browses products. There are some really effective merchandising features available with OFBiz, including cross-sell, up-sell, layered navigation, promotions, and so forth. As our visitor navigates the site and finds the products she wants, she adds them to her shopping cart. Eventually, she has her cart loaded up and is ready to checkout.

Using OFBiz, HotWax Media creates completely custom checkout experiences for our customers. One-page checkout, split shipments, anonymous checkout, coupon codes — it’s all available through OFBiz. There are, however, additional 3rd party checkout options that are also available. So these will be our first examples of 3rd party integrations available with OFBiz.

OFBiz Payment/Checkout Integrations

Google Checkout and PayPal Express checkout are both available to OFBiz merchants.

OFBiz Integration Google Paypal

The idea with these 3rd party checkout services (as with most concepts in online retail) is to boost conversion rates. This works well for users who already have established checkout preferences. For example, if our site visitor prefers PayPal Express, she simply selects that checkout option, enters her PayPal username and password, chooses her shipping method, and she is done. The benefit is that she may have saved a minute or two, and presumably she is comfortable with PayPal and confident in the quality of her purchase transaction.

OFBiz Shipping Integrations

We mentioned shipping, and this is our next example of 3rd party integration options.

OFBiz Shipping

Unless our merchant is exclusively selling digital products that are downloaded by the end user, he needs to offer shipping options in order to fulfill his orders. Using OFBiz, HotWax Media offers many integration options with 3rd party shipping services. The idea is to make this as simple as possible for the shopper by allowing her to see custom, real-time shipping costs (based on her shipping address) from a variety of carriers and allow her to select her preferred method.

OFBiz Shipping Options

Shipping integrations available with HotWax Media and OFBiz include the biggest names in shipping, such as FedEx, UPS, USPS, and DHL. We also offer more specialized integrations with Endicia (includes USPS support) and Oagis Shipping. (As of December 2009, Endicia (with USPS support), UPS WorldShip, and a more complete FedEx integration are currently not offered out-of-the-box with OFBiz, but are available through HotWax Media.) These 3rd party shipping integrations allow our online merchant to control rate display in the user’s shopping cart (using real time shipping rate quotes that the merchant can then adjust as needed — see screenshot above). Once the order is picked and packed, the merchant can automatically print shipping labels, email a tracking number and shipment confirmation to the customer, and more.

OFBiz Payment Gateway Integrations

Finally it is time to submit the order and process payment. Our visitor has her products in her cart, has selected her shipping method, and has entered her payment information. She clicks “Submit Order,” and this is where the payment gateway comes in.

OFBiz Payment Gateway

Using OFBiz, HotWax Media offers integrations with a variety of 3rd party payment gateways. The industry leaders are PayPal, Authorize.net, and Orbital, so we generally recommend one of these. These integrations offer credit card processing along with fraud monitoring, scoring, order separation for manual review, and many other useful features for our online merchant. The order is submitted, the card is processed, and there you have it — e-commerce!

That was just a simple example of a very common e-commerce use case that makes use of a few 3rd party integrations. Of course, there are many other 3rd party integrations available using OFBiz, such as multi-channel sales (eBay, Amazon, etc.), single sign-on (Crowd), and integrations with other systems like Magento. I plan to address many of these in future posts. In the mean time, for a more complete list of 3rd party integrations available from HotWax Media / OFBiz, take a look at our 3rd Party OFBiz Integrations page.

Mike Bates is CEO at HotWax Media and will join other HotWax Media employees and advisors in periodically posting thoughts here related to OFBiz, eCommerce, ERP, and related topics.
Mike Bates - OFBiz Expert

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Posted in Apache OFBiz, Apache OFBiz Development, HotWax Media, OFBiz, OFBiz Development, OFBiz eCommerce | 4 Comments »

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