ecommerce platforms - magento ... ecommerce uplift attributable to the magento platform $3,960,893

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  • July 18, 2013

    Magento Webinar

  • Measuring the Business Impact of Your eCommerce Platform

    • Introduction

    • Market Overview

    Peter Sheldon, Forrester Principal Analyst

    • The Total Economic Impact of the Magento Enterprise eCommerce Platform

    Michael Speyer, Forrester Principal Consultant

    • Q&A

    • Closing

    2

  • Introduction: Many variables as you look at re-platforming, upgrading,

    or expanding your e-commerce platform

    3

    • Licensing

    • Hosting and Infrastructure

    • Initial Implementation

    • Time to Market

    • Maintenance and Upgrades

    • Anticipated Revenue Lift and ROI

    Market Overview eCommerce and technology trends to

    consider as you review your plans and

    investments.

    Forrester Total Economic Impact A framework you can apply to assessing the

    cost, revenue and ROI of your eCommerce

    technology investments and the impact they

    will have on your business.

  • Introduction: Guest Speakers

    4

    Peter Sheldon

    Forrester Principal Analyst

    Serving eBusiness & Channel Strategy Professionals

    Michael Speyer

    Forrester Principal Consultant

    Serving Sales Enablement Professionals

    http://www.twitter.com/peter_sheldon

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 5

    ›Market Overview

    › Total Economic Impact Study: Purpose and Methodology

    ›Key findings from the customer interviews

    › Financial Model

    Measuring the Business Impact of Your eCommerce Platform

  • In case you missed it, eCommerce

    is on a tear 6

  • By 2017, 10% of total US retail spend will be online, hitting $370 billion

    © 2013 Forrester Research, Inc. Reproduction Prohibited 7

  • These stories have become common place on retailer earning calls

    © 2013 Forrester Research, Inc. Reproduction Prohibited 8

  • Two thirds of firms will increase spending on eCommerce technology in 2013

    Source: Forrester Research, May 2013 Global eBusiness & Channel Strategy Professional Online Survey 9

  • Worryingly however, many retailers are

    running the show with legacy or home-

    grown eCommerce solutions

  • Almost a quarter of eCommerce sites are powered by home-grown technology

    Source: Forrester Research, May 2013 Global eBusiness & Channel Strategy Professional Online Survey 11

  • Omni-channel, mobile and content mgmt are top priorities for retailers in 2014

    Source: Forrester Research, May 2013 Global eBusiness & Channel Strategy Professional Online Survey 12

  • The online channel today influences 40% of offline retail spend

    Source: Forrester Research, May 2013 Global eBusiness & Channel Strategy Professional Online Survey 13

  • The right ownership model for platform ownership often depends on online revenue

    © 2013 Forrester Research, Inc. Reproduction Prohibited 14

  • There are pros and cons to consider evaluating ownership models

    © 2013 Forrester Research, Inc. Reproduction Prohibited 15

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 16

    ›Market Overview

    › Total Economic Impact Study: Purpose and Methodology

    ›Key findings from the customer interviews

    › Financial model

    Measuring the Business Impact of Your eCommerce Platform

  • The Forrester TEI methodology is an established ROI framework focused on impact beyond costs. Framework and Components

    Benefits

    • Quantified value

    • Defined metrics

    Cost

    • People

    • Process

    • Technology

    “Options” created

    • Are there new

    opportunities

    created for the

    future?

    Uncertainty

    • Impact of assumptions

    Total

    Economic

    Impact

    RISK

    Source: August 4, 2008, “The Total Economic Impact™ Methodology: A

    Foundation For Sound Technology Investments” Forrester report

    Approach And Methodology

    Perform due

    diligence

    Conduct

    customer

    interviews

    Construct

    financial

    model

    Write

    case

    study

    Benefits

    (Impact on Business)

    Costs

    (Impact on Budget)

    Flexibility

    (Options)

    17

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 18

    ›Market Overview

    › Total Economic Impact Study: Purpose and Methodology

    ›Key findings from the customer interviews

    › Financial Model

    Measuring the Business Impact of Your eCommerce Platform

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 19

    Interviewed five merchants with online revenues ranging from $10 million to $100 million

    › A retailer of equipment, tools, and supplies.

    › An online-only novelty fashion accessories retailer serving the

    US and EU markets.

    › An online retailer of high-end furniture and home accessories

    products.

    › A fashion jewelry and accessories merchant that offers

    collections curated and designed by in-house stylists.

    › A retailer of luxury apparel, gifts, and accessories.

  • Magento Enterprise Edition adoption driven by shortcomings of current solutions

    Revenue loss and downtime

    triggered by high traffic

    Inability to support sophisticated

    online marketing activities

    Unfavorable economics associated

    with adding new functionality and

    updates to existing platforms

    20

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 21

    The composite organization used for the TEI analysis

    › TEI analysis based on a composite of the interviewed companies.

    › Characteristics of the composite organization are:

    • Operates both brick-and-mortar stores and an eCommerce website and had $40

    million in online sales.

    • Challenges with its pre-Magento eCommerce platform are:

    › Inability to scale to handle large spikes in traffic, resulting in instability and

    downtime.

    › Lack of features and flexibility necessary to support more sophisticated and

    frequent digital marketing efforts.

    › Inability to quickly make changes to site content.

  • New eCommerce platform requirements and attributes

    To meet growing online traffic

    volumes Scalability

    Easy integration

    Rapid deployment

    Flexibility

    To easily and rapidly create

    custom landing pages, perform

    catalog updates and other

    management tasks

    With back-office systems and

    external marketing services

    providers

    To begin growing their online

    businesses

    22

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 23

    Qualitative benefits of Magento Enterprise Edition experienced by the interviewed merchants

    Increased scalability and stability

    “ … to support increases in average daily orders from 2,000 per day to 10,000 per day”

    Flexibility to enable a broad range of functional requirements

    Integration with 3rd party marketing providers

    Enablement of custom business processes

    Rapid time-to-market Deployment times of 6-9 months.

    Variations due to project scope, resources used, scope changes.

    Increased levels of marketing activities

    Allowed the merchants to support more diverse and frequent marketing tactics

    Major contributor to the overall revenue uplift

  • © 2013 Forrester Research, Inc. Reproduction Prohibited 24

    ›Market Overview

    › Total Economic Impact Study: Purpose and Methodology

    ›Key findings from the customer interviews

    › Financial Model

    Measuring the Business Impact of Your eCommerce Platform

  • The financial model

    › Accounts for all costs and benefits reported by the interviewed

    customer

    › 3-year forward looking analysis

    › Uses a 10% discount rate for Present Value and Net Present Value

    calculations

    › All costs and benefits are adjusted for variance, uncertainty and risk

    as described in the TEI methodology

    25

  • Costs included in the financial analysis

    License fees $98,206 for three production

    servers and one nonproduction

    server

    Professional services $324,000 for initial deployment

    $537,150 for ongoing support

    Internal labor $476,732 for initial deployment,

    ongoing maintenance, upgrades

    to back-end systems

    Hosting services

    $337,632 for bandwidth,

    server hosting, load balancing,

    content delivery network

    (CDN), and a firewall

    26

  • Benefits included in the financial analysis

    eCo