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Do most large ecommerce sites use a custom shopping cart?
budbiss

10+ Year Member



 
Msg#: 3619942 posted 5:31 pm on Apr 5, 2008 (gmt 0)

I'm not exactly talking about huge big box store websites, but large online retailers like the one who is probably the biggest in online-only sales of shoes for example. Do some of these companies actually use canned solutions like Miva or Yahoo and do a serious amount of customizing? Or do they start completely from scratch? And how much do you think these large stores spend on development? Any idea on what the range is that they are spending?

 

xalex

5+ Year Member



 
Msg#: 3619942 posted 7:21 pm on Apr 5, 2008 (gmt 0)

>Do some of these companies actually use canned solutions like Miva or >Yahoo and do a serious amount of customizing?

Most multi million dollar sites do some sort of customization

>Or do they start completely from scratch?

Most customize existing software.

> And how much do you think these large stores spend on development? Any idea on what the range is that they are spending?

Depends. Are the owners technically capable of customizing themselves?
Do they have full time/part time employees? If not, anywhere between $10,000-$100,000 to get started.

Even that may not be enough, if you start adding more complexity to your site.

Most ecommerce site fail because they spend little, or too much money.

You have to find the middle ground, as no solution is the exact for you.

I you are not planing for million dollar revenue/year, you are pretty much planning to fail as a business(with some rare exception).

lorax

WebmasterWorld Administrator lorax us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3619942 posted 4:13 pm on Apr 6, 2008 (gmt 0)

>> I you are not planing for million dollar revenue/year, you are pretty much planning to fail

Wow! That's a pretty brash statement. On what do you base it?

xalex

5+ Year Member



 
Msg#: 3619942 posted 7:44 am on Apr 7, 2008 (gmt 0)

>> I you are not planing for million dollar revenue/year, you are pretty much planning to fail

>Wow! That's a pretty brash statement. On what do you base it?

Assuming, you are selling a generic widget, which you are competing with other regular retailers.

At very best you can hope for 15% net margin, much more realistic is 3% net margin, look at Amazon, that is $30,000-$150,000/ year. Anything less is not really worth all the hassle, your energy is better spent on other alternatives.

Now lets say you are in an industry where there is very little competition, your net margin is 50%. Thats all great, but sooner or later you will have competition and you will be back to above situation.

So unless you are planing to last 2-5 years in any niche, you will need to grow big and pretty fast.

Simply put small players cannot survive in the long term, look at how many small players have failed in the last few years. The people who survive, have only one thing in common, high growth rate/high volume. And in the last few years many players have grown beyond $1,000,000 revenue.

Now that doesn't mean you have start big, but you have to always remember your goal post.

Habtom

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 8:03 am on Apr 7, 2008 (gmt 0)

Simply put small players cannot survive in the long term, look at how many small players have failed in the last few years.

You seem to be pushing yourself a little too much. As far as you maintain a certain standard, you as a small player can survive no matter what.

Have you noticed small B&M shops standing next to big giant ones, but still continue to be profitable?

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 12:16 pm on Apr 7, 2008 (gmt 0)

I'd say many of the big boys partner with a company that does more than just a "Shopping cart" per say. Vcommerce is what drives many of the big boys and its and end to end order management and supply chain management program.

6 figure startup, x% of sales and a monthly fee is what you would expect.

Etailers typically aren't in it for custom solutions but more managed solutions that are effective & profitable.

pageoneresults

WebmasterWorld Senior Member pageoneresults us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3619942 posted 12:57 pm on Apr 7, 2008 (gmt 0)

Do some of these companies actually use canned solutions like Miva or Yahoo and do a serious amount of customizing?

I don't think so.

Or do they start completely from scratch?

I do believe most start off from scratch and then it grows from there.

And how much do you think these large stores spend on development? Any idea on what the range is that they are spending?

How do you put a price tag on that? I mean, these types of stores are ongoing. There is no build and leave it solution that I'm aware of. So, you may have had an initial $100k outlay. But, from the day that site launches, there will be daily ongoing maintenance, upgrades, etc.

Price is all relative and there really is no "apples to apples" comparison in this space. If you are planning on building a site of this size, expect to have a large sum of money set aside for that development and then the ongoing maintenance.

jsinger

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 1:19 pm on Apr 7, 2008 (gmt 0)

look at how many small players have failed in the last few years.

I haven't noticed that. Certainly, well established small sites aren't closing.

The Dot Com bust was about large publicly owned sites failing. Most never turned a profit and collapsed when venture capital was turned off. OTOH, small e-retailers did very nicely in 2000 thru 2002, the bust period.

>> I you are not planing for million dollar revenue/year, you are pretty much planning to fail

Most sites can survive nicely on $100,000-$400,000 gross margin.

The Dot Com bust resulted from sites/investors planning for unrealistically HIGH sales levels. Can't recall anyone going broke because their cart/back office couldn't handle unexpected revenue growth.

AffiliateDreamer

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 5:41 pm on Apr 7, 2008 (gmt 0)

I disagree about the 1m/year, I mean I have researched many sites doing around 300-400K/year in gross sales and doing just fine. Example, if you sell clothing online where the margins are usually double your cost, you can easily make a decent living doing 400K/year after expenses etc.

I think its a mix between custom programming carts and commercial products. Internetretailer had a article about which platform the big players use, and most of them from what I recall where using commercial software (that doesn't mean it wasn't customized obviously!).

A custom cart developed by the big boys will cost over 100K easily. You can easily hire 3-4 programmers at around 80-100K/year. The project would take at *least* 6-12 months to complete I would say (assuming there are making a complete 360 solution that will handle orders, phone orders, back orders, fraud checking, inventory management, etc).
So we are talking 100's of thousands....

Demaestro

WebmasterWorld Senior Member demaestro us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3619942 posted 6:11 pm on Apr 7, 2008 (gmt 0)

Of all the E-commerce sites I have set up over the years never once have I used a canned shopping cart, nor have ever spend more then 20 development hours on one... and in that case it had cool features like reporting on abandoned carts and other goodness.

$85-$135 is the range a lot of developers charge for something like that.

I don't know why a bigger company with on-staff developers would use something pre-built. If you are using a canned cart that gets customized you will most likely spend more time figuring it all out and making your changes then it would to build one from scratch.

$300 a square foot to renovate
$150 a square foot to built brand new

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 7:44 pm on Apr 7, 2008 (gmt 0)

Of all the E-commerce sites I have set up over the years never once have I used a canned shopping cart, nor have ever spend more then 20 development hours on one... and in that case it had cool features like reporting on abandoned carts and other goodness.

$85-$135 is the range a lot of developers charge for something like that.

You have to be kidding? It costs more than that to just get some image/design work yet alone build a shopping cart system.

20 hours doesn't even cover a code/xss/site testing & audit.

20 may be fine if all you do is use a standard library and push to google checkout/paypal and have a VERY small amount of products.

AffiliateDreamer

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 8:03 pm on Apr 7, 2008 (gmt 0)

20 hours? haha so basically 2.5 days of work? pffffffft :)

$85-135 yes if you are hiring people in the 3rd world who have already coded a similiar app and are merely sending you that codebase.

Demaestro

WebmasterWorld Senior Member demaestro us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3619942 posted 8:07 pm on Apr 7, 2008 (gmt 0)

ByronM comparing how long it takes to to do image/design work to writing code is silly and is hardly an accurate indicator.

I write custom code all day every day... I never use Google checkout or anything else. You could have my code XXS audited but that is not part of a development estimate nor would it be required as the code I write is not subject to such attacks.

Like I said... for me 20 hours at most to code it depending on a feature list it could be less.

Bryon the fact that you think that the amount of products somehow would increase/decrease the work load for a custom building a shopping cart shows how very little of an understanding you have of how to code something like this.

A shopping cart doesn't/shouldn't care how many products are available for sale on the site. Once a shopping cart is functional there can be 2 or 2,000,000 products and it makes no difference to how long it takes to code the cart.

Demaestro

WebmasterWorld Senior Member demaestro us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3619942 posted 8:12 pm on Apr 7, 2008 (gmt 0)

I meant $85-$135 an hour.... sorry

But ya 20 hours, why is that so hard to believe? I have done it in that amount of time many times.

I don't know what is so complicated about shopping cart functionality that it would take more then that. Especially just a basic cart functionality with no frills.

Maybe it is because I don't use ASP or PHP but even in those it shouldn't be hard.

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 10:59 pm on Apr 7, 2008 (gmt 0)

Bryon the fact that you think that the amount of products somehow would increase/decrease the work load for a custom building a shopping cart shows how very little of an understanding you have of how to code something like this.

Bold statement to make there.

I guess my idea of a shopping cart is much more than yours. Sure, a simple checkout script and catalog could be developed in 20 hours but there is no way you could write something in 20 hours to manage 75k skus on products that have 20-50 parametric values that could be searched, sorted, indexed and queried as well as implementing price matrices, discounts, coupons, order management, order entry, fraud detection, catalog managment, price management, data import, data export, feed generation, shipping, stock/inventory management and everything else that etailers use & need.

This thread is about large ecommerce systems correct?

particleman

5+ Year Member



 
Msg#: 3619942 posted 2:01 am on Apr 8, 2008 (gmt 0)

Our sites aren't large by any stretch, but I work full time as a programmer doing custom ecommerce development (including the cart). It is much more efficient to have exactly what you need, how you need it. There are situations where off the shelf carts have been more appropriate, I have personally used OScommerce and customized it on one of our sites because it made more sense. It did what we needed; we sold a lot of products that fit into concrete categories. It was to our favor to start from it and customize it. After using OScommerce I can honestly say I would have designed the cart differently. One downside for use was the way product Attributes were entered, it became very repetative to do this. If designing from scratch this could be solved easily.

On our other sites however we sell basically one or two products that get customized interactively. Custom cart made much more sense. I have written more than one from the ground up and processed more than 5,000 orders. Just to give you an idea of the features of our carts; they manage the order process from start to finish, cart editing, statistics (conversion), discounts (order total, shipping, and quantity), customer management (membership). After the 2nd or 3rd time I've written a cart, I did one with the functions above in about 2-4 weeks. After a few years running our sites I have learned what is used and not used, so when we write from the ground up we have a narrowly defined efficient system that works well for our needs.

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 5:50 pm on Apr 8, 2008 (gmt 0)

I'm a firm believer in using something that is fully functional from the get go. Are you an e-tailer or a developer or both? Will you benefit from a custom solution that you have to maintain or will your business be better off letting someone else do that while you focus on what your core business is?

Fully functional is a relevant term - i mean that in the sense that it offers everything an ecommerce platform needs - not that it will be ready to turn on and make you money from day one.

A cart that handles 5000 orders is good, but in "big boy" terms were talking 5000 orders a day if not more.

AffiliateDreamer

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 6:36 pm on Apr 8, 2008 (gmt 0)

ByronM,

I'm curious to know your ecommerce background? Jumping in with a #*$!,#*$! cart solution sure is hard core! :)

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 7:20 pm on Apr 8, 2008 (gmt 0)

My "consumer" e-commerce experience has been from small scale running a PHP based script that i thought would work to what we run now - as far as our store goes.

Industry experience though i come from an Oracle/ERP/CRM side where i implemented Procurement and Catalog management systems on the corporate purchasing side vs the retail side. I typically came in and installed/setup and integrated Oracle 11i ERP in environments where large purchasing requirements were centralized on iProcument and vendor catalogs were incorporated to manage the purchase process. So places like banks could get Staples product data/pricing incorporated and do bulk purchasing off individual cost center or one off requisitions that got consolidated for better supply chain & price management.

Instead of doing that, now i import product catalogs and sell back to the consumer/business market ;)

Back on subject - what is considered "large" here? Are we talking about places like BHPhoto, Newegg, Home Decorators or just about "larger" mom and pops maybe around the 300k to 1 mill range? or large as in amazon, buy.com and overstock.com?

AffiliateDreamer

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 7:39 pm on Apr 8, 2008 (gmt 0)

I think the original poster stated that in his first line, albiet I don't understand how you can NOT be a huge big box store and be the biggest shoe etailer hehe, but I kind of understand what he is saying but as far as software goes I'd imagine they would use the same.

"I'm not exactly talking about huge big box store websites, but large online retailers like the one who is probably the biggest in online-only sales of shoes for example."

MrPhotoID

5+ Year Member



 
Msg#: 3619942 posted 5:25 pm on May 6, 2008 (gmt 0)

Large is certainly relative.

A 'large' player in a niche market might do $1-3M.. Very different needs from some sites listed in this thread.

Depending on the store transaction volume, sites running less than $15M can run very well on 'canned' platforms like MIVA (5.0) or Yahoo (see rockbottomgolf.com)

All below use 'in-house' carts.

06' reported sales:
Home Decorators - $32M
B&H - $84M
Zappos - $600M
NewEgg - $1.5B

[edited by: MrPhotoID at 5:30 pm (utc) on May 6, 2008]

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 5:31 pm on May 6, 2008 (gmt 0)

I know for sure NewEgg is v-commerce, not 'in-house'. V-commerce has a six figure startup, six figure support cost and a residual/commission on % sold.

MrPhotoID

5+ Year Member



 
Msg#: 3619942 posted 6:40 pm on May 6, 2008 (gmt 0)

Looks like you're right re Newegg - that's how they report to IR.

Aside - if my company was > $1B in sales, I wouldn't be paying a commission to my cart provider. <crazy>

ByronM

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3619942 posted 2:19 pm on May 7, 2008 (gmt 0)


Aside - if my company was > $1B in sales, I wouldn't be paying a commission to my cart provider. <crazy>

Not necessarily crazy. Do you see what they provide business wise? I mean its highly adaptive & advanced from customer acquisition to retention. Much more than a "shopping cart" platform.

If you were to try and do it yourself and or with 3rd party apps i'm sure the fees would out weigh the commissions charged by a single solution provide.

arubin

10+ Year Member



 
Msg#: 3619942 posted 4:15 pm on May 7, 2008 (gmt 0)

We worked off a highly customized open source platform until we reached about $3M in sales. We built our own from there. Total cost for the new platform I'd estimate at $300K. We have multiple sites and they all operate under different rules. For us an in-house solution was the right move.

The downside is I have only 2 developers and many projects. I can't get things done as quickly as I could if I had the ability to contract out the work.

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