Reflections on the industry of platforms and modules [guest]

Today, another of our partner took the floor on this blog, the Agency Business Tech, with an article whose implications are very technical: modules in the Ecommerce.

The reflection created by this article is very interesting for the future of Ecommerce Software.

Good reading.

The modular approach, the Dimensions of E-merchant and metrics: reflections on the industry of platforms and modules

E-commerce: Part I

 

It is a great ecosystem. In a certain way, it could be said that the entire industry of software (operating systems and software), applications for mobile (Apple and Android), and even Facebook and its imminent App Store, chose the same approach.

But when it comes to e-commerce solutions and their "modules" and "addons" and "extensions" (the name varies depending on the platform), there is a particular expression that, as publisher of PrestaShop modules, we hear often on the part of our clients, large and small: "it is the jungle!"

Many of them simply don't know what modules suitable best, or what will be the practical effect on the profitability of their shop after the installation. Market places that distribute also often lack structure and categorization to correctly guide merchants through the process of purchase of modules adapted to their needs.

The Dimensions of the E-trader

Let's start at the beginning with the merchant at the center of reflection, and by identifying the most important categorization criteria:

-Industry and market characteristics

-Size / volume

-Countries

-Functional cutout

This is equivalent to the following questions:

-Sell you?

-What is the size of your e-commerce (number of orders, catalog size)?

- Or are you located and in what countries do you sell?

-What functional segment of your e-commerce application to be developed?

There are of course many other dimensions that could be seen, but these are the most important.

These questions are important because a given module will not necessarily adapted to all the shops. A module for PrestaShop Lookbook & sets will be well targeted for a shop mode or deco, but not for a reseller of automotive parts. In contrast, Facebook for PrestaShop modules will be more universal. Update of catalogue and automation modules will be useful from a certain amount, payment and logistics solutions, but also certain types of modules of promotion will be adapted according to the country. Finally, some modules will provide some specific aspects of the e-commerce site. Must know what are these aspects and categorize it how...

Model Business Tech "4 levers and 3 pillars of e-commerce" (4L3P) ®

To begin to rationalize all this, need us a simple but correct model to synthesize the mechanics of e-commerce, and in a way that is easily understandable by a man or a woman of affairs.

The following schema is extracted from our brochure as a web agency, and summarizes our approach:

We affirm that the overall profitability of an e-commerce website can be reduced to 4 major levers: visitors, conversion, average basket and retention rates, and 3 pillars: logistics, Promotion and development.

The levers are the main factors and opportunities on which merchants can act to increase their sales, the pillars support activity and allow the company to operate and expand, but have costs. It is therefore an opportunity to act on these factors by implementing features that reduce costs and save time for the merchant.

The logistics pillar includes not only the expedition, but also other elements as payment, the insurance, the fight against fraud, the order processing and management of catalogues; activities that have cost, either in cash or in time.

The Promotion pillar represents the scenery from the lever visitors. The promotion is expensive, and optimize its marketing campaigns is crucial.

The development has several facets: the development of website itself of course, but also of the facts as money invested in stock, the expansion and diversification of the catalogue, the structuring of the process, the hiring... It includes also all mechanisms of statistics and reporting without which it is impossible to fly its activity.

Development perspective and the importance of the measures

In this theoretical framework, each module can be used one or more levers and / or pillars. The merchant can now examine a module with a structured approach and ask:

-On what should I work? (visitors, conversion rates, average basket, loyalty, logistics...)

-This module seems able to improve one or more of these measures?

-This module is adapted to my country and / or those of my clients?

-Is this module adapted to the products that I sell?

But this approach to work, it is imperative that the shop have measures in place. The first thing to do is to check that as Google Analytics tracking scripts are correctly installed and configured to back these numbers a reliable and precise.

One can also imagine more advanced measures that merchants can calculate their own as the relationship between the volume of stock and sales, the growth rate of the stock to the winds and the clear benefit, by Mark and or category... A whole bunch of measures that help to identify the best products and / or brands that actually contribute to the growth and profitability of the company.

In the second and final part of this article, we will examine how the marketplaces of modules and e-commerce solutions themselves may also take advantage of the modular approach 100% and this model.

 

E-commerce: Part II

Reminder

In the first part of this article, we speak you of the modular approach and model 4L3P ® (the 4 levers and the 3 pillars of e-commerce), and introduced a method of analysis for e-retailers to streamline the selection and purchase of modules for their e-commerce sites.

In this second part, we now examine the impact of this approach and analysis on the squares of market vendors of modules and e-commerce platforms themselves.

A better customer experience on the marketplaces of modules

By putting forward what we have seen so far, a shop of Addons navigation menu might look like this (this is not a final model, just a simple draft):

Get the modular approach to gear: and if...

What if... ALL (pages of categories of products, product sheets, command tunnel, promotions and all the rest) became a module? If e-commerce platforms began to rely on the "crowdsourcing" to help continuously improve their solution, while minimizing their costs of development and maintenance, increasing their sales of modules, and at the same time giving more power to the merchants and the possibility to the web agencies to recycle and monetize their technical work?

Fact # 1: The e-commerce platforms are constantly trying to achieve a balance between functional richness / power and ease of use / accessibility, to speak to small as the larger merchants.

Alternative # 1: In refactoring a large part of the code of the Core as modules, and applying the mentioned type of categorization, the modules could be grouped and assigned to the installation of the solution, according to user profiles based on size, industry, and location of the merchant. Unnecessary complexity for small merchants might be hidden and reactivated later as needed, while more power could be delivered to the largest merchants from the beginning. Only size will not be suitable for everyone, but if the solution could be scaler itself to the installation, it could then become more universal and apply to the different segments of the market more effectively.

Fact # 2: Development and maintenance of the "Core" represents a large part of the workforce and financial costs resulting for the platform.

Fact # 3: The Addons / modules are an important part of the income for the platform through the sales and commissions on third-party modules.

Alternative # 3: Imagine what we can have modules named "Category for electronics Page" or "Product for the furniture", each with a layout, functionality and ergonomics adapted to the products sold. By allowing that a much more important part of specific developments can be made as modules, and then standardized and resold via marketplace Addons, 30% Commission charged to developers suddenly represent a much larger base and increase revenues substantially.

Fact # 4: Because a large part of features e-commerce are still contained in the "Core", most of the specific developments agencies are lost for the platform and the rest e-merchants, while they could be reused and industrialized while generating profits.

Alternative # 4: With a fully modular approach, this no longer the case. The whole ecosystem to benefit. Small merchants may have access to advanced functional packages that would have been beyond their financial means until then. Web agencies drift of additional revenues from their work for large clients in the packageant and reselling it to smaller merchants. Agencies with expertise in a specific industry could position itself in experts and focus on modules for this industry. In the same way that Adobe has focused on graphical applications and Microsoft Office applications in the world of traditional software...

Fact # 5: Many platforms e-commerce were struggling to find a business model profitable and reliable in the long term.

Alternative # 5: By putting the Addons and modular approach to the heart of the business model and using this leverage to the maximum, a large part of the income of the platform can now be generated via, and well... which is itself in the end an online shop. And all principles seen so far are reproduced in a fractal figure internally. And everything becomes more measurable, predictable, industrialized. And as the model actually uses the crowdsourcing as one of its pillars, the growth is much less limited by the internal payroll.

Alternative # 2: The main solution more like an operating system. The platform would have major responsibility to provide: 1) a correct database model and 2) mechanisms to bind and interlacing modules together to form a whole. Existing features are still present in the "Core modules" refactored, but the addition of new features might be partly "crowdsource" to external developers, therefore significantly reducing maintenance and development costs

As we said at the beginning: most of the actors in the world of software, and mobile applications and social networks are organized around some of these principles.

Too good to be true? Technically impossible? We do not think so.

This part becomes a little technical is will take its meaning that an informed reader. It is also based only on the PrestaShop e-commerce platform, since it is the one with which we work and know the better.

Version 1.4, if it opens a PrestaShop as category.php files "root" we will there find the following code:

include (dirname (__FILE__).')(/ config/config.inc.php');

ControllerFactory::getController ('CategoryController')-> run();

What we suggest is that the code is refactored in modules so that it looks like something in this genre:

include (dirname (__FILE__).')(/ config/config.inc.php');

Module::hookExec ('core_category');

Each module could execute its own code, call other modules, either even create his own hooks.

How this could be done in detail is beyond the scope of this article and is not covered here. We say simply with its existing modular structure, PrestaShop is already in a very good position to move towards this kind of technical architecture.

Of course, rely on third parties to provide new features and expand the present solution its own risks: control quality, conflict of interest, decreased overall control... These problems can be solved by technology alone.

Clear rules must be established and applied and carefully selected partners. We believe that, as is the case with schools or even the night clubs, the establishment is selective and exclusive, and more it attracts high level profiles. Although this involves a much more important job of filtering and selection, the end result is a quality ecosystem.

Business Tech has already begun to implement some of these principles in its own activities, with results and growth of a surprising speed. You'll hear about us more often in the coming months.