E-Commerce Tech Spending By Retailers On The Rise

by Jack Loechner, Jul 19, 2007, 7:15 AM

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E-Commerce Tech Spending By Retailers On The Rise

According to the results of Internet Retailer's latest monthly survey on e-commerce technology spending intentions, responses from 195 chain retailers, catalog companies, virtual merchants and consumer brand manufacturers reveals that 78.2% of the retailers surveyed plan to increase their spending on e-commerce applications and services this year. Merchants are planning to purchase applications and services that expedite order processing, analyze shopping behavior and give shoppers more personalization tools.

The survey finds:

• 10.1% expect to spend as much as 50% more on e-commerce technology this year
• 9.4% will increase their spending from 26% to 50%
• 41.9% between 11% and 25%
• 34.5% say their expenditures for new systems and services will grow by 10% or less

Mike Brinker, e-commerce and web channel solutions leader for Deloitte Consulting, says "Retailers... want to keep pace with giving their customers a better shopping experience (for their customers)... merchants using updated technology today and getting ready for... Internet retailing tomorrow are the ones that will remain the most competitive."

E-commerce tech budgets for retailers in the study ranged from under $50K to over $5MM

• 31.7% of retailers participating in the research operate with an annual e-commerce technology budget of $50,000 or less
• 29.6% with yearly budgets ranging from $50,001 to $200,000
• 13.7% from $200,001 to $500,000
• 8.5% from $500,001 to $999,000.
• 12.1% of merchants maintain annual e-commerce budgets of $1 million to $2.5 million
• 5.8% from $2.501 million to $5 million
• 4.4% at more than $5 million

For 46% of the respondents, the main technology buying decision maker is the CEO, followed by the chief marketing officer at 11.6%, and chief information officer at 11.1%.

The survey also reports that:

• 29.4% of companies will purchase a new web analytics program in the next 12 months
• 44.7% of retailers also expect to purchase a new order management system within 24 months
• 24.9% of retailers in the survey plan to purchase an advanced site search program within six months and 32.2% in six months to two years.
• 41% of merchants taking part in the research expect to hire a consultant or another third party for a major e-commerce technology project within the next year.
• 51% of retailers ranked adding customer reviews as their highest new e-commerce technology priority for this year

Top E-Commerce Replacement Priority For 2007 (% of respondents)
	All Respondents	Store-based Merchants	Catalog	Virtual Merchant	Consumer Brand Mfg
E-Commerce Platform	13.6	32.7	32.0	22.8	37.0
Site search software	13.6	11.5	20.0	13.9	7.4
Order management systems	11.4	11.5	8.0	10.1	18.5
Web analytics	14.7	9.6	16.0	19.0	11.1
Content management system	8.7	11.5	4.0	8.9	7.4
CRM application	8.7	7.7	4.0	10.1	11.1
Rich media application	7.6	7.7	12.0	6.3	7.5
Performance monitoring application or service	6.5	7.8	4.0	8.9	0.0
Source: Internet Retailer, July 2007

With the number of broadband Internet users expected to reach 115 million households as soon as 2011, according to In-Stat, a growing number of web merchants are making plans to deploy rich media applications that enable shoppers to compare merchandise in greater detail, view and rotate products in three dimensions and perform other more interactive functions.

For the complete article and charts from Internet Retailer, please visit this site.

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