Hosted apps handle holiday rush

Retailers looking to execute quick, affordable IT upgrades turned to hosted software providers last year as they prepared for what turned out to be a stellar holiday season for online shopping.

In the last few weeks of the season, online shoppers responded to Web promotions in force, according to industry watchers. ComScore Networks reports online sales between Nov. 1 and Dec. 25 totaled $18.11 billion – a 25% increase over the 2004 holiday shopping period.

For retailers, new technologies deployed in advance of the season helped them get the most from Web visits. Many retailers went for hosted products to gain new or improved application functionality without committing to large upfront investments or complex implementations.

Salesforce.com, with its hosted CRM products, is one of the more recognizable players in the software-as-a-service market. But the on-demand model extends far beyond CRM. Adoption is occurring in many other IT marketplaces as well, including procurement, compliance management, document management, ERP and e-commerce, Gartner says. The research firm predicts that by 2010, 30% of software revenue will be derived from software delivered via software-as-a-service models.

Among retailers, hosted site optimization and marketing products are a big draw.

Skechers last year chose a hosted search application, for example. The Manhattan Beach, Calif., shoe retailer uses technology from WebSideStory (gained in its May 2005 acquisition of Atomz) that lets visitors search for shoes, and then use sub-categories – such as size, color and price – to narrow the results. Reporting features help Skechers monitor how well search results convert to transactions.

Part of the decision to go with WebSideStory had to do with time-to-market and reliability of the service, says Laura Christine, vice president of direct marketing and e-commerce at Skechers. “We’re not a search engine company, we’re a company that sells shoes,” Christine says. “It would have taken us a year to develop a product like this, and that doesn’t include optimizing or improving it along the way.”

Online shopping portal Ebates. com also chose a hosted application as it readied for the holiday rush. Ebates uses survey technology from WebSurveyor to poll online visitors and find out how they used the site and what types of promotions are most popular.

In the past, Ebates produced surveys on its own, but the tool it used was cumbersome, says Markus Mullarkey, senior vice president of sales and marketing at the San Francisco company.

With WebSurveyor, Ebates no longer has to enlist technical staff or HTML programmers to produce a survey – the marketing team can do it. “Putting together the survey questions and making the survey go live doesn’t take much longer than it would take you to write the survey in Microsoft Word,” Mullarkey says

Alienware depends on integration between two hosted IT applications to hone its marketing efforts. It’s one of the first companies to take advantage of a new partnership between Web analytics vendor Omniture and advertising technology provider DoubleClick that lets users tie together click-stream data from a Web site and e-mail marketing data.

“It sounds simple and a no-brainer, but this relationship is the first of its kind,” says Bill Brown, director of e-commerce and demand generation at the Miami retailer, which makes PCs and gaming accessories.

Integration between Omniture’s SiteCatalyst and DoubleClick’s DARTmail lets Alienware more quickly measure the effectiveness of outbound e-mail campaigns.

For example, if visitors click on an embedded link in an e-mail promotion, Alienware can track the visits and find out if the campaign correspondence resulted in any product sales. In addition, if Web site visitors log on when they go to the shopping site, Alienware can follow up with those who don’t buy anything by sending a personalized e-mail promotion.

In the past it took Alienware 36 hours to select recipients from its lists of prospects and send a marketing promotion via e-mail. Also, maintaining the infrastructure to handle the mailing was a drain on Alienware’s IT staff.

“The technology in-house was getting very onerous to manage. We had a dedicated administrator just sitting on our e-mail server to keep it up and running, and it wasn’t really best-in-class software either,” Brown says.