Aaron Day: Iconomy's chairman maps out the company's strategy of driving e-commerce

December 22, 2000 —

There was a time when, if you were in charge of a Web site that needed e-commerce capabilities, you had to add them yourself. Today you can contract that service out. One of the companies that provides that service is Iconomy, which this month signed an alliance with OrderTrust to help expand its e-commerce network of suppliers. In an interview with InfoWorld Editor in Chief Michael Vizard, company Chairman Aaron Day outlined Iconomy's strategy.

InfoWorld: What exactly does Iconomy do?

Day: Iconomy provides complete outsourced, private-label e-commerce solutions for content-community sites. Put very simply, our clients build the brand and bring all of the traffic, and we drive and perform all of the e-commerce on the back end. We create a site with their brand identity and host the site.

InfoWorld: How does this get done?

Day: When we work with our clients, we assign a client services team: an account executive, a designer, a merchandiser, and an integration engineer. What it involves is our clients usually hosting links that link into the site that we've created for them. Typically when we start, we have them give us all their graphical treatments, their logos, their typefaces, colors, sizes, and all that information, and then we have a design staff in-house that integrates all of that information as we develop the user interface and the site itself.

InfoWorld: So why is this a better approach than buying an e-commerce application and doing it myself?

Day: It's already integrated with all of our products, all of our vendors, and it's a very object-oriented system. That allows us to reuse different data and design objects very quickly and cost-effectively. We're building up a library of objects over time,[and] that's going to give us a lot of customizability. For instance, we're now focusing on the CRM [customer relationship management] side of things, integrating various promotion and rewards programs, coupons, and those types of modules.

InfoWorld: What are the alternatives?

Day: Our clients are really faced with three alternatives: an affiliate model, build it themselves, or our solution. People are pretty down on the affiliate model now. They understand that it directs customers away from the site, and that they don't own the customer data. They also don't have any control over the look and feel, and they can't really target the product offerings necessarily the way they'd like to. Basically, they can only book the commission revenue instead of booking the top line. And, of course, all of the CRM things go away with the affiliate model. I also think that people are realizing that building and maintaining is something that makes them slow to market. If they build it, you're looking at six to 12 months; you're looking at a minimum of a million to $2 million. Fundamentally, it's really not their core competency.

InfoWorld: How extensive is the network of suppliers?

Day: We started out as BuySafe and under that model created 22 storefronts and set up relationships with 150 wholesale distributors in 22 different product categories. We're also going to be announcing shortly our relationship with OrderTrust, which is actually going to bring to the table an additional 800 vendors initially, and they expect that to grow to 2,000 suppliers by the end of the year.

InfoWorld: What shipping services is the network tied into?

Day: We'rre trying to standardize that. Right now we're primarily using UPS [United Parcel Service], but that's flexible as well, whether it's UPS, Federal Express, U.S. mail, we can customize that. Our system once again is object-oriented, so we can actually change the shipping options for each client. So if you actually want to offer free shipping, we can build that logic in. If you want to have kind of a flat fee, based on the number of items or the weight, we can do that as well.

InfoWorld: Are you going to build some kind of auction capability and eventually a trading network?

Day: We're thinking about building that type of capability. Whether we build that or whether we partner is something that is yet to be decided.

InfoWorld: How long does it take to get the system up and running?

Day: Again, we have a very object-oriented approach to doing things. We can very quickly change and modify and customize the merchandising assortment specific to each client, and then we can very quickly change the graphical treatment, the colors and schemes accordingly, and we can do this very, very quickly. We can do it, if need be, in a matter of a day.

InfoWorld: Does that limit the customer's flexibility?

Day: We're really going to market with two products. We have our modular customized storefront. This is an example where we've already kind of created a shell for a store. But moving forward, we have our fully embedded solutions. This is where we can truly customize the e-commerce environment on a client-by-client basis and really optimize the merchandising mechanisms. It's under this model where we're really integrating the design with the navigation system of our client. We can do things like integrate promotions and rewards programs. We can integrate with their account registration systems so that we can pre-populate shipping and billing information and allow things like one-click ordering. We can integrate these content, context, and profile-specific sprockets that I was telling you about.

InfoWorld: So what's next?

Day: The more you target your product offering, the higher the conversion rate you're going to have. We're developing some technology we call sprockets, which allows our clients to embed a sprocket within their site, based on a number of different triggers. Whether it's the content that the sprocket's next to or information that's being passed to us through the back channel about that customer, we're able to serve up a targeted offering to the individual consumer. We're focusing a lot of our efforts on developing that product right now.

www.infoworld.com