Yoox Net-a-Porter and IBM announced a partnership this week to enhance ominchannel browsing and shopping experiences for Yoox and Net-a-Porter consumers, as well as fashion brands in the Kering group selling through the YNAP platform. While that promises a better future for Yoox and Net-a-Porter sites, it is a testament to the growing irrelevance of in-house e-commerce operations.
Prior to being acquired by Yoox, Net-a-Porter had a team of 300 IT professionals that slowed its path to profitability. The merger with Yoox promised to cut operational costs and streamline distribution. But even with the ability to combine resources, the companies found it in their best interest to work with a third-party technology operator to develop e-commerce features.
L2’s study on E-Commerce Agility finds that legacy in-house systems are most often a cost burden to brands, especially as the quality gap between them and cloud and on-premise systems narrows. Likening in-house systems to a $7 million Formula One race car, the study makes a case for the equivalent of a $150,000 Porsche with 90% of the speed (cloud).
Cost is not the only benefit of a cloud-based platform. L2’s study of 82 brands across six categories finds that brands with cloud-based platforms have been surpassing those with in-house platforms in site scores since 2012. Furthermore, brands with cloud platforms are more likely to have site presence in emerging markets (60% vs. 45%). And 73% of brands that have chosen a cloud-based platform are high-growth (more than 10% sales growth per year) suggesting the flexibility of the solution attract organizations with aggressive expansion strategies.