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Q&A: Endeca Exec's Take on Helping Target Bring Web Operation In House

In a metaphorical sense, the electronic commerce business at Target (TGT) is growing up and moving out on its own, although not without some help.

After announcing in September it will end a relationship with E-commerce partner Amazon (AMZN), Target has announced a slate of technology suppliers that will help rebuild and relaunch its web-based operations. Amazon will continue to support Target on web technology and fulfillment until at least the first half of next year.

For all its merchandising sophistication, Target has traditionally sought partnerships to build important parts of its business. E-commerce was developed with Amazon. Target remains deeply involved with Supervalu as it develops a nascent food distribution operation. And the retailer recently entered into a music download deal with iTunes.

Target is counting on new technology partners to help bring its E-commerce operation in house by holiday 2011. The companies on board include Sapient (SAPE), lead partner and integrator, and IBM (IBM), multichannel electronic commerce platform provider. Additionally, Oracle (ORCL), will help develop a database platform, Autonomy (AU), will bring content and digital asset-management functionality, Sterling Commerce will assist with global inventory visibility and cross-channel order management, and HUGE will aid in visual and interaction design.

Endeca will provide search and navigation support. In an email interview, John Andrews, that company's vp, solutions marketing and product management, discussed Endeca's expertise and roll in the project with Bnet. Andrews said that 44 of the top 100 internet retailers use Endeca technology to power their site search, navigation, and merchandising.

Bnet: Does Endeca work with Target directly or through its other technology partners?

Andrews: Endeca is working closely with both Sapient and Target, who are taking the lead in managing the project. However, we have a close relationship with IBM WebSphere and will often work directly with vendors such as IBM when needed to address a specific customer need. Endeca is also looking forward to growing our relationship with the creative design firm involved at Target, HUGE, and leveraging their expertise in other Endeca customers.

Bnet: What is Endeca's role in Target's new E-commerce initiative and what retail experience does the company bring?

Andrews: Endeca technology will power the search and navigation experience on the new Target Web site. Upon conducting a search or clicking on a category link from the home page, their customers will be viewing Endeca-driven pages, with the content on these pages being delivered by Endeca. This component is so critical because a significant percentage of customer visits to the typical retail Web site begin with the customer conducting a search or clicking on a category link, i.e. navigation.

Target viewed the strength of the Endeca platform and our ability to support their long-term growth goals as a critical differentiator. Endeca will give Target the foundation needed to innovate and adjust their site quickly, and our aggressive product road map and continued investment in the product aligns well with Target's future growth.

Bnet: Your company explains that Target wants to take the reins of its own Web site operations and to transform the experience. So, what is the state of the art right now in search and navigation, and what elements are most critical to retailers such as Target? How does Endeca apply the latest technology to the retail space to best suit a particular set of needs?

Andrews: "State of the art" in search and navigation technology is always changing. A must requirement in any project, regardless of vendor, is integrating the search and navigation experience, so customers always have a seamless and contextually relevant experience at every step. And there are relatively new capabilities that come out of this, such as type-ahead search, spell correction, multi-dimension search, etc. However, these are fairly widely adopted, and are no longer considered state of the art.

What's accelerating is the demand from retailers for search technology that:

  • Improves search engine optimization rankings for the long-tail of products in their store.
  • Integrates customer reviews, video, etc. into the search and navigation experience.
  • Delivers merchandising based on the customer's actions. For example, a zone triggered to "Spotlight the top cross-sell item within these 300 search results returned."
  • Gives business users greater control over how and what content is presented on these pages.
  • Gives business users the ability to create dynamic landing pages off of specific triggers based on a customer's actions. For example, allowing business users to look at low-performing keywords, and then create dynamic landing pages that present more robust content when a customer types in that keyword.
  • Scales and performs consistently with ever increasing amounts of data -- reviews, video, blogs, etc. -- and traffic.
  • Enables rapid development and roll-out of innovations on the website. Retailers just can't wait months to make a change when small competitors can change their website every day in response to market demand.
Endeca has an aggressive product road map, in which we continue to incorporate new functionality in response to the over 300 online retailers using our software. The requirement of the retailer and online merchandiser are a significant driver of our product investments.

Bnet: How important is it today for retailers to enhance their commitment to E-commerce? We've seen a holiday season when E-commerce generally performed better than traditional retailing and when E-commerce providers enjoyed a boost in their satisfaction ratings from customers. How should retailers be investing to ensure they can get their piece of what is clearly a rapidly evolving business segment?

Andrews: E-commerce is one of the best investments retailers have at their disposal today. Relative to the cost and resource requirements related to stores, changes to the E-commerce site can be done quickly and deliver an immediate impact to sales. It has a much higher relative return and shorter time horizon compared to other off-line investments.

At the same time, online retailers must also make those investments just to stay competitive. Every day, dozens of new competitors pop-up online with similar products, and each trying to differentiate based on the customer experience. These small firms can innovate and make changes to their sites quickly, due to the size of their operations. To stay competitive, retailers need to be able to innovate and change their online storefronts at a comparable rate.

Investing in technology that takes advantage of their scale, rather than making that scale an obstacle, is the key. If large retailers can take advantage of the size and richness of their product data, review data, video content, etc., and deliver that to customers in a way that helps them better meet their needs, they stand to gain a real advantage over online competitors. And that online advantage also translates into a store advantage, as online traffic tends to drive more customers to the stores. And learnings from the online storefront can be used to improve how customers are served in brick and mortar stores.

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