eCommerce Consolidation?

As reported in Internet Retailer: Raising capital will be difficult in the next few years, and that will lead to a wave of mergers and acquisitions in online retailing, Overstock.com Inc. chairman and CEO Patrick Byrne predicted today in a keynote address to the Internet Retailer Conference & Exhibition in Boston.

He encouraged e-retailers to cut costs, outsource tasks that are not core to the business, and measure results relentlessly. “The more you do these things, the more you will appeal to somebody as an acquiree,” Byrne said.

He related how he learned from his years working for billionaire investor Warren Buffet the importance of measuring everything connected to a business. “I wish I could take our marketing guys and staple to each of them a bookkeeper,” Byrne said. “They overwhelmingly pay for themselves. Bookkeepers and accountants are thick throughout our company.”

He said Overstock.com, No. 29 in the Internet Retailer Top 500 Guide, has benefited from leveraging technology of vendors, rather than relying on in-house staff to perform tasks that vendors can do better. And he emphasized the value of creating a single data warehouse that can be used over and over with many applications, and that ensures data consistency.
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All very true...but Don Libey reports in an e-mail to me that merchants at the Catalogue Exchange Annual Conference in London recently were up in arms about "third-party service and technology robbery and overcharging . . . revolt time!" In short, leveraging vendor technology can be an expense that becomes hard to control.