The Economics of Multi-Site Shopping Carts

Last time I checked, it cost YouTube 25 cents to download an hour long video.  In a year the cost will be 12 cents.  Using TemplateMonster.com, a web site designer can download an attractive web site template for $150.  Another $150 in customization, and the site is ready for publication.  As for my hosting service, they’re offering new customers unlimited disk space, unlimited bandwidth, and the ability to host an unlimited number of domains for $6 / month.

By any measure, designing and distributing web sites is cheap.  In fact, web economics not only encourages web site proliferation, but more importantly, web site experimentation.  If a business can distribute the cost of a web site among 10,000 or 100,000 downloads, why not create two or three competing web sites and see which web site attracts the most conversions.  Better yet, why not create multiple web sites, and target each web site to an important customer segment.  Then each web site can be customized to maximize conversion rates for that segment.

Almost every business can benefit from experimentation and customer segmentation, off-line or on-line.  It’s just cheaper on-line.  While most industries can benefit from web economics, there’s a big on-line industry whose ability to benefit  is limited … product retailers.  According to ‘Internet Retailer’, the size of this on-line industry in 2008 was $178 billion (sales).  It is this segment of the on-line businesses world that can’t take full advantage of web economics.

In order to display and sell products, product retailers must maintain a product master file.  It is the product master file (and its associated files) that is surprisingly resistant to the notion of developing and maintaining customized web sites to serve multiple customer segments.

Next we’ll discuss why the Product Master File is a big inhibitor to servicing multiple customer segments.  We’ll then discuss how to get around this problem.  Stay tuned.

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