Proprietary Systems Versus Out-Of-Box Applications

views updated

74
PROPRIETARY SYSTEMS VERSUS OUT-OF-BOX APPLICATIONS

Proprietary systems are those developed and owned by a company. For example, Amazon.com's one-click checkout technology is a proprietary system that the online retailer developed in 1997. Similarly, the auction Web site developed and enhanced by eBay founder Pierre Omidyar in the late 1990s is considered a propriety system. Out-of-box applications, on the other hand, refer to ready-to-use programs that a company can purchase in place of developing its own proprietary systems. For example, a company wanting to sell products online might buy an out-of-box application that allows its existing Web site to conduct e-commerce. Another firm might decide to purchase an out-of-box system that includes the Web site itself, as well as e-commerce functionality. Out-of-box systems are also known as turnkey systems.

CHOOSING YOUR APPLICATION DEVELOPMENT MODEL

As an online entrepreneur, you will likely face several situations where you must decide whether to build a proprietary system or purchase an out-of-box or turnkey solution. Most analysts recommend that beginners use a turnkey solution rather than tackling a task like Web site development themselves. However, even if you plan to build your own Web site, you might find yourself in need of various out-of-box applications. For example, if you operate an online business and would like to begin accepting credit cards, you might contact a bank to obtain the necessary merchant account. You might also turn to a company like Verisign, Authorize.Net, or PayPal for a comprehensive payment-processing solution aimed at small businesses. And rather than trying to develop your own shopping-cart technology, you might opt to purchase an out-of-box shopping-cart solution from a specialized vendor like VirtualCart. Often Web-hosting firms provide a variety of out-of-box applications that cover the most common online business needs, including credit-card processing, shopping carts, and Web-site tracking.

When you first launch your venture, Inc.com writer Delilah Obie recommends that you "determine the level of technical expertise necessary to set up and maintain a storefront using a turnkey solutions, and consider whether you and your staff have the skills to design and implement an e-commerce Web site using various components or whether you need a full turnkey solution." A full turnkey solution is one that presents you with a ready-made site. Issues to consider include how unique a design you desire for your site, the amount of time you are willing to invest in site development and maintenance, and what your plans are for future growth. While full turnkey solutions allow you to get up and running quickly with minimal hassle, it is important to be sure that they meet your current expectations and future needs.

TURNKEY SOLUTIONS

The most comprehensive turnkey solutions are those offered by firms like Vstore.com. These online vendors offer everything from products to sell and fully functioning online storefronts to order fulfillment and customer service. You simply select which of the products you want to sell on your site and handle the marketing. You make money by earning a commission on the products you sell. Instant e-commerce store-fronts like these allow even the most inexperienced entrepreneurs to gain familiarity with online marketing. However, as Entrepreneur.com reported in May 2001, "These sites are all cut from the same mold—so there are thousands of other sites out there that look just like yours. The key to success here is to market your site better than everyone else."

Yahoo! offers a more flexible turnkey solution for small businesses. The cost is $49.95 per month, plus nominal fees related to the number of products on your site, transaction processing, and the like. In addition, if you already operate a Web site, you can use Yahoo! to build a storefront and host the e-commerce portion of your online operations. To allow you to test this service, Yahoo! offers a free 30-day trial.

The key to finding a turnkey solution that is right for your business is extensive research. If you are considering using a solution like the ones offered by Yahoo! and Vstore.com, visit sites run by each vendor and compare prices and functionality. Contact online entrepreneurs using these services and ask for their recommendations. Try to locate a site similar to the one you envision and find out what it takes to create such a site. Investing time in research will allow you to make a more informed decision, and many experts agree that finding the best method for launching your e-commerce venture is crucial to its success.