The “Lego” Model of Ecommerce: How to Save Trillions in Lost Opportunity

Posted by Taylor Haney on Wed, Nov 19, 2014

Another great eCommerce blog by Ralph Dangelmaier, CEO of BlueSnap. Ralph provides insight into how niche eCommerce developers can help save the lost opportunity currently happening in cross-border commerce. Interested in guest blogging? Next month's theme is Mobile! E-mail taylor[at]mitx[dot]org if you are interested.

Ralph Dangelmaier 2Ralph Dangelmaier is CEO of BlueSnap, where he is leading the charge to establish BlueSnap as the payments leader in e-commerce. A payment processing veteran, Ralph brings a wealth of experience creating products for retailers, processors and financial institutions and has a proven track record of growing companies both organically and through M&A activity. Under his stewardship, companies have successfully capitalized on the rapid growth in commerce to increase their revenue and stock value. Ralph has more than 25 years of experience in strategy, marketing, sales, and revenue, product, SaaS, development and delivery services for global customer base. Most recently, Ralph served as the President of Global Markets and Services for ACI Worldwide, a global provider of electronic payment software and solutions.

Global ecommerce is quietly paralyzed. Payments, shipping, taxes, regulations and legal issues have made cross-border commerce so intimidating that 73% of U.S. merchants aren’t equipped to sell internationally, according to the MCM Outlook 2014 Survey from Multichannel Merchant.

Meanwhile, the MCM survey shows that Asia-Pacific is on track to surpass North American ecommerce spending this year, and by 2017, the region’s $1 trillion plus in ecommerce will dwarf North America’s $660 billion. Merchants who can’t sell abroad will miss out, but no single vendor can offer a ‘magic bullet’ that will globalize every merchant overnight.

The problem is not the availability of technology or services – the issue is that the ecommerce software industry offers tons of niche solutions that don’t work together. It’s an issue so simple that a five-year old can grasp the problem: if you buy one Lego, one K’nex and one Playmobil set, the pieces won’t fit together. It is, however, an issue so severe that “painful” and “expensive” are becoming synonyms for “integration.” Merchants are discouraged from buying multiple software products because connecting them isn’t worth it.

The Microsoft and Oracle model of trying to sell everything a company needs is broken. They do a lot, but they don’t do much of it well. At the same time, the lone, niche developers are useless to merchants if they can’t integrate with other services. Therefore, the future of ecommerce belongs to ecosystems of products that are pre-integrated. Payment products, data analytics, shipping, marketing automation, cybersecurity, ERP and dozens of other solutions should jointly form marketplaces and commit to making their products interoperable through APIs.

Salesforce is a good model for the ecommerce industry. They provide core products, but they also encourage a huge network of developers to build software on their platform. They don’t pretend to provide all the solutions you could possibly need like Microsoft or Oracle. Companies can pull ‘Lego’ sets off the AppExchange and build a customized system for their business.

If we want to solve multi-trillion dollar problems in cross-border commerce, and enable all merchants to sell globally, we have to approach this problem with the straightforwardness of a kid. It’s time for niche developers to partner up and build ‘Lego’ sets that allow even the smallest of merchant to pick their solutions and combine them as they see fit. Integrations need to take one click, not one year.

Until we begin to view our software in relation to other vendors, we’re just bringing K’nex to the Lego party. This is limiting our growth, limiting our customers and continuing to stunt the potential of cross-border commerce. Vendors, build some Legos sets, and let’s start playing nice.