The entry costs for an eCommerce business can be surprisingly low, and new systems can be implemented and exchanged quickly and efficiently. This makes it a natural sector for startups, and also a natural sector for experimentation and research and development.

The ability to gradually increment the functionality of in-house eCommerce solutions means that an eCommerce startup can still invest some portion of its budget in software R&D without becoming bloated.

However, the full extent of the research and development required for the most successful eCommerce startups might surprise you.

1. Shifting Channels

The rise of digital as the dominant platform for commerce has been countered to an extent by concepts such as omnichannel commerce and agile commerce. These would probably be called “channel-agnostic” tactics in the marketing community, but whichever set of jargon you use to describe it, they’re real changes to the ecosystem and they’re here to stay.

While these include eCommerce, they attempt to broaden their scope to include any and every way of reaching consumers as-and-when they adapt. That means constant research into new channels and new ways of reaching customers, which in turn means user experience and user testing on these new platforms. Many R&D claims that we handle in the ecommerce sector relate to the development of mobile-friendly or responsive site architectures as retailers raced to provide useable solutions for those visiting via mobile and tablet devices.

Relevant areas of research in the near future may include the so-called “internet of things” and more efficient use of physical stores alongside eCommerce.

2. Changing Audience Behaviour

Audience behaviour is a constant headache in eCommerce because it simply won’t stay still.

Political events can have strange and far-reaching effects on audience behaviour, especially fear and compulsive instincts. More to the point, there is a constant and evolving meta-game being played out over billions of people where over-exposure to a particular style results in largely unpredictable reactions.

The body of research behind user behaviour, especially in relation to eCommerce, is huge. However, that research remaining relevant is dependent on people being consistent in their specific ways of using and interacting with technology.

This requires new research into new methods of laying out and interacting with the store, as well as a more conventional weapons race in terms of site speed optimisation.

3. Big Data

Big data is becoming something of a buzzword, and I’m unashamedly using it as such; eCommerce startups and niche eCommerce businesses will (probably) not ever deal with true ‘big data’. Most of the people who need really big data need to see how people work across a variety of contexts – an eCommerce company of this size usually only needs to see how people work in one context, and you can use user testing to fill in any gaps. However, they will still deal with substantial amounts of data, and with a high number of requests for that data (‘hot data’), so I’ll refer to it as big data here.

eCommerce startups constantly need better and better ways to juggle all this data. In fact, the blog linked above is from a company which provides an innovative database that’s very useful for managing eCommerce data. There is always room for improving how you deal with large frequently-accessed datasets, and any improvement will probably qualify as eCommerce R&D in the UK.

The pool of data that marketers have access to expands almost daily. The adoption of technologies such as BLE iBeacons, means that retailers can now have access to observe user behaviours in ways never previously thought possible.  The monitoring of customer behaviour, such as the time spent lingering in a particular aisle in store, was only previously possible through the use of costly customer science and analytics companies like Dunnhumby. The adoption of iBeacons is likely to provide a first mover advantage, but it’s likely to take many years of research and patient effort before this disruptive technology can be utilised to its maximum potential.

Even within the realm of ‘truly big data’, governing relationships and immense sprawling social graphs and the like, as an eCommerce startup you may be able to claim R&D tax credits when outsource the work involved in developing new methods of using the data. You can still usually claim R&D tax credits for the work carried out if you outsource the research and development work to data specialists, as long as it still meets HMRCs research and development criteria.

4. Usability

Usability is a vast and specialised field, and can still be poorly understood, even by experts. Dogma and shades of your background field still frequently cloud thinking, to the extent that even multi-million dollar websites suffer from widespread usability issues.

Many of these are due to users failing to understand subtle cues, such as faded text or a change of cursor. This is not the fault of the users, but the result of insufficient research into what people do and don’t understand. The web designer, of course, will rarely pick up on things like this, which are usually obvious in the extreme to them.  The number of specific tools to aid usability, and monitor how users are interacting with a site grows by the day.

Beyond the wider proliferation of tools like Ethnio, UserVue, ClickHeat, Chalkmark,  and Google Website Optimizer, many digital businesses are developing their own bespoke usability tools tailored towards their own specific requirements.

The story of Jared Spool and ‘The $300 Million Button’ is now well established in usability folklore, and significant successes such as this help demonstrate the massive impact that investment in usability can have on revenues for ecommerce businesses. For companes actively looking to resolve usability issues, the benefits offered by a successful R&D claim could potentially far outweigh the increased revenues accrued from a few less abandoned shopping carts.

5. Multiple Implementations

eCommerce is incredibly messy once you have more than a few subcategories and a few hundred or few thousand products. There is no logical hierarchy for your products which will function as expected for all your users, and many come with drawbacks.

For instance, even if a dropdown menu system works really well for your products and all your desktop customers, it may be clunky for mobile users. So you need on-site search as well, and that needs to work perfectly – which almost certainly means that you start researching how to get that working effectively. You probably also need a method for people to get to their favourites, and multiple different context-sensitive groupings.

Personalisation software and recommendation engines have been a key area of focus for eCommerce businesses in recent years. The myriad of enterprise level SaaS solutions available has snowballed in recent years.  Top-tier CMS developers are also increasingly building personalisation features directly into their CMS systems.

Sitecore and Kentico offer a suite of tools to tailor site content around various rules such as geo-location, specific search terms, referrers, and lead scores, as well as more advanced personalisation based on user behaviour and individual profiles. Recommendation engines typically rely on a limited bank of algorithms to drive recommendations based on ‘the wisdom of the masses’.

Personalisation or ‘true personalisation’, on the other hand, typically relies on deep integration methods to inform which data should be presented for each visitor – this allows content data to be updated in real-time, to ensure recommended products are currently in stock. Technological advances in these areas are highly likely to contain qualifying R&D expenditure that can be recovered via R&D tax credits.

Managing The Cost Of eCommerce R&D

eCommerce R&D is too important to ignore, so managing the cost is vital for startups and smaller, more niche eCommerce sites.

This is an area where ForrestBrown have extensive experience.

The potential to claim eCommerce research and development tax credits is enormous.

If you’ve developed your own eCommerce technology to sell your own wares, or you’ve created a suite of tools which are utilised across hundreds of eCommerce businesses it’s highly likely that some of the expenditure you’ve incurred can qualify for R&D relief.

To find out which parts of your work qualify for R&D tax credits with no further obligation, get in touch and arrange a completely free initial consultation and analysis of the potential benefits for your company.

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