Key Issue
Which Web server software vendors and products will emerge as the industry leaders within key market segments and which will be of niche interest?

Mercado
Headquarters: Palo Alto, California
Web Location: www.mercado.com
Founded: 1995
Ownership: Private
Employees: 70 (As of 6/00) Financial Data: Not Available

Strengths:

• Now runs on Sun Solaris and Windows 2000 as well as Windows NT
• Load-balancing is incorporated as an aspect of search management
• Combines merchandising and personalization with search

• Prebuilt connectors are only available for Microsoft Site Server Commerce Edition and Broadvision
• Few VARs or developers familiar with need for solution and implementation strategies
• Enterprises often expect such functionality from primary e-commerce platform vendor

In establishing electronic sales environments, B2B and B2C enterprises face a challenge new to retail. In the past, sales to individual buyers depended largely on placing the right product category in front of shoppers at the right time — for example, a Land's End catalog would feature children's shirts during back-to-school season. B2B sales relied heavily on guidance from sales representatives, or at the very least, on an expert buyer base, such as purchasing agents. The Internet environment, where shoppers seek out sellers for B2B or B2C sales, demands a new style of interaction. Many shoppers have a good idea of what they want and need to be able to find it through a fast process that mirrors interaction with a sales clerk or sales representative. Other shoppers have only a general idea but, due to interface constraints, are unable to "browse" as they would with a catalog or in a store. Still others expect to interact in other personal or complex ways with a product catalog via an interface that is no more sophisticated than a search blank and a few clicks. Satisfying all shoppers is a challenge.

Mercado's approach is more direct. IntuiFind cobbles together data from multiple repository databases into a single, frequently updated, informational matrix. It then matches a user's search against the matrix through a linguistic analysis buffer, translating words (such as "light" to "lamp"). The two prongs of the product are equally important because the matrix must be properly assembled and the lexical matching must be highly accurate. As a result, an IntuiFind-enabled site is better able to discern the needs of search-function users. Deploying IntuiFind does not reconcile multiple-data source product information repositories, and should not be considered a replacement for normalizing catalog data. However, when such a full solution is not required, it can improve the user experience with less technical investment and greater flexibility.

Using a search as the trigger for this sort of product-to-desire matching provides some benefits. Users who invoke a search are likely to need something in particular. Searching can also be the final method shoppers use to find something after they have been thwarted by other methods. Also, searching can be more effective than personalization, because a search term reflects immediate need instead of general interest. Mercado has increased IntuiFind's flexibility in this regard by providing an open API (see Note 1).

• Existing enterprise commerce sites have zero or rudimentary search capability
• Search logs indicate a substantial number of "no records found" results, especially if shoppers depart after such results
• Product information is collected from a variety of databases in different formats
• Intelligent merchandising is part of the business plan
• Using business rules for merchandising is not onerous to shoppers

Consider Alternatives When:

• An enterprise's product list is short or does not consist of products with fixed attributes
• The product list is made up of highly customizable items (in which case a configurator would be more appropriate)
• The product data from which an online catalog is constructed resides in a single, simple database
• Intelligent merchandisng is not part of the business plan or would be objectionable to shoppers
• Product search capabilities are considered undesirable for some other reason

Note 1
Extensibility

APIs to IntuiFind are to be used in importing personalization data from existing applications, such as Net Perceptions. Thus, IntuiFind-enabled sites return not only better but also more personalized search results. By integrating these results with business rules made available through e-commerce platforms such as Broadvision, IntuiFind can insert appropriate merchandising techniques.

Enterprises increasingly find themselves expected to personalize every user-to-Web-site interaction. If the APIs prove easy to write to, then Mercado is likely to develop a substantial number of connectors to software that maintains deep information about users, such as other personalization specialists and repositories of enterprise data.

Source: Gartner Research

The greatest challenge we see to IntuiFind adoption — or to the adoption of any logic-rich application intended to boost sales — is its complexity. The application is difficult at first to understand, and then to execute, because it requires interaction of navigation, merchandising and promotion. The combination of these functions is not intuitive. Learning to use them will require following an education curve similar to that on which commerce sites now find themselves in relation to personalization.

Mercado is seeking partners to resell and implement the solution, and intends to make a substantial portion of its sales through this channel by 4Q00. If it fails to quickly develop a substantial sales channel, it will be difficult for Mercado to continue to drive adoption beyond its existing 60 customers. The price starts at $50,000 for 50,000 items in a catalog, with an 18 percent annual support fee. Implementation is extra; we believe most enterprises will take advantage of the implementation offer.

Product Strategy: Mercado seeks to sell IntuiFind to enterprises whose customers know what they want, but who may have a difficult time finding it through an Internet catalog; to global sales organizations in need of a spot equivalent for translation within their catalogs; and to Web stores that draw product information from multiple databases or a single complex repository to generate a unified virtual catalog. B2B marketplaces that desire a universal catalog but have heterogeneous product data sources are also a target market.

Bottom Line: Mercado's combination of linguistic processing and personalized merchandising within the search results page is beneficial to both B2B and B2C sites. Internet retail sites where shoppers invoke a search function in more than 40 percent of their visits should consider adding IntuiFind before the holiday shopping season. B2B sales environments should explore the integration of IntuiFind only when multiple data repositories exist or significant international business is expected, but then should consider it immediately.

Gartner's Internet Strategies Research Note P-11-3576, 27 June 2000.

Mercado Web Letter is published by Mercado Software, Inc.. Additional editorial material supplied by Gartner Group, Inc. © 2000. Editorial supplied by Mercado Software, Inc. is independent of Gartner analysis and in no way should this information be construed as a Gartner endorsement of Mercado Software, Inc.'s products and services. Entire contents © 2000 by Gartner Group, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.