Agile development methodologies (e.g., Scrum, eXtreme Programming, etc.) have become very popular in recent years. The benefits of Agile development are generally thought to be improved flexibility, more frequent delivery of business value, increased collaboration between business and technical teams and the ability to handle frequently changing priorities.
eCommerce projects are perfect for Agile development. Things generally seem to move a little bit faster in eCommerce than in other areas. Priorities are constantly changing to keep up with competition and customer trends and to leverage the latest technology advancements to provide a rich, sexy experience. You need to release functionality early and often, then measure (through web analytics) what works, what doesn’t and iteratively refine it. There is also generally more of a convergence of business and technical SMEs in eCommerce (i.e., the eCommerce business SMEs are pretty technical and you don’t have to be an accountant, inventory manager or other business specialist to understand how your website will impact the business) – so collaboration can be very effective.
Agile and iterative development techniques can be used on any project (e.g., ERP implementations, operational systems, etc.), but nowhere is it a more natural fit that for eCommerce. I can’t imagine why you would do it any other way.