News & Updates

Putting the "e" in e-commerce (Part 1)

By James MacTavish / July 6, 2015

When consumers shop online at the websites of independent retailers, the consideration of what software is powering the shopping carts and fulfilment systems they are using is really given no thought. Furthermore, they wouldn’t recognize the names of the companies that provide these systems. Companies and products like Magento, Demandware, Hybris, Drupal and Sterling Commerce aren't exactly household names, and admittedly I too hadn’t heard of them until I became involved in e-commerce a couple years ago. Since then I have been astonished to learn that the commerce software/ cloud/ technology/ payments market is huge and growing proportionally with the growth in e-commerce as a whole.

I recently had the pleasure of attending Magento’s global annual conference in Las Vegas, as well as the UK spin-off in London. With comparable size to that of a BlackBerry conference back in their prime, the opulence of the event in its surroundings at the Wynn Hotel on the Vegas strip, tell me there is no shortage of money in commerce. It is less commonly known that Magento, a leading commerce solution provider, is an eBay company, and that eBay itself owns PayPal and Braintree, two leading payment platforms in the world.

So, with this mystique involving these e-commerce vendors, in conjunction with what I have learned by being immersed in their world, I decided to write a consolidated state of play report.

Firstly who are the major players?

· Magento, as mentioned above. They were acquired by eBay in 2011

· Demandware is a public company with a market cap of $2.6B

· Digital River was a public company but was bought out for around $480M earlier this year

· NetSuite is a public company with a market cap of $7B

· Elastic Path is privately held, based in Vancouver Canada

· Micros was acquired by Oracle in 2014 for around $5B

· Oracle also has other commerce offerings not surprisingly called "Oracle Commerce"

· MarketLive is privately held, based in the US

· Intershop is a public company based in Germany

· IBM acquired Sterling Commerce in 2010 for $1.4B. They also acquired CoreMetrics and Unica as part of their expansion into all things commerce

· In 2013 SAP acquired Hybris as part of their push into commerce

Giants including IBM, eBay, SAP and Oracle all have significant stakes in the commerce opportunity, and as you can see above there is a lot of market cap for commerce companies. It would be accurate to say that the biggest names in online retailing (Alibaba, Amazon, Apple, Staples, and Walmart being the top 5 worldwide respectively), often have an individual commerce strategy. Retailers and online companies just don't have the budget or expertise to create their own commerce platforms, which is why the above vendors are all vying for their business.
To help understand some key aspects of each of the companies I have brought to attention, I have summarized each based on how they position themselves as a company, and what they do.

Magento: "As the number 1 eCommerce platform across the Alexa top 1 million sites, Magento empowers you to focus on engaging your customers and growing your business. We have the enterprise-class features and the flexibility you need to create an eCommerce solution tailored to your unique needs. And to help you drive more traffic to your store, convert browsers into buyers and boost online revenue." That statement confirms Magento's dominance in enterprise commerce focusing primarily on the retailer.

Demandware: "Competitive advantage in retail doesn’t come from managing IT infrastructure. It comes from innovation, market expansion and exceeding customer expectations. With the industries most agile and scalable commerce platform, Demandware enables you to focus resources on the strategic initiatives that drive growth." They really focus on why outsourcing the commerce platform is a more viable option than doing it internally.

Digital River: "Whether you’re an entrepreneur or an enterprise, we can help you win customers, take the complexity out of global commerce, lower cost of ownership and speed time to market." On Digital River's site they focus on a big pain point with e-tailers which is selling globally. They discuss that handling multiple tax regimes, currencies, legal structures, and shipping issues is key to any successful commerce system.

NetSuite: "The world's number one cloud business management software suite. NetSuite is the all-in-one solution that can grow with your business including accounting / ERP, CRM, and ecommerce." So they focus on all of the cloud services a typical business needs, not just commerce. Commerce, ERP, supply chain management , loyalty programs, BI (business intelligence), POS (point of sale) , and order management are all typical online business needs.

Elastic Path: "is the world's most flexible onmichannel commerce platform." "Omnichannel" seems to be a common word these days. Omnichannel means that a brand must deliver consistent and predictable customer experience across all of its touchpoints with customers, including online, in-store, by phone, via resellers, and so on. Consumers are also demanding the same inventory and services both online and in- store for any specific brand so it needs to be consistent throughout. Finally, onmichannel speaks to the desire to recognize the customer; his/her unique profile and needs whenever that consumer interacts with the brand. In turn that includes allowing the user to sign in, becoming familiar with their purchase history, and ensuring purchases take place with zero friction because his address and credit card number are known to the brand. Omnichannel is the holy grail of commerce and retailing in my opinion.

MarketLive: "With MarketLive Customer Driven Commerce, retailers form brand loyalty and move beyond automating omni-channel commerce to integrate all commerce channels in an ecommerce marketing strategy, online or offline — enabling total commerce." And again…omni-channel.

Intershop: "You can roll out all your business models, business units, brands, and customer segments across all channels and sales territories enabling fast implementation of omni-channel commerce scenarios for a wide range of user devices." Omni-channel again - clearly that's THE buzzword. Interesting to note how Intershop mentions how commerce has to address the wide range of user devices. This is often an overlooked point in omni-channel; these days consumers want to interact and purchase via smartphones, tablets, cars and TVs. Here at AppCarousel we spend a lot of time helping our customers deliver a seamless experience across all those devices.

All the companies listed above have described their ‘suites’ of broad commerce capabilities available for businesses do online merchandizing and omni channel selling and engagement. Forrester analyzed and highlighted 4 key pillars included in these suites:

1. Experience management: this deals with delivering a unified storefront experience to the consumer, including consistent ways to buy the retailer's goods and services wherever the consumer is in the brand's world.

2. Product information management: Often referred to as "PIM". Not to be confused with personal information management as in the mobile industry. PIM means providing consumers with every piece of information they need on a product in order to buy it. These days that includes more enhanced metadata and specifications, quality reviews from the community, and video demonstrations. The list goes on.

3. Commerce management: I would replace those words with "storefront" and "shopping cart" because that's pretty much what the same thing. Features also include promotions, recommendations, merchandizing of goods, bundling, cross-selling and complex payments and taxation models too. Fundamentally it's the checkout experience which was where e-commerce all began and where it's now the most crowded space among the vendors listed above. At the recent Magento conference I watched a live demo where an online storefront was set up from scratch and operational within 90 minutes!

4. Order management, or Retail Order Management: When I hear ROM, "read-only memory" comes to mind. In the world of commerce here's how eBay Enterprise (the part of eBay that owns Magento and PayPal today) describes order management: "Do you need to manage orders and inventory across your distribution centers, stores, and suppliers? If you want a flexible solution in place fast, eBay Enterprise Retail Order Management is the answer. It's a modular, cloud-based suite of tools, services, and technology designed to manage your omnichannel operations. It has distributed order and inventory management, customer service tools, and reporting at its core.It also offers capabilities for store fulfillment, dropshipping, clientelling, payments, tax and fraud. Simply put, it orchestrates your entire commerce value chain."

Order management specifically is the new battleground. The remaining three pillars have become somewhat commoditized, as each of the major players seek to add their own personal tweaks. Retail order management is where the smart money is going. Up and coming businesses and retailers will need to have a retail order management system in order to have an online commerce platform. The retail order management system will manage stock levels across all fulfillment centers and outlets, and has the ability to dropshop and deliver goods promptly within a short 60 minutes via drones (as Amazon is starting to promise).

To conclude, the major commerce players are developing tactics to offer Amazon-like commerce and fulfillment services to companies who aren’t on an Amazon budget.

Commerce is still very much evolving. In my research I have seen it written as ecommerce, eCommerce and e-commerce, also omnichannel and omni-channel. The industry is still agreeing on how to write key terms. Maybe once this happens in the next few years, we will know the market has matured.