E-commerce technology: Lots of growth and consolidation
September 14, 2015 12:01 AM
Online retailers are ratcheting up investments in key e-commerce technology and services as they look to improve website performance and keep shoppers coming back for more. The fastest-growing technology categories, according to an analysis of data in the new 2016 Leading Vendors to the Top 1000, are e-commerce platforms and mobile commerce. Those results are based on research on web merchants for Internet Retailer’s 2015 edition of the Top 500 Guide and the next echelon of retailers ranked in the 2015 Second 500.
Retailer clients for the 310 e-commerce technology vendors ranked in the Leading Vendors to the Top 1000 grew collectively by 4.8% across 30 categories to 14,328 in 2015 from 13,675 (some of which appear in multiple categories) in 2014. But some categories grew much faster, such as e-commerce platform, which was the fastest-growing vendor category with a customer base that grew 20.1% to 508 retailers in 2015.
Mobile commerce technology grew the next-fastest at 19.2% to 236, followed by customer service software at 15.6% to 252 merchants and online advertising at 15.1% to 856 e-retailers. The fifth fastest-growing vendor category, website testing/optimization, grew by 8.8% to 432 clients among Top 1000 retailers.
According to a recent Internet Retailer survey, results of which can be found in the Leading Vendors to the Top 1000, mobile commerce and e-commerce platforms are the top technology budget priorities for the coming year, as indicated by 57% and 56%, respectively, of retailer respondents.
Those metrics dovetail with a January report on e-commerce investment by research firm Forrester Research Inc. Spending on e-commerce technology doubled from 2010 to 2014, and it will nearly double again from $1.2 billion in 2014 to just under $2.1 billion in 2019, according to Forrester. “This growth is coming on the back of more than five years of rampant commerce technology replatforming as online retailers have upgraded their commerce technologies to support increased revenues and to drive innovation,” the report says. It projects companies will upgrade e-commerce platforms on average every five or six years through 2019, as opposed to seven years or more before 2014.
As retailers search for new technology they are mindful of consolidation among vendors. According to data in the 2016 Leading Vendors to the Top 1000, vendor consolidation has touched many of those retailers. For example, Oracle Corp.’s acquisition of Micros Systems Inc. in mid-2014 affected 67 retailers across 11 technology categories. And two of the biggest website performance management companies to serve retailers in the Top 1000 have merged. Dynatrace LLC said in June it would absorb Keynote, creating a company with more than 7,500 customers and 1,750 employees. Terms were not disclosed, but both companies are owned by private equity firm Thoma Bravo.
When Pegasus Lighting decided to consolidate vendors by moving to a new e-commerce platform, CEO Chris Johnson was taken by surprise earlier this year when its chosen vendor underwent a consolidation of its own. Within a month of signing a contract for an e-commerce platform by ShopVisible LLC, the vendor announced it was being acquired by Epicor Software Corp.
For Johnson and Pegasus, surprise quickly turned into confusion. “I didn’t know who Epicor was,” Johnson says. “Then in June we learned that Epicor was spinning out its Retail Solutions Group and ShopVisible was part of that.” Epicor named the new business unit Aptos, and it was under that name that the vendor began installing the new e-commerce platform, dubbed Aptos Digital Commerce, for Pegasus.
So far so good, Johnson says, of the installation process under the newly formed supplier. It’s slated to go live by the end of September. The jury is still out though because “we’re not yet live and I don’t know the impact of being a live customer yet,” Johnson says. “The biggest challenge could be the vendors internally dealing with their own combination.”
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