We’ve been working with eCommerce Platforms for more than 12 years at Divante. When we started, IBM Websphere was king and ATG Commerce was also a leader. Then we saw a lot of traction from Magento, SAP Hybris, and Demandware. Finally, commercetools and Shopify have entered the stage as the next wave of leaders forging the future of eCommerce software.
eCommerce is an extremely competitive market and online stores need to think ahead to stay in the game. Picking the right technology to effectively support the future of eCommerce software ultimately starts with an understanding of clients’ needs.
These needs are well described in:
– Forrester Wave Report on Midsize Agile Development Service Providers
– Forrester Wave Report on Commerce Specialist Service Providers
– AdWeek report on the future of Digital Agencies.
What clients expect from the future of eCommerce software
Here is what clients of digital agencies and IT services companies are looking for:
- 56% of agency leaders said that speed of delivery is becoming a bigger factor in whether or not they win new projects
- More than 60% of all respondents agree that the in-sourcing of digital capabilities is having a major impact on the way clients and agencies now choose a partner
- Clients are looking for eCommerce partners that can bring value to the table – eg. short time-to-market thanks to pre-build solutions and accelerators
- Clients are looking for a consistent, dedicated team that will understand the client’s business.
- Agencies must have the ability to provide high-quality, reasonably priced development staff on short notice, in order to accelerate development
- Agencies should contribute fresh ideas, external perspectives, and technology knowledge.
Landscape of eCommerce agencies
The majority of agencies are small boutique shops with less than 10 M USD of annual revenue. The biggest specialist eCommerce agencies are doing between 50 and 100 M USD. Bigger companies can still have eCommerce specialization but rather as one of many verticals.
Divante’s goal is to move to the ‘50+ M USD group’ while being specialized in eCommerce. This will help us realize our strategic mission to become a top-of-mind eCommerce Technology Company.
It’s much easier to grow if you use category power and you steer a path among technology trends that are inevitable. This is why we constantly re-evaluate our tech-stack.
Illustrating the future of eCommerce software
Adam Sturrock drew a kind of hype-cycle for eCommerce Software. This could illustrate our basic hypothesis on the technologies that will fuel the future of eCommerce Software.
At this point, large clients are slowly adopting the MACH stack. They usually already use Cloud, APIs, and Microservices but are now starting to build bigger systems that use all of these components together.
So, we see more and more large clients asking for MACH solutions:
- Microservices based
The next step will be to move this discussion to a more business-driven level. Then we will see more discussions about Composable Commerce. Using a MACH stack, you will be able to build Packaged Business Capabilities (PBCs) and then use them like Lego bricks to compose any software you need.
With low-code and no-code tools being more popular at this time, the integration process between these building blocks will be easier than ever. Even now, our marketing teams use Webflow, Airtable, and Zapier to create complex marketing processes. Imagine this on the level of the whole organization. The increased speed of innovation will be just amazing.
By 2023, organizations that have adopted a composable approach will outpace the competition by 80% in the speed of new feature implementation.
Evaluating eCommerce software
Vendors use the technologies I’ve just mentioned to build their products. Knowing what clients need, we should bet on products that use cutting-edge technologies to deliver value.
This is a constant re-evaluation that is happening on the market as new technologies occur. Ultimately, clients vote on the best solutions by spending money.
Adam Sturrock prepared another valuable graph that shows a little bit of this sentiment (though I still think a lot of interesting platforms are missing).
The most interesting area for us is the “Rocket ships” part of this graph. You can find software that is getting traction as is it more commonly chosen by clients. This is also creating a Tornado Effect: other clients see that these software solutions are getting popular and choose them because of their increased popularity.
You can see that commercetools is a clear winner for the enterprise sector (as they are also a strong proponent of a MACH stack).
Shopify is very strong for small and midsize businesses. They are another clear example of a low-code/no-code approach and they also offer a kind of composable commerce approach thanks to their massive ecosystem of partners. You can argue that the Shopify model is something that large companies dream of and try to achieve, but they need to have flexibility. This is why commercetools could solve this problem one day.
BigCommerce is somewhere in between commercetools and Shopify. These three companies are the winners of the future of eCommerce software for the next 3-5 years.
You can see companies like Adobe (Magento), Salesforce, SAP, and Oracle in the “Lack of vision” part of Adam Sturrock’s chart. I personally don’t feel that this entirely reflects the reality. I think these companies have a very clear vision that is executed well—it is just executed differently to that of new players.
Having a massive installment base makes it harder to innovate if your product is not based on a MACH stack. You need to work on updates that are painful and costly to implement. This is why Salesforce is doing better than SAP and Adobe, and why the latter are now both 100% into cloud. There is no other way to stay relevant in the future of eCommerce software. These companies are investing massively in MACH stacks, starting from being cloud-native and headless. This is, of course, slowing down the development of the product itself but these are great companies and I believe that they can make this pivot.
Feature sets vs ecosystems
From the client’s perspective, there is still a features versus case studies conflict taking place. The majority of established companies haven’t heard of MACH or Composable Commerce and they still use the software they bought 10 years ago. This is why we still see these older companies listed as leaders in analysis like this one from IDC
We see Salesforce, Adobe, SAP, and Oracle as Leaders alongside VTEX, BigCommerce, and commercetools. This is because installment base is very important and eCommerce software is usually used by a business for more than 10 years.
The eCommerce software strategy of Divante
Our bet is to intelligently offer a set of eCommerce software solutions that will allow us to work with our existing customer base and help them migrate to the more modern tech-stack.
For some of them, this will mean re-platforming; for others, it will mean taking a Strangler-pattern approach to modernizing their current setup.
As a top-of-mind eCommerce Technology Company, we want to be able to work with any enterprise eCommerce clients, no matter what their current setup looks like. We want to be able to help them achieve ambitious business goals.
Our strategy is, therefore:
- Focus on frontend development as this is a crucial part of the MACH stack
- Use backend systems which are moving towards Composable Commerce
- Partner with vendors of composable bricks to be able to integrate them smoothly
- Invest in fast-growing Commerce Software of the future
For us, this means:
- Maintain and develop: Adobe (Magento), SAP
- Invest in: commercetools, AboutYou Cloud, Shopify
- Research, learn, and try: Shopware, Spryker, Salesforce
And, for Composable Commerce, we work closely with our partners: