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US eCommerce Software and Services Spending to Nearly Double by 2019 reports that annual spending on e-Commerce software by U.S. firms doubled from 2010 to 2014 and Forrester’s ‘U.S. Commerce Platform Technology and Services Forecast,’ predicts e-Commerce software and services spending will nearly double in the U.S. by 2019.

The report predicts that in 2019, larger U.S. firms will spend $2.090 billion on e-commerce platform software, up from $1.204 billion in 2014, a 12% compound annual growth rate. Those firms typically spend five times more on related implementation and maintenance services, and services spending also will nearly double from $5.118 billion in 2014 to $9.772 billion in 2019. “This growth is coming on the back of more than five years of rampant commerce technology replacement.” the authors say.

The report highlights several trends and our take on them is in this color:

  • 13% of major manufacturing, retail and wholesale firms use homegrown e-Commerce technology today but many will move to “more nimble and highly scalable” commercial software. e-Commerce platforms typically lasted seven years or longer from 2000 to 2010, Forrester predicts companies that host their own software will re-platform every four to seven years between 2014 and 2019, with five or six years being the average. In our experience adoption by industrial suppliers (manufacturers and distributors) is accelerating and for the reasons in this post.‘The four Horsemen of the e-Commerce Apocalypse’ they are typically not building their own software systems. Often companies do it in stages, website first, add product CAD model downloads and lead generation, link to CRM for sales lead dissemination, improved their website with SEO and local search catalog next, add RFQs, connect to ERP to show pricing and individual customer pricing on their website, add e-Commerce for online sales, add order tracking, add configurators, etc.
  • The market is shifting to software-as-a-service (SaaS), in which vendors host e-commerce software that clients access via the web. Today 42% of U.S. companies studied license software that they maintain on their premises but the report predicts that will change, as more companies “outsource the burden of support, scalability and upgrades to the vendor.” SaaS accounted for 44% of e-Commerce software spending in 2013 and Forrester says, “SaaS is eating traditional licensing’s lunch” and predicts that it will increase to more than 66% by 2019, We agree, especially now that our SaaS products match the customers website design, are easily integrated with their other systems (such at CRM, ERP) and work wholly under their website domains so that all SEO ‘Google-juice’ accrues to their domain and further improves their search ranking.
  • Retailers and consumer brands have virtually all deployed e-commerce systems, many manufacturers, wholesalers and distributors are just getting started. Retailers and consumer products companies accounted for 49% of e-commerce software spending in 2013, but that will decline to 33% by 2014; at the same time spending by manufactures and wholesalers will increase from 20% to 30%We agree that many Industrial Manufacturers and Distributors are ‘just getting started’ but that is partly because online sales and marketing is complex and ever evolving. It has also, until recently, been too expensive for many small and medium sized industrial suppliers – see these posts:
  • B2B e-commerce will account for a growing part of e-commerce technology spending. We agree with that too and it’s corroborated by the 2015 Content Marketing Institute’s survey of manufacturing marketers who have shifted significantly to focus on sales as a primary goal of their content marketing – see Manufacturing Content Marketing and Sales Disconnect
  • The Forrester report focuses only on larger U.S. companies, those with total revenue of at least $250 million or online sales of at least $50 million. Forrester estimates e-Commerce software sales to smaller companies worldwide now totals $240 million annuallyWe think small and medium sized company adoption may continue to lag large company adoption but costs today are a tiny fraction of what large companies like Amazon®, Grainger® or McMaster® spent to achieve their e-Commerce capabilities. Today, sophisticated industrial B2B eCommerce websites can be set up and operated at relatively low cost subscription rates with little or no capital investment. For the smaller companies it has paid to be a fast follower!
  • The report only covers spending on two central components of e-commerce software: commerce management software “used to power online storefronts and manage pricing, promotions, shopping carts and purchase transactions” and the order management systems that “orchestrate complex order processing scenarios from the point of capture through the point of fulfillment.” Although the report only covers those components, the other components we’ve mentioned are vital to industrial e-Commerce solutions so we think growth in their adoption will be proportional and “nearly double”.

That’s our take, please let us know what you think below. As always, if you’d like our opinion on your situation or want see an online demo, call or click either button below:

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