February 5, 2015
Over the past four years, the commerce technology market has undergone significant consolidation. Commerce technology is now table stakes for any enterprise software vendor with a focus on systems of engagement. Consequently, Forrester has observed an unprecedented chain of mergers and acquisitions (M&A) in this space over the past four years with eBay, IBM, Oracle and SAP alone, having spent in aggregate over $10 billion on commerce related acquisitions. Furthermore venture capital and private equity firms have been making big bets in this space. Between them, Shopify, Volusion and Big Commerce have accumulated $337 million in funding in the past few years, while Siris Capital Group are set to shortly complete their acquisition of Digital River for $840 million. Beyond these headline transactions, dozens of smaller deals have been done, with vendors including Demandware and NetSuite both having been on acquisition binges’ in the past 12 months.
So what's driving this frenzy of investment in commerce technology? The answer is simple – the market for eCommerce technology is hot – very hot. Forrester has just released our inaugural 5 year forecast for the commerce technology market and we predict that in the US alone, spend on commerce technology (licensing, subscriptions and support & maintenance fees) will grow from $1.2 billion in 2014 to nearly $2.1 billion by 2019. Globally, the spend on commerce technology today is $2.4 billion and, like the US market, will see significant growth through the end of the decade. The growth of the commerce technology market is also fuelling growth of the services firms (Forrester refers to these firms as Commerce Service Providers) that implement, customize and integrate these commerce technologies on behalf of the online retailers that buy and use them. Spend on associated commerce implementation and support services will grow in the US from $5.1 billion in 2014 to just shy of $10 billion by the end of the decade. Growth in the services market is also stimulating associated M&A as large digital agencies seek to bolster their commerce implementation practices. Recent notable activity includes the acquisition of Optaros by MRM//McCann, Crown Partners by Razorfish and the $3.7 billion acquisition of Sapient by Publicis Groupe SA.
Together, Michael Yamnitsky and I developed this forecast to help technology vendor clients identify and assess new market opportunities. We took a unique approach to developing the forecast. Rather than scour third parties, we collected key market metrics from the leading commerce software vendors. By aggregating the data, we’re able to present a highly accurate picture of current and historical spending patterns. To predict future spending, we mined data from Forrester’s Business Technographics® surveys on tech and business trends within enterprise companies. For deeper insights into the target markets most ripe for growth, we segmented spending projections by target industry (i.e., retail, wholesale, manufacturing) and quantified the shift from legacy (i.e., on-premises) to modern (i.e., SaaS/hosted) solutions. Forrester clients can find a summary of the forecast findings in my latest report "US Commerce Platform Technology And Services Forecast, 2014 To 2019" while clients interested in accessing the full forecast model for a deeper dive into the numbers should contact their Forrester account manager or email our data team for more info on accessing the results.