As participation in online retail is at historic levels, what are the benefits for business?
The global e-commerce market has been booming for a number of years, with key drivers of merchant success including mobile, omnichannel and marketplaces. In 2016, global online retail sales will hit $1.6 trillion rising to $3.5 trillion in 2019.
The interaction between online and offline sales has never been so important to consumers and potentially fruitful for technology providers and IT pros. When we discuss big retail numbers, we most commonly think about online giants such as Amazon, eBay and Walmart. However, the remarkable course of e-commerce has been an SMB phenomenon – in fact, if we look at Amazon, some 45% of all goods are sold on the Amazon Marketplace by SMB retailers. On eBay, SMB merchants have accounted for a 20% annual growth rate over the past 5 years.
Thus, the market for retail technology is surging as a result. Recently, we have seen Salesforce acquiring Demandware for $2.8 billion in pursuit of a slice of the e-commerce market. According to Forrester, spend on e-commerce technology globally stands at $2.6 billion today and will double by the end of the decade. Against this backdrop, it seems remarkable that many web and IT service agencies still do not make money from e-commerce offerings.
According to Forrester, spend on e-commerce technology globally stands at $2.6 billion today and will double by the end of the decade
Advancements in e-commerce platforms mean that it is now possible for any agency to re-sell a powerful, yet easy to use e-commerce solution with ease. For the reseller, addressing the e-commerce customer has some excellent benefits. The e-commerce user offers a high level of ARPU and customer lifetime. Value-added resellers have much potential to combine with other value added services. In fact, the market for associated design, implementation and support services comprises an additional $6bn today, rising to $10bn by end of 2019.
Of course, this attractive market has not gone unnoticed. E-commerce pure players, such as Shopify, have seen remarkable growth. The valuation of these providers serves to underline the high value of e-commerce customers. For example, Shopify achieves a market value of $2.5bn from a relatively modest installed base of 275,000 SMB merchants worldwide as opposed to a market value of $5bn for GoDaddy with more than 14 million hosting clients.
So, how does a reseller explore e-commerce for the first time, and what should they look for in a platform partner? It is true that e-commerce means rapidly evolving technology. The strongest platforms today will fully enable cloud agility and ensure the widest set of merchant needs can be fulfilled.
There are options for web professionals to re-sell across both Open Source and Software-as-a-Service, and the right choice often depends on your customers’ needs for design, maintenance, security etc. E-commerce has never been so easy to launch – there are now very effective plug-ins for site builders and CMS platforms like WordPress, as well as feature-rich standalone shop packages. A fully managed white label SaaS platform will deliver the end user a high quality, robust, all-inclusive service.
It is essential that your e-commerce partner works hard to evolve in line with all the best and fully localized integrations, payment and shipping methods and apps that shoppers demand. Philbert Shih of Structure Research, a leading analyst to the cloud industries, agrees, “Today’s demanding consumers desire and trust only the latest tools. This is crucial to the user experience, which in turn goes a long way to determining success for merchants”.
Of course, successful merchants will mean successful resellers. Businesses that thrive will seek further online projects. Do partner with a global-scale provider whose experience and technology partnerships you can benefit from. For example, SaaS platforms with their own Apps Store and development programmes can deliver you and your customers timely access to the latest tools for competitive advantage online. With so much potential to share in the retail success of your hosting customers, now is certainly a wise time to scope out your options.
About the author
Richard Stevenson is Head of Corporate Communications for cloud-driven online shop software provider ePages. He has worked in the web hosting, domain name and Software-as-a-Service industries for over 13 years.