Shopping spree: Spend on commerce technology set to nearly double by 2019

By Peter Sheldon

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.

The author is VP, Principal Analyst serving eBusiness and Channel strategy professionals at Forrester Research. For more insights, click here.