Ecommerce: Gradually, then suddenly

 

boosterThe way we’ve come to understand the role of ecommerce in the broader consumer/retail economy has evolved pretty remarkably over the last ten years. In many ways, the rise of ecommerce resembles the proliferation of consumer mobile devices, a trend best described by Hemmingway: “gradually, then suddenly.”

Somewhere in the late 2000s, we went from a slow, gradual adoption of the internet to a tipping point, where we accelerated rapidly to 3+ billion people online today. A big part of that is due to the maturation and commoditization of mobile technology. More people got online to access a certain bundle of goods there: information, services and products. As those things improved in quality, it drew more people online. A virtuous cycle that happened gradually, and then suddenly. We’ve moved into the “suddenly” part now, as another billion (!!) come online in the next year or two, which is part of why Google and Facebook are investing so much money in welcoming those new users to the internet.

Ecommerce has grown tremendously, but its growth has so far been gradual. As a percentage of overall retail sales here in the U.S., it’s still in single digits – but growing at a steady clip. Yet this growth pattern drastically understates its potential. Ecommerce is quickly approaching its own “suddenly” function. And I think the day is getting closer when we’re going to see a major shakeout in retail between those companies that are prepared, and who “get it,” and those that do not.

I’ve given some thought here about what that shakeout might look like.

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Collision Course

shipsOver the last few months, I’ve been meeting with a lot of folks working in ecommerce at major retail brands in North America. There’s been a ton of interest in the Shopping Index reporting my team at Demandware has been working on, particularly as everyone begins their holiday campaign planning. The Index is a project to apply analytics reporting to the incredible amount of ecommerce data that flows across the 1,300+ retail sites on the Demandware platform – you can read more about it here.

Since I joined Demandware, I’ve been struck by the many similarities between the digital analytics and ecommerce platform markets. These are both fast-developing markets whose clients – small, mid-sized and large companies, mostly B2C but also B2B – are seeing most of their new growth, if not all of it, in digital rather than brick-and-mortar. As a result, these companies are racing to adopt new technology to support that growth, which often leads to painful and awkward change in their organizations.

I’ve noticed that, over and over, when I’ve been talking with ecommerce teams, the conversation begins squarely in ecommerce and gradually drifts towards… something else. Part marketing, part commerce, part customer experience, part “digital intelligence,” if you want to call it that. Ecommerce folks are constantly referring back to topics I used to talk about while at Coremetrics – contextual marketing, using data to inform merchandising, leveraging browsing and search data, and so on.

For someone whose tech career has been built in the technology of how people buy and shop online, this convergence is… interesting. And it has given me some clues about where the industry is headed, probably sooner than we think.

 

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Oracle and Maxymiser

Today, Oracle announced its acquisition of Maxymiser. You can read the press release here.

This is the 7th acquisition by Oracle for its “Oracle Marketing Cloud.” (Check out my running tally of Marketing Tech acquisitions.) While not Oracle’s largest by a wide margin, I think this acquisition actually says a lot – both about Oracle, and the direction for the “MarTech” field as a whole. I have another blog post brewing on that topic….

Broadly, though, relevancy is becoming the new table stakes across a broad swath of industries. Retail, as usual, leads the pack. Maxymiser gives Oracle a whole new set of capabilities around optimizing user experiences that Eloqua and Responsys didn’t, and as Oracle looks to challenge Adobe and the others in that lucrative market, building out their strength in this area was a must. In that way, you could see this acquisition as the keystone of their marketing technology strategy – Oracle can now offer cross-channel delivery of promotions, products, and content, and the optimization thereof, by use of a very high-quality and market-tested solution in Maxymiser.

I would guess that Oracle, as usual, outbid a small number of other suitors for Maxymiser. I have a pretty good idea of who those suitors might’ve been (though no privileged information there), but you can figure it out with a quick Ghostery check. Per usual, Oracle’s extended ROI timeline – if they are even held to an ROI timeline! – probably allowed them to offer a better deal.

My next post, which I’ve been cooking for a while, is going to deal with what I see as the endgame for MarTech. It’s coming. And probably sooner than we think. More soon.

 


The long tail of enterprise software

If you follow tech twitter long enough, here are a few things you will learn:

  • How expensive housing in the SF Bay Area is
  • What Blue Bottle coffee is (actually, you will want to go try this)
  • There are all these on-demand services that sound kind of cool but probably aren’t available where you live (outside of a few major metros)
  • There are certain political red lines in tech that you must not cross publicly or you are a terrible human being
  • Seriously, the housing in SF is a nightmare

Just as it is Silicon Valley-centric, the tech twittersphere is also extremely startup-centric. In a lot of ways, this is really cool: you get the sense of seeing the first contours of the future as they’re being built. On the other hand, I’ve found that the mainstream tech commentariat has remarkably little of value to say about management in large companies. The VC/startup industrial complex glorifies practices that are kind of cute or interesting but totally impractical for any organization of appreciable size: transparent salaries, “flat” organizations, a focus on user experience as the acme of product strategy, constant rotation of job duties in the company, and so on.

This reflects a lack of appreciation for the legitimate struggles of traditional industries, particularly big companies in them, to adapt to technological change.

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Status update: is the election over yet?

I thought I would give an update on a little side project I’ve been working on lately.

A while back, I decided to try to level up my coding skills. I was already pretty handy with javascript and basic web design, but I hadn’t really broken ground on anything new in a long time. As tends to happen when you specialize deeply in one thing for a while, I hadn’t picked up my head to look around for too long. I felt like I was overdue for some exercise, and wanted a new challenge.

I scrupulously avoid talking politics here, but I’ll make an exception here to describe my project.

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