These days it’s the e-commerce vendors that are buying competitors, developing highly specialized new technology and services, and penetrating new merchant niches that are getting the most business from top online retailers, according to an analysis of data from Internet Retailer’s newly published Top Tech 2014.
Overall the 175 biggest suppliers of e-commerce technology and services to the Internet Retailer Top 1000, which includes merchants ranked in the 2013 editions of the Top 500 Guide and Second 500 Guide, collectively grew their Top 1000 retailer client base about 13.3% to 9,198 in 2013.
It’s a combination of acquisitions and new technology that is driving growth among the biggest e-commerce technology and services companies. And it’s vendors that are developing highly specialized technology such as personalization applications that serve up specific offers and products to shoppers that are growing the fastest, according to Top Tech 2014.
In researching the new digital publication, Internet Retailer ranked the top 10 e-commerce technology and service providers in 28 categories, including affiliate marketing, e-mail marketing, search engine marketing, e-commerce systems, order management, fulfillment, web analytics and others. Some vendors appeared in several categories. In all the Top Tech 2014 profiles 175 companies that serve online retailers.
Internet Retailer ranked e-commerce technology development and service vendors based on the number of verified Top 1000 retailer customers in each category and on the collective web sales those merchants represent. If a vendor serves a Top 1000 e-retailer in two or more technology categories, the vendor is credited with multiple clients to more accurately reflect that vendor’s total market share. Growth rate is based on the number of clients in 2013 vs. 2012.
Based on the number of total Top 1000 clients, the leader is Google, which supplies applications and services across multiple categories including web analytics, to 716 Top 1000 merchants. Google is followed by security certification provider McAfee with 514; Adobe, which among other products provides content management and web analytics tools, with 443; the United States Postal Service with 414; and e-commerce technology, fulfillment, customer service and marketing provider eBay Enterprises with 409.
The three fastest-growing vendors based on number of Top 1000 clients added in 2013 were led by personalization application provider Certona, which grew its client base by 46 Top 1000 retailers, a growth rate of 124.3%. Certona was followed by MyBuys, another personalization application developer, which added 61 new Top 1000 customers for a growth rate of 88.4%, and marketplace management provider ChannelAdvisor, with 81 new clients for a growth rate of 38.9%.
The biggest and fastest-growing vendors based on total number of clients share a common trait that’s enabling them to add more new Top 1000 customers: the ability to provide e-commerce technology that’s in many cases is more sophisticated, durable and cheaper than retailers can build for themselves internally, says Gartner Inc. vice president and information technology analyst Gene Alvarez.
“The big vendors have the resources to continue to add new services that help them diversify and retain and attract more of the top retailers,” Alvarez says.
Another reason some e-commerce technology suppliers continue to grow is their ability to add very specialized applications that help them add more sophisticated web site features, functions and security; expand their sales channels; and generate repeat business from their best customers.
With aggressive plans to become a $1 billion online retailer in as soon as five years, Market America Inc. is counting on more sales from outside retailers selling on its site to account for a big chunk of the growth. “We see the new retailers and customers we’re adding to our marketplace as making up about 25% of all our e-commerce sales this year,” says Market America vice president of strategic partnership Eddie Alberty. “Our marketplace is one of our primary growth engines.”
Market America, which operates Shop.com, an e-commerce site and marketplace featuring more than 40 million SKUs, including its own health and beauty products and products from about 3,000 other retailers, could have taken up to a year and spent several hundred thousand dollars to develop its own marketplace technology. But with big plans and short deadlines to meet, Market America instead contracted with ChannelAdvisor, a marketplace management services company, to manage its program. “It made sense to find an e-commerce technology vendor with this level of expertise in marketplace management,” Alberty says. “They had the expertise to help us get up and running and grow sales quicker than if we developed it ourselves.”
Market America, which posted about $515.5 million web sales in 2012, develops most of its e-commerce technology internally, but when it’s easier and more cost-effective to purchase a specialized commercial application or service Market America will turn to a vendor. Other e-retailers are doing the same. “Where they are investing now is in more specialized technology that helps them to better target their best customers, extend their reach to more mobile, social and marketplace shoppers, and analyze buyer behavior,” Alvarez says.
Top Tech 2014 ranks the biggest suppliers of e-commerce technology and services to the Internet Retailer Top 1000 based on the number of merchants in the Internet Retailer Top 500 Guide and Second 500 Guide that verify they use a vendor in one or more categories. Vendors are ranked on their confirmed number of Top 1000 retailers and the collective web sales those merchants represent.
More on how to order Top Tech 2014 is available by clicking here.
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