And spending on services, typically five times that of software, also will grow rapidly.

Annual spending on e-commerce software by U.S. firms doubled from 2010 to 2014 and will nearly double again by 2019, predicts Forrester Research Inc.

In 2019, larger U.S. firms will spend $2.090 billion on e-commerce platform software, up from $1.204 billion in 2014, a 12% compound annual growth rate. Those firms typically spend five times more on related implementation and maintenance services, and that spending also will nearly double from $5.118 billion in 2014 to $9.772 billion in 2019, according to the report, “U.S. Commerce Platform Technology and Services Forecast,” by Forrester analysts Peter Sheldon and Michael Yamnitsky.

“This growth is coming on the back of more than five years of rampant commerce technology replatforming as online retailers have upgraded their commerce technologies to support increased revenues and to drive innovation,” the authors say.

The report highlights several trends:

  • While 13% of major manufacturing, retail and wholesale firms use homegrown e-commerce technology today, many will move to “more nimble and highly scalable” commercial software.
  • A shift to software-as-a-service, in which vendors host e-commerce software that clients access via the web. While 42% of U.S. companies studied license software that they maintain on their premises, that will change, the report predicts, as more companies “outsource the burden of support, scalability and upgrades to the vendor.” SaaS, also known as “on-demand” software, accounted for 44% of e-commerce software spending in 2013, but that will increase to more than 66% by 2019, Forrester predicts. “SaaS is eating traditional licensing’s lunch.”
  • The changing role of the retail store in the Internet age is driving upgrades of order management systems. Forrester says more retailers are allowing customers to pick up online orders in stores, shipping web orders from stores, showing store availability on their web sites and enabling store employees to order from web inventory. “To manage this accelerating complexity, enterprise customers are investing in order management systems to enable these complex fulfillment processes,” the report says.
  • Mobility is another investment driver. Companies need online sales platforms with the flexibility to handle orders from consumers buying from smartphones and tablets, store kiosks and web-connected wearables, such as so-called smartwatches.
  • Companies are upgrading their platforms more often. While e-commerce platforms typically lasted seven years or longer from 2000 to 2010, Forrester predicts companies that host their own software will replatform every four to seven years between 2014 and 2019, with five or six years being the average.
  • B2B e-commerce will account for a growing part of e-commerce technology spending. Whereas retailers and consumer brands have virtually all deployed e-commerce systems, many manufacturers, wholesalers and distributors are just getting started. Retailers and consumer products companies accounted for 49% of e-commerce software spending in 2013, but that will decline to 33% by 2014; at the same time spending by manufactures and wholesalers will increase from 20% to 30%. Other industries covered include education, government, health care, financial services, media ad entertainment, utilities and telecommunications and business services.

The Forrester report focuses only on larger U.S. companies, those with total revenue of at least $250 million or online sales of at least $50 million. E-commerce software sales to smaller companies worldwide totals $240 million annually, Forrester estimates.


The Forrester report only covers spending on two central components of e-commerce software: commerce management software “used to power online storefronts and manage pricing, promotions, shopping carts and purchase transactions” and the order management systems that “orchestrate complex order processing scenarios from the point of capture through the point of fulfillment.”

Not included in this forecast is spending on related software that manages digital content, product information, site search, product recommendations and mobile commerce. Nor did Forrester include in its estimates fees that retailers and other companies pay technology vendors for consulting and the upfront costs associated with determining the scope of an e-commerce deployment.

Deploying an e-commerce platform is not cheap for the larger companies covered by this report. Forrester estimates the average project costs $1 million, and 15% of implementation projects cost over $2 million. And that’s just the cost of the software: “We expect spending on services to hold steady at five times software spend through the end of the decades,” the authors say.