The State of the Commerce Platform Market in 2021

The State of the Commerce Platform Market in 2021

With much fanfare, the annual Gartner Magic Quadrant for Digital Commerce is now public! You can download the full report, courtesy of commercetools, from https://ok.commercetools.com/gartner-magic-quadrant .?

As a vendor, we love these reports. Vendors have the right to say anything they want in the market, but we feel acknowledgement from a trusted analyst like Gartner is proof that we’re on the right track. For those of you who’ve never been through one of these evaluations, they require an enormous amount of work from the entire company – at least 500 hours total from 20+ people. A colonoscopy is a great analogy. Company-level evaluations are especially important because SaaS turns vendors into long-term partners.?

Market Trends

In looking at the market for commerce platforms, a number of trends are clear:?

  • Legacy commerce platforms (those built pre-cloud) are clearly on the decline. I would name names, but it’s not polite to punch down. As I’ve written about before , legacy vendors absolutely cannot modernize old products
  • In my opinion, a few of the legacy commerce platforms, like SAP and Salesforce, have managed to stay relevant through acquisitions (like Salesforce buying Mobify ) and through standalone inhouse initiatives (like SAP building Spartacus ), but as I wrote about in Seven Options Software Vendors Have When a Product Hits End of Life , the “correct but difficult approach is to just sell off or kill the legacy product so that the entire organization can focus on the new product.” These vendors cannot do that for a myriad of reasons, so they will continue to be on the slow decline. Every product (and company, for that matter) has a lifespan
  • MACH Alliance members, like commercetools, VTEX and BigCommerce, have all made substantial gains. Microservices, APIs, Cloud native/multi-tenant SaaS, and Headless are very much the present and future of the commerce platform space. As Gartner wrote in their recent Hype Cycle? for Digital Commerce, 2021 “API-based digital commerce is being rapidly adopted by midsize to large, digitally mature organizations, and is becoming the standard approach for delivery of experiences by the enterprise, even if the underlying application remains monolithic.” If you’re not already investing in API-based commerce, more commonly known as headless commerce, now is the time!
  • There’s a whole crop of commerce platform vendors (many new) going after the market above Shopify Plus but below commercetools/Salesforce/SAP. Vendors like VTEX, Spryker, Kibo, Adobe/Magento, BigCommerce, and Shopware are going after same $25m -> $250m GMV customer. Add in vendors who didn’t participate in this year’s Magic Quadrant evaluation, like Fabric and commercelayer, and customers in that segment have a wide range of mostly good options to choose from. I expect there to be a lot of consolidation in that space over the coming year
  • Almost every one of the 17 vendors evaluated placed better than in years past (yes criteria change year over year but generally, the vast majority of vendors are placing better over time). As I’ve been writing about for a while now, commerce platforms are becoming rapidly commoditized . Commoditization is a good thing for organizations buying a commerce platform and for the few vendors that ultimately make it big. Like many other areas of our global economy, bigger vendors get disproportionally more customers because there are many economies of scale to getting bigger

Outside of this year’s Magic Quadrant, I’m blown away by the vast sums of money now entering our space. In the past year, BigCommerce and VTEX both went public with public market valuations of ~$5 billion. Fabric raised $143m over two rounds. Spryker raised $130m. Fundraising rounds of more than $100m used to be reserved for pre-IPO “C” or “D” rounds but are now commonly seen in B rounds, well before a company has demonstrated product/market-fit.

I recently had an in-depth discussion with Jason Goldberg & Scot Wingo about the state of the commerce platform market. If you’d like to hear more, have a listen to their podcast at https://retailgeek.com/jason-scot-show-episode-270-microservice-platfroms/ .

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How commercetools Placed

?Focusing on how commercetools did, we couldn’t be happier having been named a leader again. On top of that accolade, we made substantial progress up and to the right and were newly named the platform that has the most completeness of vision (furthest to the right). Even though Gartner gives higher scores to vendors with hundreds of offices around the world, thousands of support staff and sales people, and so on, we still did well despite only having ~325 employees and nine offices world wide.

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When speaking about our product, they said

“commercetools ranks first for the composable commerce use case”

and then go on to say

“It can be a good fit for large global organizations with complex requirements, advanced technical skills especially in API management and integration, and strong product management and governance.”

We agree with the need for technical competency, though there are increasingly few organizations out there without strong API skills and some degree of technical competency. We would have done even better in this report had we not spent most of 2020 strengthening the foundation of our platform to support the trillions (!) of API calls we will soon be getting hit with as we continue to sign new and increasingly larger customers.

?The future is bright for us at commercetools. Expect some very big announcements from us in the coming months. We will continue to quickly grow our employee headcount. Over the next 18 months, we plan on more than doubling the size of our product organization. With very little technical debt and scalability/security addressed for the next 5+ years, expect to see a lot of new/exciting features coming out soon.

?Citations

Gartner, Hype Cycle for Digital Commerce, 2021, 13 July 2021, Sandy Shen

Gartner, Magic Quadrant for Digital Commerce, 31 August 2021, Jason Daigler Et. Al.?

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

GARTNER, Magic Quadrant and Hype Cycle are registered trademarks and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.?

About commercetools

commercetools is the world’s leading platform for next-generation B2C and B2B commerce. To break the market out of being restrained by legacy suites, commercetools invented a headless, API-first, multi-tenant SaaS commerce platform that is cloud-native and uses flexible microservices. Using modern development building blocks in a true cloud platform provided by commercetools, customers can deliver the best commerce experiences across every touchpoint on a large scale.?

More information at commercetools.com .

Julia Kurganova

Director of Growth @ Aimprosoft, IoT startups & IT Outsourcing, Dedicated Teams

3 年

Kelly, interesting! Thanks for sharing!

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Rafael Lourenco

Payments & Fraud Globally | COO Ecommerce ClearSale

3 年

Congratulations!

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Mahesh K. Murthy

VP Engineering, Digital @ Alo Yoga | Executive Leadership and Transformations - We are hiring!

3 年

Great achievement Kelly!

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Sebastian C.

Technology advisor | Digital Solutions | IT Services | e Commerce | Future-Proof Business

3 年

Congratulations!!

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Fantastic to be with the leader of the (S)Quad(rant)

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