Amazon has become the dominant force in retail in the past two decades, but Adobe’s recent acquisition of Magento proves that eCommerce is no longer just Amazon’s game.
This, following Demandware’s acquisition by Salesforce and Hybris’ by SAP, speaks to the growing allure of ecommerce. Certainly, more and and more companies will sell on Amazon as a function of brand visibility on the digital world’s premier retail display shelf. But the pull to direct-to-consumer commerce will prove a stronger force for brands that want to build relationships with their customers…and profits.
This is exactly why Adobe put a $1.68BN bet on Magento. The move is sending shockwaves across the entire retail technology industry and has significant implication for eCommerce, tech companies and brands alike.
Big Tech and the next frontier
For technology giants serving brands, it is apparent that ecommerce is becoming the new frontier for digitization and customer experience. Microsoft is partnered with Adobe, but will they explore their own acquisition? The same goes for Oracle, who, despite having a homegrown platform and Bronto eCommerce marketing software under its belt, might already be assessing other promising players. Essentially, ecommerce has become more strategic for big tech. Just look at the multiples: Magento commanded 11.2x; Demandware, 11.8x.
Looking at the continuing phenomenal growth of later entrant Shopify, ecommerce is poised to be the most exciting (and optimistic part) of retail in the years ahead.
Microbrands go macro
Speaking of exciting, the move is also a vote of confidence for next-generation brands. The love letter to “microbrands” published by Adobe’s chief product officer Scott Belsky in March has come full circle, a validation of the massive impact of Magento’s primary B2C customer base as the enterprise brands of tomorrow. The microbrand industry is poised to exceed $140B in sales this year based on gross merchandise volume forecasts for Shopify, Magento and BigCommerce. Compare that to Amazon’s $186B, “micro” is starting to look like a misnomer.
Further, the ecommerce experiences of disruptor brands (like Meghan Markle’s favorite, Birdies Slippers) are already known to be high-style, but Adobe’s superior offerings in content and design has potential to really raise the bar.
Tech entrepreneurs for the win
A thriving upstart ecommerce ecosystem supporting and growing those microbrands has flourished in the shadow of Amazon and the great retail fail. Magento has mastered connecting the global ecommerce community–merchants, tech partners and eCommerce-expertise agencies like BORN and Gorilla Group–to move the industry forward. As the Magento fairy tale demonstrates, journeying from open-source platform to eBay acquisition to going private to Adobe today, value creation is a long-term endeavor, and it takes a village.
So, who will win?
Growing in size, scope and clout, commerce clouds will continue to amass ecommerce capabilities, but the big question will be who will build the best brands of the future? My bet is on the one with the best brands to begin with.
Tomer Tagrin is the co-founder and CEO of Yotpo, a customer content marketing platform for commerce brands like 1-800-Flowers and Esurance.
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