Think consumers are fueling the rise in Commerce-as-a-Service? Think again. As B2B corporations deal in transaction volumes that compound the value of B2C deals, wholesalers and manufacturers have the financial resources to spend big when they look to migrate their operations online.
But while the Commerce-as-a-Service market has taken off in only a few years, the industry seems stuck on the notion of providing sellers with the tools to act like Amazon. As research continues to signal a B2B eCommerce market far greater than its B2C counterpart, analysts’ sentiments suggest that CaaS providers may want to shift their services from emulating B2C giant Amazon to emulating Alibaba for the B2B world.
Forrester Research’s statistic that the B2B eCommerce market will likely see $1 trillion in sales by 2020 is frequently cited, but less often mentioned is the fact that by the end of this year alone, the sector is set to see $780 billion in sales – compared to just $304.9 billion in B2C online transactions in 2014.
Similarly, Frost & Sullivan concluded late last year that the B2B eCommerce market as a whole – including Commerce-as-a-Service – will hit a valuation of $6.7 trillion by 2020.
In the most recent research by Forrester, analysts Peter Sheldon and Andy Hoar revealed at Internet Retailer’s conference held earlier this month that they expect manufacturers and wholesalers to outspend B2C players in Commerce-as-a-Service solutions, including tools like content management, inventory management and product information services.
According to Internet Retailer, Sheldon and Hoar said that by 2019, B2B firms will make up 30 percent of all eCommerce technology and service spending; the space accounted for 20 percent of spending in 2013, reports said. At the same time, retailers are expected to make up just 28 percent of eCommerce service spending in 2019, down from 41 percent in 2013.
While the conclusions are once again highlighting the bright, lucrative future of B2B eCommerce, the market climate today reveals that Commerce-as-a-Service providers are already gaining significant traction in a global ecosystem that only a few years ago had no need for such an industry. But so far, the market seems to be focusing on CaaS for B2C retailers, not manufacturers.
Years ago, NetSuite made headlines with the announcement of its entrance into the cloud-based CaaS market through a new software that touted its ability to offer retailers more than a simple Web design service. “We want to make it so anyone can be like Amazon,” NetSuite chief executive Zach Nelson told The New York Times in a 2012 interview.
Today, Amazon is still considered the Holy Grail of eCommerce services. A recent article in Forbes, for example, featured Commerce-as-a-Service pioneer Symphony Commerce, which aims to help retailers compete to provide Amazon-like services. “Any eCommerce service will inevitably be compared to an Amazon experience, and the bar is set high,” Forbes wrote.
There is nothing surprising about B2C retailers wanting to emulate the success and business plan of Amazon when moving operations online. But for B2B sellers, it’s a different story. While Amazon has bobbed up and down within the B2B digital commerce market, recently taking a new stab at the industry with the launch of Amazon Business (a venture analysts say is anything but a sure win), Chinese eCommerce conglomerate Alibaba is at the front of the B2B pack.
In mid-2014, Frost & Sullivan calculated Alibaba’s B2B eCommerce merchandise value to be $27.28 billion, while China itself is expected to emerge as the largest B2B eCommerce market by 2020. With Alibaba’s recent decision to deploy a B2B business model to strengthen its cross-border commerce operations, analysts are fixing their eyes on the corporation to see just how high it can go.
Historically, retailers looking to jump into digital commerce have sought out Commerce-as-a-Service providers that will provide them with an experience similar to that of Amazon. But as the B2B eCommerce market grows, CaaS providers will need to strengthen their reach to manufacturers and wholesalers. In doing so, experts’ sentiments suggests that both CaaS providers and the B2B sellers they service may want to emulate Alibaba – not Amazon – in achieving online success.
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