The Convergence of Marketing and E-commerce
Marketing and e-commerce are converging, altering user experience for consumers in an unprecedented way. This convergence is no surprise, since companies have been exploring new ways to build their brand and create consumer loyalty. Every consumer interaction is responsible for building an image, and as companies focus on the consumer experience, there is a need to innovate. This consumer experience revolution will enable brands to deliver a unified journey that will be both personalized and available across all devices, leading to a stronger relationship with consumers.
The now-outdated marketing goal for corporations was to identify a particular target market and sell their product. Recently, there has been a focus on the consumer experience, with businesses realizing that creating a more robust relationship locked in consumers for more than just one purchase. This can be done through various strategies, but one that has seen a lot of action is e-commerce. Through the addition of a strong e-commerce platform, companies are able to deliver a standout consumer experience. Gartner notes in their “2017 Hype Cycle for Digital Marketing and Advertising,” that this is one of the most important strategies to focus on over the next 18 months (1). New apps and solutions from leaders in both spaces are creating more personalized, integrated capabilities, and delivering advertisements that feel more like content, rather than simply advertisements. This change of focus is creating brand connections with consumers that build brand loyalty, thus creating a customer experience that is ongoing and not a one-off experience.
Understandably so, companies are focusing on delivering what their consumers want, when they need it, and personalizing these results. Gartner notes that by 2020, smart personalization engines used to recognize customer intent will enable digital business to increase their profits by up to 15%. In this same time span, more than 50% of online sellers will either list their products on marketplaces or sell third-party products on their core commerce sites and 25% of leading online sellers will have enabled first-generation “commerce that comes to you” capabilities (2). Use of these strategies will greatly benefit the consumer, making consumption much more efficient and user friendly.
Some of the benefits consumers will experience, although not a complete list, will include:
- Improved customer satisfaction
- Better content and personalization
- Ability to seem 24/7/365
- Connectivity between devices
- Simplified process
Below are a few leaders in the e-commerce space, which is featured in our Sectorwatch report. These companies provide e-commerce platforms for their clients that deliver a personalized and consistent user experience.
The Market
The U.S. Online Retail market is expected to see explosive growth. FTI Consulting (NYSE: FCN) expects U.S. online retail sales will top $600 billion by 2020 and surpass $1 trillion in 2027, compared to $445 billion in 2017, which will represent a CAGR of 12% through 2020 and 9% over the next decade (3). FTI Consulting attributes a large portion of the growth to Amazon’s (NASDAQ: AMZN) success. FTI Consulting also expects that by 2027, as the U.S. online sales hits $1 trillion, Amazon’s market share of the online sales will be 53%, versus 34% in 2016.
Forrester and Gartner have both identified leaders and other key players in the space, which are shown below. These key players have been able to take advantage of this convergence either through organic growth or through M&A activity. One example of M&A activity fueling growth is the acquisition of Demandware by Salesforce.com (NYSE: CRM) in June of 2016. Salesforce’s largest acquisition at the time helped catapult them into a leader position in both reports. To learn more about M&A activity currently occurring in the e-commerce space, see our latest Sectorwatch report.
Deals to Note in the Industry:
- Salesforce.com Inc acquired Demandware
- Shopify (NYSE: SHOP) acquired Boltmade
- Salesforce.com Inc acquired CloudCraze
- SAP (NYSE: SAP) acquired Roambi
- Salesforce.com Inc acquired Mulesoft
Author: Marty Johnston, Associate at 7 Mile Advisors
About 7 Mile Advisors
7 Mile Advisors provides Investment Banking & Advisory Services to the Business Services & Technology Industries globally. 7 Mile Advisors advises on M&A and private capital transactions, and provides market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, 7 Mile Advisors helps its clients sell companies, raise capital, grow through acquisitions, and evaluate new markets. For more information, including research on the M&A markets, visit www.7mileadvisors.com.
All securities transactions are executed by 7M Securities, LLC, member SIPC/FINRA.
Sources:
(1) https://www.gartner.com/doc/3765365/hype-cycle-digital-marketing-advertising
(2) https://www.gartner.com/doc/reprints?id=1-52RIE1Y&ct=180607&st=sb
(4) https://marketrealist.com/2017/04/why-salesforce-commerce-cloud-has-emerged-as-a-leader
(5) https://www.gartner.com/doc/reprints?id=1-52RIE1Y&ct=180607&st=sb
