MARCH 10, 2015

FOR EBUSINESS & CHANNEL STRATEGY PROFESSIONALS UPDATED: APRIL 1, 2015

Market Overview: Full-Service eCommerce Solutions

by Lily Varon and Peter Sheldon
with Zia Daniell Wigder, Rebecca Katz, and Diana Gold

WHY READ THIS REPORT

Running an eCommerce operation in today’s fast-paced, highly competitive marketplace is hard, and it
just keeps getting harder. eBusinesses must execute many functional areas well — from demand generation
and running the website through fulfillment and customer care — in order to drive profitable sales and
offer great customer service. Fail in any of these capacities and eBusinesses risk damaging the brand and
stifling business growth. eBusiness leaders with limited resources, competencies, and capabilities in-
house to deliver on these complex commerce initiatives are seeking partners to manage all or parts of the
eCommerce operations for them. This report will help eBusiness professionals understand the landscape
of vendors available to manage and streamline any or all aspects of the complex eCommerce processes.

Table Of Contents Notes & Resources

2 What Type Of Company Is Looking For A Forrester interviewed and surveyed 11
Full-Service Solution? vendor companies, including arvato, Baozun,
BrandShop, Digital River, eBay Enterprise,
10 Full-Service eCommerce Solutions Continue
Newgistics, Onestop Internet, PFSweb,
To Evolve
Singapore Post, Speed Commerce, and Yoox
11 The Full-Service eCommerce Solution Group.
Vendor Landscape Is Diverse
Related Research Documents
RECOMMENDATIONS
18 Approach The Full-Service Relationship Like The Forrester Wave™: B2C Commerce
An Open Partnership Suites, Q1 2015
January 13, 2015
WHAT IT MEANS
Commerce Technology Investment And
19 Full Service Is No Longer An All-Or-Nothing,
Platform Trends — 2014
Long-Term Commitment
September 22, 2014
19 Supplemental Material
The Forrester Wave™: Omnichannel Order
Management, Q3 2014
July 29, 2014

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FOR EBUSINESS & CHANNEL STRATEGY PROFESSIONALS
Market Overview: Full-Service eCommerce Solutions 2

WHAT TYPE OF COMPANY IS LOOKING FOR A FULL-SERVICE SOLUTION?

eBusiness leaders are under tremendous pressure to deliver in the face of aggressive business
growth plans, competitive threats, and digitally-empowered consumer demands. When you add
evolving sales and service channels and ever-more global markets on the road map to the mix, even
eBusiness leaders with hefty budgets and a do-it-yourself attitude acknowledge that they could use
a little help. Together with their counterparts in business technology (BT), eBusiness professionals
must work to identify the right external partners to help them win, serve, and retain customers.1

Many Firms Don’t Want To Manage The Entire eCommerce Business Themselves
eCommerce is becoming more important as way of doing business, but the break-neck pace of
change in technology and consumer expectations also means eCommerce is becoming harder
to manage. A small but significant portion of retailers, CPGs, and branded manufacturers are
completely outsourcing their eCommerce operations to a full-service eCommerce solution provider
(see Figure 1). Firms looking to partner with a full-service solution typically exhibit some or all of
the following characteristics:

■ They are launching DTC (direct-to-consumer) eCommerce for the first time. While
eCommerce is table stakes in retail, many industries have lagged behind. Leading CPG firms
and branded manufacturers have had eCommerce strategies for years, but many midmarket
companies in these industries are just getting started. As such, these firms face the daunting task
of building up the eCommerce organization from soup to nuts, including the technology and
operational expertise needed to run an eCommerce business. Many of these firms turn to full-
service eCommerce solution providers for help getting up and running online for the first time.

■ They lack internal resources. Running an eCommerce operation requires competencies across
a slew of functional areas, from demand generation and running the website through fulfillment
and customer care. If a firm is lacking expertise, technologies, or resources across any of the
many areas necessary to run an eCommerce operation effectively, they can rely on a full-service
partner to pick up the slack. Additionally, given the seasonality of most direct-to-consumer
categories, firms needing to support spikes in traffic around the holidays but lacking the
resources to manage it in-house will look to a full-service partner for a high level of scalability.

■ They want to expand into new markets or launch new brands or product lines. Aggressive
business-growth plans translate into road maps and go-to-market timelines that are simply
impossible to meet with limited resources. For global expansion, this requires expertise in local
consumer behavior and expectations, the appropriate business models for market entry, and
countless technology and logistics partnerships.2 Full-service eCommerce solution providers have
an ecosystem of solutions, partnerships, warehouses, and fulfillment operations already in flight
that firms can plug into and become operational much faster than would be possible independently.

© 2015, Forrester Research, Inc. Reproduction Prohibited March 10, 2015 | Updated: April 1, 2015
FOR EBUSINESS & CHANNEL STRATEGY PROFESSIONALS
Market Overview: Full-Service eCommerce Solutions 3

■ They struggle with aspects of eCommerce execution. There is an established tradition to look
for third-party vendor assistance with core business initiatives (see Figure 2). Even if a firm
has a fully functional eCommerce operation in-house, there are instances where they will look
to full-service eCommerce solutions for help. Most commonly, this new partnership can help
brands enter into and operate in new global markets or handle particular product lines (e.g.,
licensed products or brands). Increasingly, however, firms are also looking to hand off core day-
to-day eCommerce operations to these full-service partners in order to focus on areas more
critical for competitive differentiation (e.g., innovation, research and development, product
design, etc.).

■ They have too many cooks in the kitchen. Those firms that have outsourced pieces of their
eCommerce operations to a variety of vendors and solution partners over the years are dealing
with the headaches of incompatible technology architectures, starkly different business user
tools and they are attempting to manage multiple partner relationships at once. These firms
are looking to the full-service eCommerce partners to simplify the ecosystem and bring all of
eCommerce operations together under one roof.

Figure 1 Firms Using A Truly End-To-End Full-Service Offering Represent 8% Of The Market

“How is your eBusiness/eCommerce platform supported today?”

None of the above/

don’t know
10%
Full-service vendor who also supports
fulfillment, customer service,
and marketing Licensed commercial application
8% (e.g., IBM, Oracle, SAP)
28%
SaaS (on-demand) application
hosted and supported by
the product vendor
10%

Open source eCommerce platform

(e.g., Magento)
15% Homegrown solution supported and
hosted by our internal IT staff
28%
Base: 38 eBusiness and channel strategy professionals
Note: Percentages may not total 100 due to rounding.
Source: Forrester’s Q1 2014 Global eBusiness And Channel Strategy Professional Online Survey
119684 Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited.

© 2015, Forrester Research, Inc. Reproduction Prohibited March 10, 2015 | Updated: April 1, 2015
FOR EBUSINESS & CHANNEL STRATEGY PROFESSIONALS
Market Overview: Full-Service eCommerce Solutions 4

Figure 2 Third-Party Vendors Address A Myriad Of Business Initiatives

“What actions are your firm currently taking or planning to take

to accomplish the following initiatives?”
(Hire/outsource to a third-party business/management consultant, digital agency, or technology services firm)

Creating a comprehensive digital marketing strategy 35%

Improving products/services 32%

Better leveraging big data and analytics in business
32%
decision making
Addressing rising customer expectations 31%

Reducing costs 30%

Creating a comprehensive strategy for handling
30%
customers’ multichannel activities
Creating a comprehensive strategy for addressing
26%
digital technologies
Improving market differentiation 25%

Base: 191 to 262 global technology and business services decision-makers who reported
the initiatives are important for their primary production manufacturing,
consumer products, retail, or wholesale firm
Source: Forrester’s Business Technographics® Global Business And Technology Services Survey, 2014
119684 Source: Forrester Research, Inc. Unauthorized reproduction or distribution prohibited.

Firms Outsource Core Commerce Areas To Full-Service eCommerce Solutions

With a keen sense of their own eCommerce technical and operational limitations, firms are looking
to full-service eCommerce solution providers to manage the functional areas core to an eCommerce
business (see Figure 3). Most full-service eCommerce solution providers’ offerings include taking on
some or all of the following core functional areas for their clients, including:

■ Strategy. These full-service eCommerce solution providers are leveraging their experience in
running diverse eCommerce businesses to providing business analysis and strategy consulting
to help their clients plan and grow their businesses. This can take shape in design, benchmark,
and optimization projects across areas like strategic planning, operational processes, and
innovation initiatives.

■ Commerce technology, integration, development and hosting. A few full-service providers

offer proprietary eCommerce technology. Others build their offerings leveraging commerce
suites like Demandware, hybris (SAP), IBM Websphere Commerce, Magento, and Oracle
Commerce and order management technologies such as IBM Sterling or Manhattan Associates.3

© 2015, Forrester Research, Inc. Reproduction Prohibited March 10, 2015 | Updated: April 1, 2015