When chief managers finally become satisfied with their company’s market position, the competition instantly shakes them up and incentivizes them to keep progressing. It is especially the case for the ecommerce industry, which is extremely competitive.
Such giants like Amazon and Walmart, Shopify, and BigCommerce are always competing for a greater market share. To stay two steps ahead, they implement advanced technologies, expand globally, and increase the number of partners and acquisitions.
To help your business stand out in the crowded ecommerce industry, we compiled a list of key actions that market leaders take to get ahead of their competitors.
1. Partner ecosystem
Vendors must acknowledge they can’t cover every corner of the market. However, it becomes possible with an expanded partnership network. Indeed, about 50% of the major global brands already use this strategy and own partner ecosystems.
For instance, BigCommerce, being one of the largest open SaaS ecommerce platforms, partners with more than 2,800 agencies and tech companies. It also provides over 870 integrated apps in its app marketplace. However, that is not the limit as other market players Shopify and Adobe Commerce (formerly Magento) possess app stores of 7,000 and 3,800 solutions.
Even though global ecommerce businesses have large partnership networks, integrations don’t happen overnight. Last year, BigCommerce and Shopify announced no more than 8-9 new integrations. Another shopping cart platform, Adobe Commerce, connected only with three partners in the period between July 2021 and July 2022. Hence, even for global players, integrations are still a time-consuming, labor-intensive manual processes.
It might look like the benefit of the partnership comes as a deferred income. However, it might be achieved much sooner. Some SaaS platforms oblige partners to pay a specific monthly fee as a member of their marketplace or an app store. For example, in the Shopify ecosystem, app developers pay the 20% gross revenue tax every month.
How to build and grow a partnership ecosystem
Before starting any cooperation, consider one thing: any partnership aims to create additional value for customers. Together with partners, you need to bring more value to users than you could manage alone while both parties work separately.
First of all, the integration partnership is based on reliable API infrastructure. It’s better to assess it before contacting a potential partner. Is it scalable? Do you have enough API endpoints to satisfy specific integration?
You should also consider how you will build and manage your marketplace UI. Probably, you will need additional dedicated roles. Plus, the partnership strategy basically requires additional engineers for full-time integration development.
After these preparatory steps, you can reach out to your future partners. Be sure your offer is attractive enough. For instance, mature companies provide their partners with improvement suggestions and integration analytics. Salesforce partners can view statistics directly in their AppExchange account dashboards. Another giant, BigCommerce, offers training and co-branding assistance for its ecosystem members. Shopify allows partners to offer a discount or a free trial version to customers. Therefore, the options you deliver to your partners define the quality of your network.
2. Innovations
Large ecommerce businesses heavily invest in innovations. Since 1995, the biggest online retailer Amazon has filed more than 20,000 patents, most of which fall under logistics and artificial intelligence. In doing so, Amazon became a trendsetter in the industry. Let’s dive deeper into the areas of Amazon’s interest:
– voice assistant backed by AI;
– autonomous vehicles;
– robotics for cashier-less stores;
– drones to support delivery programs.
Another market leader, Walmart, is moving in a similar direction. Last year, Walmart scaled up its drone infrastructure, delivering goods to more than 4 million U.S. households with drones. There is one more disruptive tool that the retailer uses: SaaS platform Spark Driver. The solution connects delivery orders with drivers, making the process even smoother.
Ecommerce websites are becoming more and more intelligent. In recent years, Etsy improved its website search tools by integrating AI-powered computer vision. Now, the add-on enables customers to single out necessary commodities from millions of unique items in a more structured way.
Anyway, the global ecommerce companies put customers and end-users at the heart of their innovation strategies. Walmart, for instance, upgrades logistics systems based on feedback from drivers and store associates, which is just one of many examples.
How to introduce innovations
Entrepreneurs might be overwhelmed when choosing the supportive tool as the ecommerce market is flooded with all types of technologies. The most important criterion you have to consider are real problems needed to be solved by new technologies.
Innovations don’t have to be splashy to lead to structured changes. Make sure to start with gathering customer feedback and overhauling an inefficient process. As an example, Walmart evolves logistics systems based on feedback from drivers and store associates.
To ensure continuous growth, it’s not enough to set up one disruptive tool. A company has to build a dedicated internal environment to regularly incubate new product ideas.
Meanwhile, if innovations pop up too quickly in your niche, it might be the reason to switch to the mergers and acquisitions (M&A) strategy.
3. M&A
Another option to strengthen market positions lies in the acquisition of smaller rivals or promising tech startups. Amazon uses this strategy extensively. In the past five years, the company has closed more than 30 deals to enhance its ecommerce processes.
In some cases, companies acquire other businesses to enhance existing product capabilities. For instance, last year SaaS platform BigCommerce aimed to elevate its B2B edition. For this purpose, the company purchased a B2B quoting solution and a B2B ecommerce application.
On the other hand, large enterprises might be interested in entering completely new markets, indicating a high potential. Here, the M&A strategy of Amazon serves as an illustrative example. The company identified healthcare as one of the booming industries even before the pandemic. Predicting the surge of the market, Amazon made its first moves to enter the industry by purchasing an online pharmacy in 2018. Two years later, the online retailer announced the launch of Amazon Pharmacy.
How to identify an acquisition target
When a legacy company considers acquiring a new company, it is essential to quantify the skills, capabilities, and technology at stake. Let’s uncover these sources of value:
- Software
A buy-side can consider a software platform as the most valuable asset. In this case, the acquired solution would help the legacy company to create and market its digital products.
- Talents
Some enterprises find it difficult to imitate truly cutting-edge talents. After verifying other justifiable metrics of the target business, the company decides to invest.
- Business processes
Instead of redesigning cumbersome business processes, legacy companies often acquire smaller businesses that have more modern ERP and clear-cut operational processes.
4. Emerging markets
Technical development greatly differs from country to country. When shopping online, a user from France expects a customer-centric experience, while a person from the Philippines can’t enjoy such an amount of options. This discrepancy creates opportunities for global ecommerce companies.
For example, the marketplace Ebay found a blue ocean in South-East Asia. Due to travel restrictions resulting from the pandemic, touristic countries like Sri Lanka, India, Thailand, and the Philippines suffered an economic downturn, which was especially harmful to local small traders. However, entrepreneurs found their customers online due to eBay. Using the marketplace for unique items, Asian manufacturers of natural beauty items could sell products internationally.
Furthermore, the trend affected other parts of local infrastructure. New educational institutions appeared in the region to help many aspiring entrepreneurs do business on eBay.
Other ecommerce platforms are also expanding their international presence. This year, the BigCommerce platform has expanded into European and Latin American markets. Pursuing the same goals, another ecommerce brand Shopify started partnering with the nonprofit international organization Young Americas Business Trust. The mission of the collaboration is to motivate youth ventures from Central and South America to adopt technologies into their businesses.
How to enter an emerging market
This approach implies devising new uses for existing ecommerce technology. Everything needed to be done is shifting to a new market. That is where the additional revenue will be generated from. The tactic is especially suitable for SaaS ecommerce providers whose capabilities are outdated.
Answer the questions to revise your opportunities:
- What kind of demand is there on the global market?
- What capabilities do you generally have?
- Which of them do you need to convert or transfer to meet the demand?
In order to ensure success while entering new markets, it is crucial to conduct an accurate landscape analysis.
Conclusion
Ultimately, ecommerce industry evolves rapidly. Market players aim to be first in all directions, including partnership networks, M&A activities, and in-house R&D. Large enterprises tend to evolve their businesses in all of these areas simultaneously. However, not all companies can afford to keep up with giants. Nevertheless, the growth tactics of big businesses are universal at every level: partner with others, improve their technical base, and always look for market opportunities.
01 August 2022
WRITTEN BY
Timothy Partasevitch, Chief Growth Officer at Smart IT. Tim is a sales and marketing specialist, who solves business challenges like an engineer by focusing on data insights, analyzing what works, what doesn’t, and what can be improved from a technical and financial perspective. Over the years he has supported the transformation of new clients into long-term partners and expanded services provided in the work space, ultimately facilitating revenue generation and business success. Tim strongly believes that you can’t be in charge of the outcome and results. However, you are 100% in charge of the input. [email protected]
