Why are eCommerce companies now also software companies?

Care to share?

I remember the times when Amazon started its AWS. It was just an idea, and then it became the biggest cloud business of today. From that moment, we see more and more eCommerce players re-selling their own tech and getting traction.

The Amazon step was a brave move and, as a result, they have built an amazing business. 

Another very well known European example is Ocado. But other players are also following the path of developing and then sharing their software. Just take a look at About You (https://cloud.aboutyou.com/) or The Hut Group (https://www.thg.com/). We also see some eCommerce platforms as a spin-off of successful retailers, such as commercetools, based in Germany (born out of REWE) or Spryker (a team that was and is in a close relationship with Zalando).

Why does it make sense for a retailer to buy technology from another eCommerce company?

Well, good software is something more than just code, good software delivers know-how and helps to run a business successfully. That’s the basis of all reasons for which retailers appreciate and buy software from eCommerce companies:

  • The eCommerce players know how to run an eCommerce business and this know-how is a part of the software they offer. 
  • Industry expertise is hard to obtain. 
  • Talent is super-limited – if a retailer can use something out-of-the-box and make a production process faster and cheaper, he will.

Why does it make sense for an eCommerce company to sell its own software?

If you are an eCommerce company with expertise and experience in software development, you should consider selling this outcome because:

  • You can share the cost of your IT with others and be more innovative.
  • You can still be the first to test new features.
  • You can build your position and alliances, thanks to all other players using your software you gain power.
  • You can build IT product-company culture much easier, and you can attract talent much easier.
  • The marketplace is the best model for eCommerce and to build a marketplace you need to unify supply to build an extensive catalog of products. If your vendors are using your software, integration is much easier (on the tech level but also on the business level).

A real-life example

For these reasons, at Divante we have a similar approach. We see that many (or at least some) retailers want to be eCommerce, or rather digital-first, companies, and working with these leaders is incredibly satisfying for us. Our teams are ready to invest extra time and give exceptional engagement to help them transform their businesses by building cutting edge products together. Often, we keep developing these products and sometimes resell them to other retailers. All this makes sense, and to be honest … we see this is becoming more and more popular.

Retailers appreciate solutions built out of hands-on experience. 

What is your approach? Please share your thoughts in the comments.

Divante Innovation Lab: we turn your ideas into products

Published November 20, 2019