The arrival of the shortest day of the year also heralds the arrival of another time: prediction season. This year was a big one for digital commerce, with traditional ecommerce platforms struggling under growing market pressures, major acquisitions like Demandware being purchased by Salesforce, and exciting new platform innovations poised to disrupt the market. So this year I wanted to share some predictions I have for digital commerce in 2017.
Prediction #1: Acquia Drupal will start to power amazing contextual commerce experiences with Magento and Hybris
It's no secret we are excited about Acquia and Magento's partnership to bring to market a platform that combines the best of both solutions. We built the product for Acquia after all ;)
Headless and side-by-side commerce enhanced with Drupal is already in production use by some of the world's best brands, but in 2017 I predict we will see further adoption of this innovative approach. When two systems that focus singular excellence are tied together, the customer wins every time.
Prediction #2: Ecommerce will get simpler and more complicated, at the same time
Stores like Kylie Cosmetics – hosted on Shopify Plus for enterprise – will become more common. The growing sophistication of big data-driven insights and platforms designed for rapid deployment by marketing stakeholders – not IT – is resulting in brands getting to market and capitalizing on circumstances to scale rapidly.
But the backend systems and integrations needed to effectively deliver commerce – much more complex than the needs for a marketing only site – will continue to grow. Marketing automation, analytics analysis, personalization, and rich engaging content will increasingly place more demands on the entire commerce stack to produce results.
Prediction #3: Digital will start to disrupt brick-and-mortar retail sales
Almost 95% of all sales take place in a retail store rather than online. While the digital commerce market will continue to grow, technology that has been disrupting the world of software will expand its disruptive power in the brick and mortar world of retail.
We are big fans of our friends over at Oak Labs, the makers of the innovative Oak Mirror. It's an incredible piece of technology that transforms the changing room experience of a clothing store into an interactive, digital experience. The mirror detects what you brought into the changing room and suggests additional items that would go with the ensemble, increasing in-store sales.
There are many talented companies working to bring digital innovations into the real world and I expect we will see much more of these technologies used in the brick-and-mortar space.
Prediction #4: Shopify Plus will start to win deals from Demandware
According to the Harvard Business Review, up to 90% of mergers and acquisitions fail. While Salesforce and Demandware are two talented companies with amazing products, chances are the acquisition will be disruptive to current and potential customers and this will create an opening for the rapidly maturing Shopify Plus for enterprise to make progress.
Shopify Plus for enterprise will shine in competitive pitches by showing the strength of its ability to scale rapidly to deal with massive traffic spikes, incredible fast time to market, and really inexpensive cost.
Users may need to compromise merchandising tools and offer a simpler shopping experience which makes Shopify a good candidate for sites that need to scale and have low product counts.
Prediction #5: Magento will have a great year
eBay sold Magento to a collection of private equity funds late in 2015 and they run the company as an independent entity. Magento 2 – now more than a year old – is production ready and powering some amazing digital experiences, like for our client Quicken. Independent companies tend to be more nimble and have higher returns than when owned and run as a business of a larger company. And the mid-market has clearly moved in Magento's direction in 2016 and that trend is likely to continue in 2017.
Shopify and Shopify Plus for enterprise both don't really compete with Magento's core market, those that need custom solutions with deep integrations, but can't afford to pay the hefty license fees for Hybris. PHP's maturity – market validation through Facebook, a decade of time to allow young PHP developers to mature into productive software engineers making decisions at companies, and the release of PHP 7 – position Magento as an even bigger threat to Hybris, as customers start to realize Magento doesn't introduce the risks they thought and that they can spend the cost savings on activities that will really move the revenue needle like data-driven design, UX, analytics, optimization, and content strategy.
Prediction #6: Magento will merge with a CMS by the end of 2017
For this last prediction I wanted to get a little crazy but stay with me.
Adobe missed out on buying Hybris in 2013 when SAP purchased the company. This year Demandware was purchased by Salesforce and again Adobe missed out. Magento appears to be the only major digital commerce player left that could be purchased by Adobe to reinvigorate its declining enterprise CMS product Adobe Experience Manager. Integrating Magento would be no simple task for Adobe, as the culture of open-source that permeates Magento clashes with Adobe's closed-source worldview.
Drupal is another potential suitor. The digital engagement value of Acquia Drupal goes up considerably when combined with an awesome ecommerce solution like Magento. While a very remote possibility, a merger of the two companies would make some sense for a variety of reasons. Both Drupal and Magento are PHP/MySQL applications, so the technology, expertise, and hosting are very similar for the two solutions. Both platforms are open-source so there is plenty of philosophical alignment in their approaches to the market as well as how you sell these solutions to customers. Indeed, both companies sell to similar enterprise customers and are based in the United States.
There are very likely others interested in mashing up Magento with their own platform. 2017 is shaping up to be an eventful year for digital commerce.
It's as true in stocks as it is with year-end predictions: speculation is for damn fools. But it sure is damn fun.