Future of eCommerce: Why is IBM divesting its platform to HCL?
Why are Leading Providers of eCommerce Platforms Dumping their Solutions?
In December 2018, IBM made the announcement they would divest their eCommerce platform along with other digital marketing and customer experience solutions to HCL Technologies in a deal worth $1.8 billion. The news took many longtime IBM WebSphere Commerce customers and business partners by surprise, after all, IBM has for years been a named a Leader in Gartner’s Magic Quadrant for Digital Commerce. Understandably, IBM customers and partners were left wondering how the deal would impact their business moving forward.
However, the biggest question undoubtedly on everyone’s mind has to be: why is someone that has been an eCommerce leader for over ten years abandoning their entire digital commerce business? Aren’t eCommerce sales growing by double digits year-over-year?
You’re right to wonder. Recently, in Internet Trends 2019, Mary Meeker reported that eCommerce sales grew over 12% in 2018 and continue to grow at a similar rate in 2019. As she typically does, Mary also shared insightful information around consumer behavior that can help us understand why some vendors are giving up on their eCommerce business. In this year’s report she highlighted:
- Use of mobile and other connected devices continues to grow at the expense of desktop/laptop device usage
- Consumers use a growing number of social media platforms multiple times per day.
- Consumers doubled their use of Facebook platform’s short form video like Instagram stories in one year to 1.5 billion daily active users
- Amazon Echo’s install base doubled in a single year
- There are twice as many wearables in use today as there were four years ago.
In my past life as a Forrester Research Senior Analyst, I was at least partially responsible for more of these statistics and therefore understand the potential these touchpoints and more have for transforming the transaction experience. We are already seeing the rise of shoppable Instagram posts. Leading brands are already experimenting with shoppable video. Consumers can now order groceries from their refrigerator. We’re very quickly entering a new era of eCommerce: one where eCommerce doesn’t look like a web storefront.
The reality is, many eCommerce platforms like IBM’s WebSphere Commerce weren’t built for the world we live in today, they don’t easily handle these scenarios, and they’ve struggled mightily to evolve to fit in this new world of eCommerce. They were created 10 plus years ago when online shopping was done on desktop computers. IBM had to place its bets on what would drive its business forward. Unequivocally, business applications and WebSphere Commerce in particular could not be that bet, and instead they’ve focused on cloud infrastructure.
Now shoppers want brands to meet them where and when it’s most convenient and they have little patience for buying experiences that don’t fit the way they live and work. How many of you have clicked a social media ad only to be redirected to the merchant’s website? Nine times out of ten that point of friction is where my purchase journey ends and the merchant loses a sale. I simply won’t bother to navigate the storefront to find the item that caught my attention. Unfortunately, this scenario plays out daily for millions of consumers in different ways because the brands they attempt to buy from don’t have an eCommerce platform that can support all their customer touchpoints.
For IBM and other eCommerce platforms that were built for the desktop browsing era, support for these modern commerce scenarios requires them to rebuild their eCommerce platforms from the ground up with new technology stacks and architectures. Obviously, IBM has decided that work was not something they wanted to take on and instead handed the job over to HCL Technologies. The future for WebSphere Commerce as part of the HCL portfolio is still a massive unknown.
Fortunately, WebSphere Commerce users have options and can take control of their own destiny. There are modern commerce platforms and architectures readily available and many businesses are gravitating towards API-oriented or headless commerce, where all functions are decoupled services. Since headless commerce provides all commerce capabilities through an API, information is available to any and all customer touchpoints on a consistent basis, eliminating the need to build separate commerce solutions for every channel and avoiding the situation where your commerce platform can’t handle a new touchpoint or experience. The businesses that pull away from the pack aren’t the ones that solve for today’s market well. They are the businesses that can solve for the next change most quickly.
Here at Elastic Path we have helped many businesses make the switch to headless commerce and move beyond the desktop era to engage and transact with customers wherever they are and however they want, on a single commerce platform.
If you’d like to learn more about headless commerce, whether it’s right for you, and how to make the switch, visit elasticpath.com.