Category Archives: e-commerce

Thinking small. Here’s what became of the British e-commerce platform industry.

Last week, Shopify, a Canadian e-commerce platform company floated with a valuation of $1.3b. Demandware, a similar business from the US that focuses on meeting the needs of larger retailers now has a market capitalisation of $2.4b. The North Americans have created significant value from this corner of the retail technology market but what happened to all the British e-commerce platforms? We used to have quite a few of these.

ecom platform

Of the 22 vendors listed in the 2009 edition of the e-consultancy platform buyers guide, 18 were home grown. Yet none has gone public, none has passed more than £45m annual revenues and none have made any meaningful impact globally.

It’s not a very positive story and symptomatic of the UK’s inability to capitalise on business opportunities. Although e-commerce has boomed since 2009 and UK retailers are at the forefront of best practice, the 18 remain mostly relatively small businesses serving the local market.

What happened?

Fresca sold out early to BT. Snow Valley was snaffled by Micros. Portaltech went to an Italian buyer. Only three, Venda, Salmon and ecommera (now called Order Dynamics) were strategically set on growth. Venda ran out of steam last year and was sold to Netsuite, And then there were two.

While Salmon and Order Dynamics have managed to both grow internationally and remain British, neither is likely to be a unicorn. But they do have one thing in common and that’s WPP. Martin Sorrell’s firm is a lead investor in Order Dynamics and bought Salmon outright in 2013. Thank goodness for Martin Sorrell otherwise the story might have been worse.

In alphabetical order, here’s what happened to those eighteen platforms listed in 2009. If revenue is “not disclosed” it is below £6.5m and hence not reported to Companies House.

Actinic – an early market leader in e-commerce for small retailers, Actinic was caught out by the move to software as a service. It sold its embryonic cloud business together with its brand name to Oxatis, a French competitor in 2011. The desktop business continues, rebranded as SellerDeck. Revenues are not disclosed.

Fresca – I joined BT Expedite shortly after it bought Fresca, a software as a service platform company. My predecessors had made a smart acquisition as the addition of e-commerce to Expedite’s existing retail software suite helped attract and retain customers. Fresca could have been the British answer to Demandware but BT wasn’t able make product investments fast enough to keep pace with the market. The latest annual accounts show revenue of just £6.5m.

Design UK – A marketing agency that was very early into web development, Design UK still works for brands like Hobbs and New Look. Its marketing continues to reference its in-house software (LavaSuite) although its website claims just nine customers. Revenues are not disclosed

Digivate – this digital agency moved away from its proprietary software to develop on Magento in 2010 although most of its work now seems to be conventional PPC and SEO business. Revenues are not disclosed

eCommera – The most glamorous British competitor, eCommera attracted funding from Tom Hunter and Martin Sorrell while winning high profile accounts such as House of Fraser and Asda. It began as a Demandware integrator but raised £25m in 2014 to reposition itself as “cloud software and big data company and to conquer American. Renamed OrderDynamics after a Canadian software vendor it acquired, the business now commercialises decision support and order management software. Latest accounts show revenue of £25m with operating losses of £5m.

e-inbusiness – Proudly trading as “Yorkshire’s largest e-commerce agency,” e-inbusiness renamed itself eibDigital, now builds on EPIserver and boasts Hallmark among its customers. Revenues are not disclosed.

Ekm – specialising in templated sites for micro-businesses, Ekm now claims to power one in five online stores in the UK and has opened its own sites in France and Spain. Revenue is not disclosed.

eSellerPro – focused on helping brands manage large volume/complex assortments on the leading market places (eg eBay), eSellerPro recently rebranded as Volo Commerce. It boasts 90 employees and reported turnover of £4.5m.

Imano – in 2009 it commercialised its own e-commerce platform called CommerceNow with clients including Radley and Past Times. Imano still exists but is a pure mobile agency with last reported turnover of £1.2m. It was acquired by Israeli integrators, Ness Technologies, in 2012.

Maginus – the leading Microsoft integrator, Maginus recorded sales of £9m in 2014. Predominantly aiming at the mid-market incuding Fortum and Masons and Smeg, Maginus has taken advantage of its strong Microsoft relationship to position itself beyond e-commerce as an integrator of the full AX software suite.

MoneySpyder – first appeared in the e-consultancy guide in 2009 and is still marketing its proprietary platform based on Ruby on Rails. Target customers are smallish catalogue retailers. Revenue is not disclosed.

Motive – now called E-Motive, this business remains focused on helping brands sell on the large marketplaces but is more consultancy than software vendor. Revenue is not disclosed.

Pod1 – one of the first agencies to build on Magento, Pod1 was very successful with brand-led retailers such as Harvey Nichols. It’s now extended to build on Demandware too and is part of an anglo-American digital agency group called Born. Revenue is not disclosed.

Portaltech – listed as Quicklive in the 2009 guide, Portaltech was one of the first Hybris integrators, listing clients such as Monsoon. By 2010, with sales of £4.5m and EBIT of £0.8m, it was acquired by Reply (an Italian group) for £1.6m. It now claims to be the world leader in Hybris implementation with offices in the UK, Italy and Germany. Turnover is now £13m with operating profit of £3.2m.

Red Technology – operating a proprietary platform called Trade.it, Red continues to invest in new features and has maintained a decent client list including Hotel Chocolat and Crabtree & Evelyn. Revenue is not disclosed

Salmon – the most successful of all the businesses listed in 2009, Salmon built its capability around implementing IBM Websphere for tier 1 retailers including Sainsbury and Selfridges. WPP bought the business in 2013 and most recent financials were turnover £42m and operating profit £3m.

Screenpages – coming into e-commerce very early from a catalogue background, Screenpages moved to Magento from Microsoft in 2008. It has now delivered over 50 Magento projects including Atterley Road and RSPB. Revenue is not disclosed.

Snow Valley – building on Microsoft Commerce Server, Snow Valley listed Majestic Wine and Clarks Shoes among it customers. It was acquired by Micros in 2011 at a time when its revenue was reported as just £3m. Subsequently, Micros was bought by Oracle and, although the old Snow Valley business persists, it’s future isn’t clear.

Venda – the closest thing to Shopify listed in the 2009 guide, Venda was the initial mult-tenanted SaaS e-commerce platform. Founded by Dan Wagner, Venda attracted plenty of customers but racked up losses throughout its existence (see Farewell Venda). Revenue did manage to hit £20m but the business was acquired by Netsuite in 2014 for $50m, rather less than the owners has been hoping for just 12 months previously.

£92m revenue. £53m losses. Farewell Venda.

Venda, one of the UK’s pioneering e-commerce platforms, was bought by Netsuite in July. Customers include Wilkinsons, Laura Ashley and TK Maxx. Founded in 2001, Venda made cumulative pre-tax losses of £53m in its life as an independent company from revenues of £92m yet still managed to pay out a total of £6m in directors emoluments (source: Duedil). Remarkable. venda Netsuite revealed that they paid just $50m for the business. This is way below the valuation of £170m which the press were discussing in 2013, just before Dan Wagner, Venda’s flamboyent founder, pulled its flotation.

The £170m price tag itself was based on a comparsion with Demandware – a competitor SaaS platform – which had successfully floated on a 5x sales valuation in 2012. But Venda was no Demandware and Netsuite’s probably paid only around 1.5x sales. Squeezed between Magento for simple retail e-commerce installations and by Hybris/ATG/Demandware for more complex ones, Venda’s mid-market proposition is less relevant than it once was.

By the time Netsuite bought the business, it had evidently run out of steam. “It’s safe to say Venda was not growing when we acquired them,” said Netsuite’s CEO, possibly because it “had almost non-existent sales teams.” Netsuite made it clear in July that they had bought Venda for its capabilities and people; not for the business.

Fast forward to November 2014 and Netsuite made no mention at all of Venda in their Q3 results.

Since then, things have been quiet other than a snippy comment from client Bonmarche in its annual results. Bonmarche blamed the acquisition for delays in implementing responsive design on its website. The Venda brand may not be important to Netsuite but its roster of high profile retail clients will make trouble if they’re not properly looked after.