Revisiting Some Assumptions About SMBs and E-commerce in the Age of Customer Experience
It’s that time of year where it seems like everyone in the known universe and beyond is either organizing conferences, preparing to exhibit or speak at them, or attending them. Accompanying the raft of conferences are announcements and press releases galore, and one in particular from the #IRCE15 event taking place in Chicago this week caught my eye: that hybris has launched a new partner program for hybris Commerce targeting small and medium businesses (SMBs). This program offers a cloud-based “pre-packaged hybris solution” for B2B and B2C customers, which can be offered as a subscription service.
Hybris already has a substantial partnership program in place, with literally hundreds of partners worldwide, so this aspect of the announcement was not surprising. This announcement does, however, raise a few key issues:
- The amorphous nature of what an SMB actually is;
- Whether SMBs, regardless of how they are defined, are actually better served by a pre-packaged solution any more so than larger enterprises are, particularly in the context of customer experience management.
SMB is not one thing
Generally, commerce software vendors targeting very large organizations tend to define those as “enterprise” and require them to have a minimum of $1 billion in annual revenues. Yet there is far from a consensus around what small and mid-sized are. Hybris and other major software vendors, for example, tend to define SMBs as having between $500 million and $1 billion in revenues.
After discussions with commerce vendors who target only companies below the $1 billion mark, it is clear that that there is far from a consensus of how SMB is defined. I’ve heard it defined variously as being up to $10 million or up to $50 billion in addition to the large vendor definition of $500 million to $1 billion, and have also heard phrases like “upper mid-market” and “lower mid-market” as well without accompanying description of what those terms mean. To further complicate matters, official business statistics that national governments collect have their own definitions. Here’s some examples from some of the world’s largest economies:
- Germany: small and medium businesses (the Mittelstand) are up to 500 employees and up to €50 million in revenue;
- Japan: small and medium businesses have up to 300 employees and capital stock of up to ¥300 million, with variations for retail, wholesale, and manufacturing
- United States: does not define SMB at all, instead reporting data by multiple size bands based on number of employees.
(For an in-depth view of how problematic defining SMB is in the context of technology selections, check out this useful post from smbresearch.net that is a few years old but still relevant. And for a closer look at the meaning of defining company size segments in the context of CEM, see my colleague Tim Walter’s post entitled What does “enterprise” and “mid market” really mean for CEM. This post, by the way, is one of DCG’s consistently top ranked blog posts since it was published in late 2013, so it clearly resonates.)
That is not to say that vendors should universally adopt a single government-statistics defined segmentation for what an SMB is – that would be a huge mistake. Naturally, vendors need to develop their own segmentations that best fit their strategies and commercial goals. It is the use of the term SMB externally as part of a customer product or solution that is more problematic. Obviously a company with only $10 million in revenue will not spend a huge chunk of that on their ecommerce platform, putting some vendors beyond their reach. However, it is debatable that when companies are considering vendors for technology selections, they think of themselves above all else, by their size, as opposed to by their industry, internal technology and business capabilities, or other measures. And in this world of digital disruption, where companies need to put the customer at the center of everything they do in order to survive, understanding how customers view themselves is absolutely key for any vendor.
The integration conundrum
Most companies looking to purchase commerce software will already have other solutions that are from a mix of vendors or are home-grown, and of various versions. This means installing a new e-commerce platform – or any type of software, for that matter – will involve some type of integration challenge. Business and IT executives tend to see too great potential risk and cost in a wholesale rip and replace of a company’s entire infrastructure and replacing it with a solution from a single vendor.
Following this logic, an SMB – however you define it – may have less money to spend on software than a large enterprise, but that doesn’t necessarily follow that an SMB will therefore want – or even if they want, are suited for, an off-the-shelf system. A medical device manufacturer with $300 million in revenues that sells to European Union countries, for example, may have more complex requirements than a retailer with $500 million in revenues who sells shoes to consumers in the U.S. Commerce cannot be considered in isolation: it must integrate with ERP, CRM, WCM and other systems that companies already have in place in order to function. And there is no shortage of other vendors targeting the SMB market with cloud solutions who also have solid experience in these other technologies: NetSuite for ERP, Salesforce for CRM, or Sitecore for WCM are just a few examples. It also remains to be seen whether the advantage hybris gains with large enterprises being part of SAP can translate to smaller companies who may consider SAP too expensive or complex for their purposes.
Considerations for prospective buyers
The partners named in the hybris announcement are a diverse group, some of which lean more toward being digital/interactive agencies with technology expertise (Gorilla, BORN) and others more in the systems integrator world (Conexus, CrossView, and Tacit Knowledge). Additional partners are undoubtedly waiting in the wings prior to hybris making their names public. Customers of these partners should ask for references of past implementations that involved integrating hybris commerce with their clients’ other systems in a quick and cost-effective manner and providing the necessary post-implementation training and support. Companies that have been considering hybris as an e-commerce platform but had taken it off their shortlists thinking it is priced and aimed at much larger enterprises, should consider taking a second look in light of this announcement. Just be sure to do your homework first in surveying your internal stakeholders and gathering requirements so you are viewed not just as an SMB, but also as a customer with a unique set of needs and challenges.