Research from Gartner:
Cool Vendors in Digital Commerce, 2015

This research focuses on innovative players in payments, mobile, pricing, marketplaces and cloud technologies that can augment or complement enterprises' current digital commerce platforms. IT leaders supporting digital commerce should consider the technologies represented by these vendors.

Key Findings

• Last year's momentum behind cloud-based commerce application environments and results-based licensing agreements (based on usage or revenue) continues as organizations pursue API-enabled ecosystems.
• The highly publicized launch of Apple Pay in 2014 drove increasing interest across industry sectors in implementing new payment options, both online and offline, to drive incremental sales.
• Organizations are seeking growth through marketplaces, by both integrating with established third-party marketplaces and setting up marketplaces as operators. However, for sellers, marketplaces drive commoditization and price transparency that compress margins.
• Price optimization (usually based on competitive positioning) is a critical tool to preserve profits in highly transactional environments.
• Open-source and API-enabled commerce is seeing broader adoption as companies aspire to deploy highly unique commerce platforms, but without the resource and financial overhead of a complete in-house development effort.

Recommendations

• Map the financial, technical and time resources needed to develop an in-house solution against the packaged offerings provided by the vendors addressing this segment.
• Evaluate the niche technologies offered by smaller vendors as possible ways to achieve and maintain competitive advantage.
• Use Gartner's Pace-Layered Application Strategy to balance long-term, foundational e-commerce technologies with short-term, innovative technologies that respond quickly to market demands.

Strategic Planning Assumptions

By 2018, 70% of e-commerce will move from business-to-consumer (B2C) and B2B models to models that focus on the individual customer experience.

By 2018, organizations that have fully invested in all types of online personalization will outsell companies that have not by more than 30%.

Analysis

This research does not constitute an exhaustive list of vendors in any given technology area, but rather is designed to highlight interesting, new and innovative vendors, products and services. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

What You Need to Know

Entering 2015, executive focus on digital marketing, digital commerce and customer experience remains strong. All three initiatives seek to drive growth, profitability and customer loyalty.

This year's crop of Cool Vendors for digital commerce takes different approaches to achieving those objectives. More platform options, new payment methods, better pricing management and multichannel selling tools represent new approaches to the classic commerce equation of audience-conversion-order value.

Apart from their respective technical prowess and differentiation, these Cool Vendors share innovative delivery as the major quality setting them apart from the competition.

Boomerang Commerce

Sunnyvale, California (www.boomerangcommerce.com)

Analysis by David Kohler

Why Cool: Boomerang Commerce promises to solve one of the core problems in multichannel retail and digital commerce: how to grow revenue and margins while remaining competitive in a dynamic, rapidly changing market. The challenge for many retailers in a world of Internet-driven price transparency is staying price-competitive without being dragged into a "race to the bottom."

To do this, Boomerang offers clients a set of tools. It allows an organization to monitor millions of competitor prices in real time; track how customers perceive market prices (what it calls its "Price Perception Index"); monitor internal profitability based on transaction, SKU and product category; and make pricing decisions on millions of SKUs at scale. Other tools, including A/B testing, pricing simulation, profitability monitoring and assortment insights, complete Boomerang's offering.

The competitive monitoring itself is a huge big data challenge. Similar products can be referenced very differently across different e-commerce sites, making the reliability of the data very challenging. Boomerang works directly with major retailers to get source data on hundreds of thousands of products before applying its validation layers to ensure an apples-to-apples comparison. Boomerang claims roughly 100 variables are tracked per product.

However, the real cool factor is Boomerang's automated price management system, which boasts a proprietary algorithm that allows a company to define business objectives (for example, revenue, margin and customer value) and automatically set the best pricing policy to meet those goals. The system theoretically allows pricing or product managers to express what they are trying to accomplish, and then literally press a button to make it happen. Boomerang naturally offers an alternative where organizations can leverage the platform to build pricing strategies along with proprietary out-of-the-box algorithms that Boomerang provides, thereby also allowing control of the business in a more manual, granular way.

Challenges: Retail price optimization is already offered by a number of large vendors, including IBM, Oracle and SAP, as well as retail specialists such as JDA Software and KSS Retail from dunnhumby.

Competition in the space is strong. While Boomerang is currently positioned in consumer electronics, office supplies and apparel, it is less notable in grocery, healthcare and consumer packaged goods. Unlike some of its larger competitors, it is not yet active in Europe, the Middle East and Africa, or South America. Furthermore, its direct-only sales model may limit growth for the vendor in new markets, as many of its competitors have either indirect sales representation or strategic technology alliances through consultancies. However, Boomerang is starting to build strategic partnerships with technology consulting firms and digital commerce platform providers.

Who Should Care: IT leaders supporting digital commerce at big multichannel retailers with a minimum of $25 million in revenue will be primarily interested in Boomerang's offering. Smaller retailers, or those operating in sectors where Boomerang is not yet active, should explore other options for price optimization management.

HotWax Systems

Salt Lake City, Utah (www.hotwaxsystems.com)

Analysis by Chris Fletcher

Why Cool: HotWax Commerce is a digital commerce platform based on the Apache OFBiz open-source environment. The open-source business model enables a company to implement a B2C or B2B commerce solution with no licensing or maintenance costs; customers are able to own the source code for their commerce initiatives, and to control the path and pace of future enhancements. HotWax provides a Java-based development platform, a set of APIs and a common data module shared by all of its applications. HotWax integrates easily with other OFBiz applications available on the market, as well as with Apache Solr and others. The vendor does not charge for its software platform, and generates revenue through development, implementation and related services.

Originally started as an open-source development and service company, HotWax has evolved to becoming a growing commerce platform, albeit one that does not charge for its software product.

Challenges: While open source has been embraced in technology infrastructure, open-source business applications, including CRM and commerce, have had a long road in convincing enterprise customers of their value. The perception of open source as a low-cost alternative to licensed or SaaS applications, appealing mostly to organizations with limited financial resources, has been difficult to change. Organizations have also been cautious about the level of services, whether internal or third party, required to deploy and maintain a complete commerce solution. Companies that are considering HotWax Commerce need to be comfortable with taking on some level of development, and the responsibility for developing and maintaining their commerce platform over time.

Who Should Care: Organizations that are looking for an agile and customizable commerce platform, and that want to limit or eliminate software license and maintenance costs, should evaluate HotWax Commerce. The Apache OFBiz environment also enables companies to leverage other open-source modules and applications, such as Apache Solr for search, to extend their commerce platforms. While part of the cost savings from the open-source model will be used to cover initial and development costs, the organization will then own its commerce platform and the source code, giving it complete control over its commerce environment.

Limonetik

Paris, France (www.limonetik.com)

Analysis by Penny Gillespie

Why Cool: Limonetik offers a unique one-stop payment solution facilitating online payment and loyalty transactions for multiple parties, including large merchants and marketplaces, payment gateways, processors and payment service providers (PSPs), and consumers. Traditional card payment processing (debit and credit) are starting to be viewed by some sellers as a commodity service. Instead of focusing on those, Limonetik outsources these transactions and focuses its SaaS platform exclusively on all other payment types to facilitate digital commerce by enabling merchant acceptance of:

• Traditional paper payments (e.g., cash, vouchers)
• Traditional online (e.g., PayPal, PayPal Credit)
• In-country payment methods (e.g., Alipay, Seamless [SEQR mobile wallet])
• Private-label payments (e.g., gift cards and credit cards)
• Emerging (e.g., mobile, social, gifting, Bitnet)
• Loyalty points.

Limonetik also enables split tender payments among any of these payment types, including traditional credit and debit cards, as well as one single consolidated financial report. For marketplaces, it offers integrated accounting between buyers and sellers.

Limonetik accomplishes this through its single integrated API and by serving as middleware between online sellers and payment authorizers. Its single API allows merchants and marketplaces to connect to multiple payment providers (PSPs) with one integration and enables merchants to easily add PSPs, switch PSPs and A/B test PSPs. Limonetik also standardizes all merchants' forms of payment into a credit card "look" that makes for a more seamless integration. Today, Limonetik serves 100 merchants and 10 PSPs in eight European countries, and supports 50 international payment methods. It has raised $8 million in funding since its inception in 2007.

Challenges: Limonetik's greatest challenge may be that it is still a small vendor in the payment space, and it is challenging for small payment vendors to grow. Merchants are not willing to take risks with payments and are therefore reluctant for their payment volume to represent more than a single digit of the overall payment volume processed by a vendor. This reluctance typically forces smaller vendors to grow one small client at a time, making it difficult for them to achieve rapid growth in transaction volume.

Who Should Care: IT leaders supporting digital commerce initiatives in the following types of organizations may be interested in Limonetik:

• Online marketplaces wanting to accept a large variety of payments in multiple countries, especially in Europe
• Large merchants wanting to accept more-traditional in-store payment types online
• Processors, PSPs and gateways needing to rapidly expand their connectivity to emerging or more-traditional payment types all face problems remedied by Limonetik.

Mirakl

Paris, France (http://www.mirakl.com)

Analysis by David Kohler

Why Cool: Most B2C organizations are monitoring large pure-play marketplaces like Amazon, eBay and Alibaba, and trying to work out the best ways to interact with them. Fewer among them are thinking of how to operate their own marketplaces as an intermediary, rather than a seller. For most, this represents a shift of business model. Rather than, or in addition to, stocking and selling products directly to customers, as a marketplace operator, the organization brings together buyers and sellers, and makes a commission on the transactions.

For organizations with large buying audiences that make them attractive to a large number of sellers, Mirakl proposes a SaaS platform allowing organizations to quickly set up and run their own marketplace. The platform offers management tools for seller relationship and performance management, transaction management (inventory, order and billing) and customer relationship management (trust and security). For new entrants, the SaaS platform provides the essential dashboards and consoles to manage marketplace operations, while for larger, more experienced players, Mirakl offers the possibility to integrate directly with an organization's ERP or digital commerce environment using APIs and other connectors.

Mirakl is cool because it has put together a highly scalable SaaS platform with integration possibilities for both operators and sellers.

Challenges: Organizations planning their digital commerce strategy do not generally think about operating a marketplace. Most consider multichannel commerce options first: digital commerce integration with physical stores, distribution and channel partners, and major third-party marketplaces. Although third-party selling is fairly common in pure-play B2C retailer operations, many brands and manufacturers (outside of IT hardware) don't consider leveraging their market presence to build a marketplace.

With most of its client wins in France and neighboring European countries, Mirakl has indicated the importance of breaking into the massive U.S. market to scale its business. However, several U.S.-based competitors offering various degrees of similar functionality are already active there. Mirakl will need a solid go-to-market plan and clear differentiation in order to make any impact.

Who Should Care: IT leaders responsible for digital commerce for retailers who want to capture the long tail of digital commerce transactions, and potentially complement their direct selling operations with third-party sellers, should consider Mirakl's capabilities. Offering a broader product range without inventory risk is an advantage, but one that should be weighed against the effort required to manage marketplaces effectively.

Brand manufacturers should also consider marketplaces. Brands have a large audience of potential buyers that can attract a big enough community of sellers to make a marketplace scale. It is critical for such brands to select and recruit the right sellers, offering products that complement the brand's own products and positioning.

Powa Technologies

London, U.K. (www.powatag.com)

Analysis by Jason Daigler

Why Cool: PowaTag is a platform that allows retailers, brands and manufacturers to engage with consumers on mobiles devices, allowing a "one touch" transaction or promotional interaction.

Using a broad range of triggers — such as "scan to buy" (on websites, and in print advertising and catalogues, etc.), "touch to buy" on mobile phones and tablets, audio tags (for live and prerecorded broadcasts) and wireless interactions (Near Field Communication [NFC], Wi-Fi geofencing and iBeacon) — PowaTag delivers transactions in the form of one touch purchasing, instant sharing of user details to an advertiser, instant donations and recurring purchases, or delivery of information (menus, coupons, promotions) directly to the consumer's smartphone.

Using this technology, organizations can facilitate purchasing and account sign-ups, or present other engagement opportunities. For example, end customers with a specific app could walk past a beacon in a physical store and discover a coupon on their smartphones for certain brands. Customers viewing paper bills received through the mail could scan quick response (QR) codes and pay bills directly from mobile phones. This enables simple, convenient and often impulse transactions.

Organizations benefit because they can capture the customers' attention and simplify the transactional process at various points in the physical world, without waiting for them to reach a traditional digital commerce channel, like an e-commerce or mobile commerce (m-commerce) site. PowaTag is part of Powa Technologies, which also offers PowaPOS (a point-of-sale hardware and software offering) and PowaWeb (an e-commerce solution including a payment gateway).

PowaTag is cool because it connects the virtual and physical digital commerce worlds, which enables commerce to happen anywhere, from billboards to physical display ads to commercials.

Challenges: The more traditional methods of digital commerce — e-commerce sites, mobile apps, m-commerce sites — are crowded spaces for vendors, with retailers and brands often reluctant to add another check-out flow for their customers. PowaTag will need to grow through its capabilities in connecting digital commerce to the physical world, where organizations are not yet as mature.

Furthermore, there are growing trends toward social sharing and personalization in digital commerce, in which customers are willing to share information in order to get personalized experiences and connect with others — including the use of product advocates, and ratings and reviews. Many customers have come to rely on these technologies to inform their purchase decisions. A main benefit of the PowaTag offering, on the other hand, is that the technology capitalizes on impulse purchases where customers can see a product and purchase it quickly. This assumes that customers don't require a social or personalized experience to complete a purchase. The PowaTag offering may be most well-suited for products where the buyer is more familiar with the brand or confident in the purchase decision.

Who Should Care: Retailers, brands and manufacturers that benefit from sales in physical stores or that market products in physical locations, especially those that will benefit from impulse buys (think apparel more than televisions) are the most likely to benefit from the PowaTag offering.

Where Are They Now?

Moontoast (now Spendsetter)

Nashville, Tennessee (http://www.spendsetter.com)

Analysis by David Kohler

Profiled in "Cool Vendors in E-Commerce, 2012"

Why Cool Then: Social commerce was one of the top online trends in 2012. Since then, and particularly over the last year, clients have been looking at social applications and, in particular, social commerce applications, to drive new revenue, rather than to simply enable light customer engagement. Once-popular models of group buying through popular sites like Groupon have taken a back seat to product reviews, product bulletin boards and even trackable share buttons, which have been proven to increase conversions.

Moontoast was a Cool Vendor because its social analytics enabled organizations to take on the challenge of understanding how social sales occur and what they can do to grow them. Moontoast allowed brands to activate their fans to interact in social networks, such as Facebook and Twitter, and content networks. Moontoast enabled engagement, conversion and revenue generation at the customer point of interaction, embedding e-commerce capability in social networks, mobile, ad networks and affiliates. The solution integrated with an organization's digital commerce platform, distributing commerce capabilities across a network of sites for brand retailers, musicians, athlete/celebrities and authors.

Moontoast's Social Activation Engine enabled brands to effectively focus their social efforts on relationships, relevancy and results. The vendor enabled this by providing a single screen of social analytics that contained information on reach, revenue, social engagement and social participation. It provided trending information on impressions, revenue, fans and followers, enabling the organization to keep an eye on bringing these together to drive revenue and make social commerce profitable.

Moontoast enabled digital commerce merchants to sell through social sites, mobile applications, and advertising or affiliate networks, extending its e-commerce presence in a timely and cost-effective manner. Moontoast also enabled merchants to rapidly adapt to market changes as user preferences change, or as new relationships with ad or affiliate sites develop.

Where They Are Now: In May 2014, Moontoast acquired a mobile marketing company called Spendship. Its CEO, Jason Weaver, joined Moontoast as chief product officer and took over as Moontoast CEO from Blair Heavey in October 2014. He rebranded the company as Spendsetter and moved the headquarters from Boston to Nashville. Spendsetter has since discontinued the Moontoast technology. Its Advocate Marketing Platform allows brands to engage their most influential customers, and reward them for promoting their products and services to their friends and followers.

Who Should Care: IT leaders working for brands seeking to drive customer engagement and loyalty should consider the technology. Moontoast's founders have remained involved in the business as advisors.