Adobe’s Magento acquisition made some industry analysts speculate that the e-Commerce platform is merely the best of the rest, with Salesforce having picked up Demandware toward the end of 2016 and SAP acquiring Hybris a few years before that. But in fact, Adobe’s move signals a smarter strategic investment than the deals that came before, and the company is making a loud statement regarding the future of e-Commerce and the customer path-to-purchase: it’s a non-linear, real-time experience and marketers need an even more comprehensive, end-to-end solution.
With this move, I think there’s an even bigger rationale beyond Adobe’s ability to “make every moment personal and every experience shoppable,” and it starts with Amazon and the rise of direct-to-consumer brands.
Amazon is the biggest disrupter of retail in the past two decades, but the microbrand industry — companies like Adore Me, Casper and Allbirds (which interestingly just launched Shake Shack-branded sneakers) — is nipping at its heels. While Amazon’s GMV rose 31% last year to $186 billion from $141 billion in 2016 (according to forecasts by JP Morgan), conservative estimates show growth to at least $140 billion in the microbrand industry based on Magento B2C, Shopify and BigCommerce alone.
Adobe is making a bet that this federation of relatively tiny brands with disruptive DNA together hold the keys to the future.
According to Bryan Eisenberg, Partner at Buyer Legends, “there are a lot of ways to ‘Be Like Amazon’, and Adobe has had ambitions to complete their cloud offerings for a while now. Magento has a diverse mix of clients who sell through their platform and Adobe is making a bet that integrating the Magento platform with their marketing and creative clouds could potentially be disruptive.”
Brands should be excited by this decision, as it will bring about more robust competition and ultimately elevate experiences. Because of the new wave of e-Commerce enablers like Shopify and Magento, microbrands have a lower barrier of entry into the market. Retailers like JCPenney are stuck with IT and other organizational baggage — it’s no coincidence the retailer’s CEO announced he’d be moving on to home improvement store Lowe’s today. On the flip side, microbrands are hyper-focused on the customer experience, leaving operational headaches to the likes of Adobe.
For Adobe’s competitors, however, this move should be a wake-up call. While Microsoft is already an Adobe partner, Oracle and SAP will need to level up their game as the marketer’s need for proving the value of the customer experience gets more challenging.
In “The State of Engagement: Bridging the Customer Journey Across Every Last Mile,” the CMO Council found that only 10% of CMO members surveyed are able to tie customer experience success to bottom-line business goals (growth in revenue, sales increases, etc.). To succeed in today’s retail climate, brands need to be able to harness the power of user-generated content, providing thorough analytics — engagement, ORs, CTRs, CPCs, conversions — down to the specific asset so that CMOs and other executive stakeholders can better measure ROI.
There’s a reason direct-to-consumer brands are gaining an edge on traditional retailers, and it stems from a better-than-anyone-else understanding of who is buying the product and how that specific consumer likes to be communicated with. Microbrands have built real relationships in the era of fake news.
The challenge now facing Adobe is how to translate this action into becoming the de facto agent for microbrands, and it won’t be easy. Multiplying channels, agile tech platforms, on-demand insights and analysis is the baseline that today’s direct-to-consumer brands demand. Fast responses to customer feedback and on-the-fly product iteration over a consistent period of time is fueling the “overnight success” of these digital natives, and owning the tech foundation to support this value creation is Adobe’s first step towards success. I predict that the Clouds will soon enter a war for domination for the best e-Commerce tech in the biz.
Tomer Tagrin is the co-founder and CEO of Yotpo, the leading customer content marketing platform for commerce brands. Thousands of businesses — from established companies like Staples and TYR to fast-growing, digitally native brands like UNTUCKit, MVMT Watches and Esurance — use Yotpo to collect and leverage every type of user-generated content to increase trust, social proof and sales. Tagrin was a chip designer for Intel before co-founding Yotpo, and a software engineering major at Tel Aviv University before that. An e-Commerce junkie, he passionately believes that great brands are built on happy customers.