E-commerce Software Market Size, Share & Trends Analysis Report By Deployment (Cloud, On-premise), By End Use (Food & Beverage, Automotive, Home & Healthcare), By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global e-commerce software market size was valued at USD 6.2 billion in 2019 and is projected to grow at a compound annual growth rate (CAGR) of 16.3% from 2020 to 2027. E-commerce software simplifies complex processes and helps companies manage their inventory, calculate taxes, and manage other business-related functions effectively. Increasing adoption of online shopping among people has led to the demand for e-commerce software among several retailers. For instance, according to the U.S. Department of Commerce, e-commerce sales in the U.S. contributed to around 11.0% of the overall retail sales in 2019. With retailers such as Walmart and The Kroger Co. investing heavily to increase their e-commerce sales, it is expected that the market will witness significant growth over the forecast period.

Reduction in additional costs due to the adoption of online platforms combined with the ease of online business is expected to upkeep market growth from 2020 to 2027. Furthermore, e-commerce software automates business processes by eliminating manual processing errors. The software also provides customers with options to customize delivery date and time, which enhances customer experience. Companies such as Shopify are integrating Artificial Intelligence (AI) tools to help retailers analyze the customer’s buying pattern and estimate the future demand for various products. Owing to these advantages, the number of retailers opting for e-commerce software is bound to rise over the coming years, thereby resulting in market growth.

The increasing adoption of mobile phones for online shopping has led market players such as Shopify to customize their software and operate on these devices. With the high internet penetration rate and the rising number of mobile users, online shopping over these devices is bound to rise. The GSM Association (GSMA) estimates that the internet penetration rate in mobile devices will rise from 48.9% in 2019 to around 60.5% in 2025. Furthermore, the introduction of high-speed internet technology such as 4G and 5G is anticipated to positively impact the growth of the market for e-commerce software.

The rising number of e-tailers is also anticipated to generate huge demand for e-commerce software over the forecast period. E-tailers sell their products and services to customers over online platforms and do not need to own or rent a physical store. Their dependency over e-commerce platforms is high as compared to other retailers. However, data security issues due to the increasing cyber-attacks are expected to pose a challenge for the market for e-commerce software. Market players such as 3dcart are focused on offering solutions that have advanced security features to overcome this challenge. The company provides an e-commerce software platform with additional features that reduce the need of installing insecure modules and plugins.

Increasing adoption of e-commerce software in automotive sector is expected to be the additional factor that is driving market growth from 2020 to 2027. Several, automotive brands such as CruiseMaster, JeepPeople, and Awesome GTI are offering various automotive accessories, parts, and other related services online. These brands are engaged in updating their online storefront channels and are also launching multi-channel initiatives to enhance their business. All these factors are expected to generate growth opportunities for the market players.

Amid the COVID-19 outbreak, governments of various countries have implemented stringent lockdown regulations to prevent the spread of the virus. Shops, malls, and other retail outlets have shut down, which has resulted in bulk buying over online platforms. Limiting shopping of all but life-essential products are becoming a new normal. Retailers are modifying their business strategies accordingly to meet the sudden changes in demand for these products. This factor is likely to have a positive impact on the growth of the market for e-commerce software over the long term.

It is expected that the online shopping trend will continue even after the lockdown regulations are removed. Due to this factor, market players are adopting various strategies to expand their customer base. Companies such as BigCommerce Pty. Ltd. and Shopify are currently offering three months of free trial of their e-commerce software to all the new merchants. Moreover, Shopify is offering discounts, gift cards, free email marketing plans until October 2020, and online support for all the merchants to cater to their requirements effectively.

E-commerce Software Market Trends

The e-commerce software market is expected to witness substantial growth in the coming years. This growth is mainly attributed to the rising number of online stores and online/virtual marketplaces worldwide. In addition, the focus of small businesses and e-commerce companies is shifting towards the adoption of advanced solutions such as e-commerce software. This is mainly to control and manage processes and operations efficiently and effectively. Furthermore, growing prominence of grocery stores, brick & mortar stores, and start-up businesses towards digitization is further supplementing the growth of e-commerce software market.

Due to the outbreak of COVID-19 pandemic, several government authorities across various countries have implemented lockdown and stay-at-home policies to avoid the spread of the virus. As a result, the retail stores, malls, shops, and grocery outlets were shut during the first and second quarter of 2020, which ensued bulk buying across several e-commerce platforms. Retailers are modifying their business strategies accordingly to meet the sudden changes in demand for these products. This factor is likely to have a positive impact on the growth of the market for e-commerce software over the long term.

The demand for e-commerce software is expected to increase over the forecast period as smartphones and mobile devices become faster and smarter, and communication and exchange of information get more convenient and efficient than before. The growing transition from desktops to smartphones is particularly expected to drive the demand for e-commerce software. The rapid increase in the number of smartphone users means more individuals would be exposed to online ads and prompted to consider online shopping.

While the number of individuals owning a smartphone or using the internet remains high in developed economies, it is rising continuously in emerging economies. As such, the growing number of internet users, particularly in the emerging economies of Asia Pacific, Latin America, and the Middle East, is expected to contribute to the growth of the market.

Subsequently, the growing preference for online shipping among consumers is prompting businesses to facilitate online purchase of their respective products and services as part of the efforts to create awareness about their respective websites and drive website traffic, which bodes well for the growth of the market. The growing number of smartphone users is also encouraging marketers to extend their advertising capabilities and promote brands on e-commerce websites, thereby contributing to the growth of the market.

The average online shopper penetration in developing nations, such as India, Brazil, and China, is still lower than that in other developed countries. This means the share of online shoppers in the overall number of internet users is still smaller. However, penetration in urban areas is particularly growing at a rapid pace. The annual spend per shopper on online shopping in emerging economies also remains lower as compared to that in countries, such as the U.S., the U.K., and Germany. Nevertheless, given that the global e-commerce market is poised for significant growth, the number of new consumers approaching online shopping platforms is also expected to increase, thereby further driving the online shopper penetration. The efforts being pursued by e-tailers to ensure a seamless and appealing experience would also encourage online shopping, thereby driving the demand for e-commerce software over the forecast period. 

Deployment Insights

The cloud segment held the largest market share of 77.0% in 2019. This is attributed to the increasing adoption of cloud-based technology across various industry verticals. Cloud-based deployment offers several benefits such as high storage capacity, centralized access, high speed, and reliability. Furthermore, prominent market players such as Oracle, SAP SE, and Adobe, are focusing on investing heavily on cloud-based platforms.

The on-premise segment is estimated to witness a CAGR of over 6.0% from 2020 to 2027. On-premise deployment limits the total ownership to the user and thus reduces the need for additional security. The deployment method provides the user with complete control of the configuration and the updates of the software. Furthermore, the growth of the segment is expected to be hindered by increasing number of startups that conduct their businesses over the internet and companies that have budget constraints.

End-use Insights

The apparel and fashion segment held the highest share of 32.6% in the market for e-commerce software in 2019. This is attributable to the increasing adoption of online shopping of clothing, bags and accessories, and jewelry. Low digital entry barriers for clothing merchants has led to the adoption of online platforms for expanding their customer base. Furthermore, rising disposable income in developing economies coupled with comfort benefits such as door-step delivery services, cashless transactions, 24-hour access to products, and discounts with online shopping has led merchants to opt for digital platforms.

The healthcare segment is projected to exhibit a considerable CAGR of over 10.0% during the forecast period.E-commerce software provides opportunities for hospitals, clinics, and other health institutes to streamline their purchase of medical equipment and other supplies. The shift of medical device manufacturers towards online platforms has generated growth opportunities for market players. Furthermore, integration of telemedicine with e-commerce software is anticipated to enhance patient experience over the coming years, which in turn will boost market growth.

Regional Insights

North America held the largest market share of 37.0% in 2019. This is due to the presence of prominent market players such as Oracle Corporation, Shopify, and Salesforce.com, Inc. Furthermore, rising e-commerce sales in the U.S. is fueling the demand for e-commerce software among various retailers. Retailers are also taking up new initiatives and investing heavily in e-commerce software to gain an advantage in their respective business sectors. For instance, in 2017, The Kroger Co., one of the major retailers in the U.S., announced the launch of its new initiative named “Restock Kroger” that aims to develop its e-commerce and omnichannel businesses.

Asia Pacific is projected to witness the fastest CAGR exceeding 16.0% during the forecast period. This upsurge is attributed to the initiatives undertaken by the government of countries such as China and India to promote digitalization in their respective countries. This has resulted in an increase in the number of internet users. According to the World Bank Group, about 34.5% of India’s population had access to the internet in 2017, an increase of around 12.5% from 2016. This high internet penetration rate has created a huge opportunity for the growth of the e-commerce sector and in turn market players to expand their business in this region.

Increased focus on improving e-commerce sales is driving the adoption of e-commerce software across several countries. The U.S. market is poised to experience impressive progress in the near future. This growth is mainly attributed to the rising adoption of m-commerce, increasing number of online marketplaces, expansion of international or cross-border e-commerce, and implementation of cloud-based platforms and technologies such as AI, IoT, and blockchain among others.

Countries such as India and China are likely to present potential growth opportunities for vendors of e-commerce software due to the growing e-commerce market in the Asia Pacific region. Moreover, blockchain technology is expected to emerge as a potential trend transforming the e-commerce software market in the region. The blockchain technology have significantly transformed the e-commerce space and in turn is fueling demand for e-commerce software.

Key Companies & Market Share Insights

The market for e-commerce software is moderately fragmented and characterized by intense competitive rivalry as there are several market players conducting their business operations worldwide. The top 5 market players accounted for more than 45.0% of the total market share in 2019. The market for e-commerce software has witnessed various inorganic growth strategies such as acquisitions and mergers, partnerships, and collaboration adopted by companies over the recent past. For instance, in March 2019, Shopify announced the acquisition of Handshake Corp., an e-commerce platform provider for B2B wholesale purchasing. With this acquisition, the company plans to enhance its business in the B2B e-commerce sector.

Market players are also focusing on expanding their business by launching various partnership programs across different regions. For instance, in September 2019, SAP SE announced the launch of its “Foundry” program in Germany. According to the program, SAP SE plans to utilize solutions made by start-ups in Munich and integrate them with SAP’s commerce cloud solutions. With this program, the company aims to enhance its customer experience in marketing and commerce cloud solutions. Some of the major players operating in the e-commerce software market are:

• Shopify

• SAP SE

• Salesforce.com, Inc.

• Pitney Bowes Inc.

• Oracle

E-commerce Software Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends from 2016 to 2027 in each of the sub-segments. For the purpose of this study, Grand View Research has segmented the global e-commerce software market report based on deployment, end use, and region:

• Deployment Outlook (Revenue, USD Million, 2016 - 2027)

  • Cloud

  • On-premise

• End-use Outlook (Revenue, USD Million, 2016 - 2027)

  • Apparel & Fashion

  • Food & Beverage

  • Automotive

  • Home & Electronics

  • Healthcare

  • BFSI & Technology

  • Others

• Regional Outlook (Revenue, USD Million, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

  • Europe

    • The U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa