OFBiz Tutorials - Enterprise eCommerce Stats and Interperetation

OFBiz Tutorial article that takes a minute to evaluate the current enterprise eCommerce landscape as it relates to pricing and costs for the user.

Using data compiled by B2C Partners, it is estimated that the size of the US market for online retail sales was $415 million in 2008 (conservatively). B2C Partners used the following method for their estimate:

• $166 billion of online revenue in 2008
• x3% revenue for development and technology (ref. A)
• x50% dev/tech for site improvement / vs. support (ref. B)
• x50% eCommerce platforms third party / vs. in house (ref. C)
  
• x33.3% year 1 costs on software / vs. services to deploy (ref. D)
  

We will use ref. A through D to refer to analyze and modify these points throughout the post.

Line A is the percentage of revenue spent on software development and technology. B2C Partner's source, SORO Report 2007 Forrester Research and Shop.org, the range is between 3-5%. With 5% having a larger impact, it would push the market from $415 million to over $690 million which sounds more realistic.

Line B appears straightforward. There is difficulty between distinguishing between improvements and support, but not enough to alter this percentage point much.

With lines C and D we have noticed some interesting anomalies. HotWax specializes in enterprise eCommerce and ERP applications using Apache OFBiz. Apache OFBiz is an open source suite of eCommerce and ERP applications. Some clients have viewed OFBiz as a 3rd party platform, while others see it as the root of their in-house platform. Neither viewpoint is wrong, OFBiz's use depends more on the clients internal tech staffing and how they use the platform.

This realization has the effect of making the market larger from our perspective because we could then count revenue from the 50% that implement a 3rd party platform as well as the 50% that use an in-house system. That would result in an addition $2 billion in market opportunity.

Line D divides the software spending by 1/3 to differentiate between licensing costs vs. services to deploy. OFBiz is free and open source which means that our clients do not sacrifice 1/3 of their annual budget on licensing. This makes line D unnecessary for our evaluation.

Now, we add $2 billion for 3rd party vs. in-house distinction (C), keep the 33.3% for licensing fees (D), and with the 5% revenue number (A), we come up with an enterprise eCommerce and ERP online software services market that exceeds $4 billion (in retail). This is a far cry from $415 million.

This is achieved using the following points:

1. A system has an advantage if it offers the client the options of in-house development or 3rd party reliance.

2. Using Software that does not require a licensing fee represents a huge opportunity for increased returns on project investment.

3. Vendors that are well positioned to deliver implementation services on open source enterprise systems have a lot of budget to use if they can make the case effectively to online retail business owners and corporate CIOs!

Enterprise eCommerce offers limitless possibilities for businesses to grow and expand. By analyzing needs and requirements, there are many places where a company can cut costs and increase revenues.