Ecommerce software vendors get warned over future

Vendor confidence in the European ecommerce software market may be misplaced in the short term, according to a study from Frost & Sullivan.

Following growth of nearly 130 per cent during 1999 the European ecommerce software market was worth $267.3m. Frost & Sullivan has warned that it is unrealistic to expect this rate to be maintained, stating it is symptomatic of an immature market, despite many vendors predicting brisk growth for the long term.

After an initial boom period, Frost & Sullivan predicts growth will be maintained at a steady rate, but below vendor expectations.

While bandwidth increases will benefit the market the study predicts costs of implementation and rising deployment will counteract the improvements made.

The promise of a lucrative market has attracted vendors from CRM and ERP sectors and this migration is one factor the study points to as weakening the European ecommerce software market. For this reason Andrew Tanner-Smith, industry analyst at Frost & Sullivan, predicts there will be a major consolidation of the market within the next two years.

Tanner-Smith added that businesses were also looking to cash in on a perceived lucrative ecommerce market - a factor that will help drive sales. He said: "High profile internet start-ups have encouraged small businesses to look for online markets. Venture capitalist funds, lowering barriers to entry and the adaptability of small firms are pushing revenues in the SME market for ecommerce software to $465m in 2006."

On a regional level there will also be a shift in the balance of power within the market. Previous market-leaders, Germany, Scandinavia and the UK will see increased competition from France and Italy, with France's rise coming about largely to the detriment of Scandinavia.