hybris Preparing Growth Capital for Merger with iCongo

What will happen to hybris, who has been gradually eroding Intershop's market share of major internet retailers and online manufacturers? To learn more it is sometimes helpful to throw the speculation out into the open.

After almost all of the first generation shopping system providers have been bought out or otherwise taken care of, it seems now hybris is also looking at an exit/growth solution for its business. According to information provided to Exciting Commerce, hybris is working with private equity investors Huntsman Gay to bring about a fusion with Canadian competitor iCongo. Forrester wrote the following information on iCongo in their latest e-commerce tech report:

[This paragraph was deleted by request of Forrester Research, Aug 22, 2011]

Huntsman Gay Global Capital will become the major stakeholder, whereas the fusioned hybris/iCongo will stay independent with the option of a subsequent IPO (like Demandware) or later buyout (such as with ATG, GSI/Intershop, Magento, etc.).

In the course of the currently ongoing e-commerce revival, it is not only online retailers, but also shop system providers who are looking to cash out or take the next growth jump.

The rapid change and growth potential in the e-commerce market will be covered at the K5 Conference in Munich ("Expect a New Kind of E-Commerce Conference"). The conference is bringing together the leading e-commerce players of today with the growth drivers of tomorrow.

Related posts:

• Demandware IPO, the Exit Trend, Speculations on hybris
• Spreadshirt On The Lookout For Good Offers
• X.Commerce: What Is eBay Doing With Magento?

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Comments

[Jason Soo]

@Moritz and Tom: The sentence has been corrected. Thanks for calling it out.
Hope nobody minded that I used the little "h" in hybris. ;-)

[thomas]

thanks jason. hybris with a small h is correct. even if we might be bigger soon.

[Ludger Vogt]

The flurry of vendor consolidation activity in recent months, including the most recent acquisition of iCongo by hybris, raises questions about the suitability of these new entities to meet retailers' needs. Organisational size and rapid growth by acquisition can sometimes be hindering qualities in an ecommerce partner.

I believe that:-
-Attempts to merge 'like with like' ecommerce platforms only creates integration headaches and unnecessary cost burdens on users
-That many iCongo customers may very well soon find themselves with legacy, unsupported technology that could end up being phased out
-That vendors pre occupied with growth through acquisition and sheer size often lose sight of their customers and their needs
-A significant number of these vendors' customers will now question that strategy and consider a more agile, cost-effective eco-system of specialist partners for their ecommerce needs

How do retailers strike the right balance between scale, service and technical excellence when choosing a multi-channel/ecommerce partner/vendor?

Based on conservative estimates, growth in the e-commerce market is very dynamic, as the latest bvh figures from July 2011 show. To be part of this growth, online sellers need to plan ahead and create the appropriate infrastructures to meet future challenges.

Indeed, strategic alliances are the way forward; bringing together different areas of expertise to create genuine value-add for online retailers. There is little sense in merging direct competitors whose portfolios largely mirror each other’s. Whilst on paper this may increase market share, it is hard to see how store managers benefit. If both parties have very similar offerings, how do they combine their solutions? Their technologies were developed independently of each other - technical integration doesn’t necessarily deliver double the benefit but instead requires additional effort in time, money, and resources.

Compromises are inevitably made to keep costs under control and lenders will want to see a quick return on their investment. It may also be some time, if ever, before online retailers can realise genuine value from such mergers for their own business. Those businesses currently evaluating an e-commerce-solution should bear that in mind.

For existing customers of the iCongo e-commerce-platform, the recent hybris acquisition could mean that the backbone to their online business is a phased-out software model. This will result sooner or later in considerable costs for migrating to the new solution. It is also worth noting that many mergers have resulted in companies tending to get distracted by the associated organizational problems and lose sight of their customers altogether.

Given all these considerations there will be many prospective e-commerce users, as well as existing hybris and iCongo customers evaluating alternative software vendors. Online sellers need to protect their profits and opt for a software provider that is fully focused on enabling them to derive sustained benefits from the growth of e-commerce.

Dr Ludger Vogt, Intershop