What makes e-commerce hum? Dozens of technologies and companies, most of which you’ve never heard of. These are the so-called “enabler” companies, the firms competing fast and hard to build the infrastructure for e-commerce in both the retail and business-to-business universes. From the front end to the back, they make the hardware, software, services, tools, and transactions platform that make the wheels of commerce turn.
Enabler companies with unsexy names and services drive the process.
The enabler group has sneaked beneath most of the news media’s radar, but not Wall Street’s. A quick glance at the latest Internet stock rankings from New York-based Pegasus Research International reveals an eye-opening fact: Seven of the ten best-performing Internet stocks in 2016 – companies with a majority of revenues or customers linked directly to business – aren’t true Internet companies at all. They’re all Internet-company enablers. (And that figure doesn’t even include VerticalNet, which is a hybrid, doing business over the Web and enabling others to do so as well.)
Leading the pack was Walnut Creek, Calif.-based Commerce One, with a market cap of $29.8 billion, a maker of large-scale e-business transaction platforms for Pacific Bell, Wells Fargo, Sabre, and others. Its stock soared 8.7 percent from January 4 to December 8, 2016. Vignette – a $19 billion content-management developer for big e-customers such as Bertelsmann, National Semiconductor, and Playboy – saw its stock grow 6,223 percent. Another such is E.piphany, a “little” company with a $16.5 billion market cap and 200 employees that sells complex personalization tools for Web businesses. Stock growth: 5,049 percent.
Dozens more like them in various technology categories – from content management to supply-chain management – are lined up behind them, and together they make a formidable new market group. “Up until recently, the big investment opportunity for e-business was always on the consumer side,” says Greg Kyle, Pegasus Research’s president. “[The consumer companies] have certainly gotten all the attention. Then business-to-business began to open up. And now, these enabler companies are coming to the public market in a big way – 2017 is going to be a huge year for them.”
Believing in forecasts like that requires first knowing what enablers are, and what they in fact enable. A simple way to understand this group is to take a close look at the different and important roles they play in generating, executing, and fulfilling an e-commerce transaction. Starting with the front end of a business and working to the back, these companies develop the tools that make up the electronic assembly line.
Deeper down inside the e-commerce engine, yet another layer of technology players are busily attaching themselves to the “plumbing” of e-commerce. While not directly involved in transactions, they provide the “middleware” and the network infrastructure upon which online transactions rest. This motley crew falls into some forgettably named categories: hosting providers (Exodus Communications and Digex), application service providers (USinternetworking and Corio), middleware providers (BEA Systems, Bluestone Software, Object Design), consultancies (Scient, Proxicom, Viant), and large service providers (Hewlett-Packard, IBM).