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Why do the 1,000 biggest online stores use 66 different email marketing platforms?
As part of the “German e-commerce market 2019” survey, we looked at whether Germany’s 1,000 biggest online stores carry out email marketing and, if so, how they do it. Although email marketing has been an established technology for some years now, there is no consolidated market and little differentiation between the various tools used. We were able to identify a total of 66 different email service providers, but these include a few key players: altogether, the 10 most frequently used platforms serve 76% of the online stores surveyed, while the 20 most popular serve 88% of stores. In 2019, there were 11 newcomers compared with the previous year’s survey, making up a combined 2.3% of the email service provider segment.
When is a market a market?
Using our findings, we were able to determine the market shares of the various email marketing platforms, and draw some conclusions about the nature of the market itself.
When we surveyed the email marketing practices of some 3,700 stores in the US back in 2016, the question came up whether it’s okay to lump together powerful multichannel platforms with lean, streamlined self-service email platforms – or if it’s like comparing apples and oranges. In other words, are we actually talking about multiple markets that are in competition with one another?
To get a better understanding of this, we sorted the 66 platforms from our 2019 survey according to their range and depth of functionality, strengths/focus, integrated channels, and the availability of personal account management and professional services. We were able to divide the providers into four primary groups:
- Multichannel marketing: Emarsys, Episerver (Optivo), Mapp and Cheetah Digital
- Multichannel multi-cloud: Salesforce Marketing Cloud, Adobe Marketing Cloud, Oracle Marketing Cloud and SAP Marketing Cloud
- Regional and email focus: Inxmail, Xqueue, Agnitas and Mailingwork
- Self-service email marketing: CleverReach, Mailchimp, Sendinblue (Newsletter2Go) and Rapidmail
All groups are represented in the five most widely used solutions. We divided up all the online stores into five groups of equal size (quintiles) based on their EHI Retail Institute ranking, and then compared how often the most widely used solution from each of the four email marketing groups was deployed.
We found that Emarsys was the most popular solution with the most successful stores, but this difference quickly levels off. The other solutions are represented relatively consistently. Even if CleverReach, as a self-service platform, is not represented much in the first quintile, in the last quintile it’s right behind Emarsys: all the solutions are represented in every group. So, it’s not a question of separate markets. This is corroborated by the findings in our US survey.
Despite using a different methodology, the results were the same. Although we looked at a different country, a different population and a different definition of size, no selective distinction is possible here either, despite a clear correlation between company size and the tools used. The largest companies tend to use large enterprise solutions, but also supposedly straightforward tools, for their email marketing. In concrete terms, 6% of the “biggest tenth” (decile) used Mailchimp. But why is that?
Maximizing benefits vs. minimizing costs
Which platform is the right one?
When it comes to selecting a platform, companies have two different strategies: maximizing benefits or minimizing costs.
The “benefit maximizers” want to get the most out of each customer – i.e. optimize the customer lifetime value. Generally speaking, to do this they need a comprehensive multichannel solution with cross-channel journey orchestration, all of which means they’re willing to invest in technology, consultancy services and other professional support.
By contrast, the “cost minimizers” want functional email marketing without any frills. They send successful marketing emails, but forego more costly technological integrations, complex automation and cross-channel prospect tracking.
Both strategies can be found in each segment, and both ultimately have the aim of achieving the highest possible margin. The potential customer value may be one criteria: the potential sales revenue is presumably higher for a furniture store than for a store that specializes in contact lenses. So when choosing a tool, the “strategy fit” is much more important than the tool’s individual features or even the cost.
These strategies are not defined or formulated as they are here at individual companies. But they do explain why there is only one market, although it is a fragmented one. We’ll continue to observe how the trend unfolds over time.