Unlocking New Revenue Streams: Acquiring Digital Competitors

The laws of digital dynamics have undermined the barriers of entry for low-key players who can literally emerge from nowhere and tap into markets without having to build distribution networks of local agents or offices. At the same time, most of them will never reach scale and are bound to experience losses (while still having managed to do some damage to incumbents).

If you’re one of the bigger market players who would like to extend your business portfolio, acquiring your smaller digital competition might prove reasonable. However, digital acquisitions are not without roadblocks. Below, we elaborate on the typical challenges of digital M&As and propose adequate solutions to those problems.

Situation

A company, which is already comfortable in the digital realm, may consider acquiring its digital competitor(s) to access their customers, extend the company’s current offering, and explore new markets. If a traditional expansion model (where the company organically grows its consumer base) no longer meets the increasing stakeholder demands and revenue expectations, acquiring a digital competitor can be a successful strategy, especially if the deal price is lucrative.

Challenges

Legacy systems

When acquiring the digital competitor with its customer base, we also acquire our competitor’s legacy system with its pertinent business logic. Since acquired customers have already been accustomed to doing business through the competitor’s front end and have established business practices tied up to the legacy system you acquired, it would be unfair to change that system overnight by imposing your own store’s front end (or perceptions about doing business). In case you try to force your new customers to accept the new platform, you risk losing the fair share of an acquired consumer base. If even a tiny design change requires adaptation, imagine what it takes for customers to adjust to a new B2B ecommerce platform.

To avoid any objections and keep customers happy (if not oblivious) with the change of ownership, you need to have an adequate plan with a less invasive strategy and start implementing it slowly.

To leave everything as it is, on the other hand, is not an option either – the support for any legacy system brings additional overhead costs.

Such a predicament might seem like a Catch-22, but there is a solution – let the customer keep the familiar front end (at least for a while) but dispose of the legacy system.

If you adopt this strategy, you can acquire several competitors a year without experiencing adverse side effects. If, on the contrary, you leave the legacy systems untouched, you risk losing control over the spread-out webwork of diverse systems and supporting teams, and eventually, the acquisition costs would far outweigh the benefits.

As discussed above, the only viable solution is to leave the front end as it is and attach it to your back end.

It becomes possible if you address and solve a few problems.

You need to have a B2B ecommerce platform capable of decoupling the front end from the back end and translating the relevant business logic to the new front end. This way, the only overhead costs you will incur are those associated with keeping your competitor’s front end. The platform that can separate the facade from the hindquarters needs to be headless. The headless platform can attach an unlimited number of front ends (channels) to a single back end, which is capable of translating business logic back and forth between the channels.

Catalog

Another challenge is accommodating and maintaining the competitor’s catalog. Chances are that the acquired competitor had either a different catalog structure or additional positions which your catalog lacks (and vice versa). In this case, to avoid data handling problems (either duplication or omission), you need to have virtual catalogs based on one mastermind physical catalog for each relevant channel.

Learn more about Digital Catalog ⟶

Pricing

Displaying relevant pricing for each channel is yet another challenge that can be addressed by having a multi-channel ecommerce solution and a flexible pricing module capable of adapting complex pricing strategies.

Localization

If your acquired digital competitors speak other languages, your ecommerce solution needs to be multi-lingual.

Solution

Virto Commerce is a natively headless ecommerce platform capable of accommodating an unlimited number of front ends on its single back end.

Moreover, the solution is natively extensible, meaning you can build any required logic on top of a standard solution.

Virto Commerce B2B ecommerce platform is multi-channel and multi-lingual.

It has a further customizable pricing module and can stream different price lists to different channels.

The Virto Commerce solution also enables a gradual transition of acquired customers from the old to the new system. By making some of the additional functions available on the new platform, you can allow your customers to log into both systems under the same credentials.

For illustration purposes, consider the following use case. Virto Commerce has helped a US company that sells embroidery design (with a catalog of over a million items) acquire several digital competitors in a matter of months. While leaving the customers with the familiar front end, the company bound the acquired websites to its own back end. Hence, all systems were in sync and operating seamlessly without any disruptions.

If you want to learn more about how the Virto Commerce B2B ecommerce platform can help your business successfully expand, operate in new markets, or acquire digital competitors, schedule a demo now!

Marina Vorontsova
Technical author and eCommerce advocate