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SPS Commerce Idea Proposal (SPSC)

SPS Commerce Idea Proposal (SPSC)
 

Will SPS Commerce expand its retail network and increase wallet share among suppliers over the next 12 to 18 months?

 

Report Available: October 18, 2017

 

Blueshift’s initial research found SPSC’s revenue growth slowing from more than 20% last year to less than 15% this year, partly because of a difficult retail environment. Recent growth is coming from additional spending from existing customers rather than an expansion of its customer base. In the face of difficult competition from small vendors and large software providers alike, SPSC is reorganizing its salesforce and trying to become a more important part of its customers’ operations.

 

Observations

  1. SPSC provides cloud-based supply chain management software, helping suppliers, retailers, distributors, and others connect and manage inventory. The company has about 25,000 customers that pay monthly fees, many of them small- to mid-sized consumer packaged goods suppliers.
  2. Q2 revenues for SPSC grew 15% year-over-year. Much of that growth was from upselling existing customers as opposed to adding new ones. The total number of recurring revenue customers was up just 4% in Q2, while average revenue per customer climbed 11%.
  3. Company executives forecast full-year revenues for 2017 to surpass $220 million, which would mark a 14% jump over 2016. Such a figure, though, represents a deceleration, as revenue was up 22% last year over 2015. Some of the drag stems from bankruptcies and other difficulties in the retail environment. The company has said it hopes to return to growth rates above 20% by late 2018.
  4. SPSC has numerous small competitors in the cloud-based supply chain management space. Its key rivals in traditional, on-premise software include IBM’s Sterling Commerce and OTEX’s GXS.
  5. SPSC has been rolling out the next-generation version of its web fulfillment software, aimed at creating more strategic relationships with customers by providing analytics and other business insights. It has also embarked on a reorganization of its sales team, including an increase in quota-carrying salespeople.

 

How do retailers connect with their suppliers today? Do they require suppliers to use specific Electronic Data Interchange (EDI) software? Will SPSC be able to add new retail customers to its network? For suppliers that do not use SPSC, what EDI software do they use and why? What are their trends on EDI spending? Will suppliers that use SPSC software buy additional products from SPSC? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Retailers, Suppliers, Distributors and third-party logistics providers, and Industry specialists.

 

Companies: SPS Commerce Inc. (SPSC), IBM Corp. (IBM), Open Text Corp. (TSE:OTEX)

 

Research Begins: October 2, 2017