Sales in retail eCommerce have been growing exponentially in the last years. In 2017 alone worldwide sales in online retail have reached mind-blowing numbers of over 2 trillion dollars. It comes with no surprise that there is a growing number of entrepreneurs who want to take a bite of this cash-flavored pie. Especially considering the fact that in this age of information it is entirely possible and increasingly easy to find an untouched niche of consumers. This allows entrepreneurs to create a product that hits their sweet spot and utilize the long tail effect. Or pick up a battle with the current market leaders and weaponize innovation and creativity to fight for their share of consumers.
Naturally, your main tool in becoming the next Jeff Bezos is an attractive, sustainable and scalable eCommerce shop. There are loads of eCommerce platforms to choose from when building your new e-shop:
- many others
Today, we will compare the top of the bunch – Magento and Shopify. These two are the current leaders in eCommerce, together handling over $140 billion in gross merchandise volume each year. Both platforms offer out-of-the-box eCommerce solutions that can be customized to fit your business needs, however, there are many differences to consider.
Magento is an open source eCommerce platform based on the widely-used PHP programming language. Its first version was published in 2007 and has been growing relentlessly ever since. Its open source nature and 11 years of eCommerce experience (light-years in digital scale) have allowed Magento to become the go-to platform for more than 250,000 merchants worldwide. Magento technology supports more than 150$ billion in gross merchandise volume. There is also a different paid product called Magento Commerce, but we will not get into it this time. You can read more about it here.
Shopify is a commercial product of Canadian publicly traded company by the same name. The very first version of Shopify was launched way back in 2006. The platform is based on Ruby programming language and hosted on Shopify owned servers. Gross merchandise volume reported by Shopify exceeds $55 billion. Shopify proudly states that its platform hosts more than 600,000 merchants, although this claim is arguable and has been disputed as misleading marketing.
Even though both platforms offer a way to create an attractive and purposeful e-shop, there are some significant differences between them that are worth considering before jumping aboard.
Magento and Shopify utilize vastly different pricing models that will result in diverse business costs attributed to using these platforms.
Shopify is based on a monthly subscription model. At the first sight, this model seems like a better bang for your buck. Prices start at $29/month for the basic Shopify experience with additional transaction fees of 2.9% + 30¢ online or 2.7% in person for credit card transactions. On top of that, there’s a pretty hefty charge of 2.0% per transaction if you’re not willing to use Shopify Payments.
One more aspect to consider is the theme selection for your shiny new e-shop. Even though there is a pretty wide selection of free themes, more refined premium themes and plugins for advanced features all have monthly costs attached to them. Even though this might seem insignificant, building a proper e-shop usually requires various plugins to be enabled and the monthly fee will definitely start growing quickly.
Magento system, on the other hand, has vastly different costs attached to it. Firstly, the open source platform is fully accessible and free to use (unless you’re using Magento Enterprise Edition), modify and adapt to your business needs.
Worth mentioning is despite that you can access the source code unless you are proficient in programming, you will need help. Therefore costs of building an e-shop will entirely depend on your business needs, the ability to find a programming partner and negotiation skills.
Another aspect of the cost is hosting – unlike with Shopify, you will have to take care of hosting services as well. Good news is that finding a good programming partner will usually result in them taking care of the hosting as well. Same goes for support.
In reality, the most important point here is that by taking up more freedom with Magento system you also take up more responsibility. However, even though upfront costs might be a bit higher with Magento, you will be the true owner of your e-shop. If your development partner, hosting service provider or any other aspect of having your e-shop online fails, you will always have options. You will be able to find another partner to carry on the development of the project or find a different hosting solution and just move your e-shop there. Unlike with Shopify, which holds all of your e-shop code, which will be gone if you stop making monthly payments or some disaster happens with Shopify servers that result in their downtime, taking down your e-shop simultaneously.
“With Magento, you are in control of your e-shop. And as always, more control comes with more responsibility.”
Moving onwards, we will talk about customization options of both platforms:
Shopify offers a quick setup for your eCommerce business. You can choose your style from 10 free and 55 paid themes, not including third-party created themes. However, this is probably the most customization that you’re going to do. The source code is not accessible, which means that deep integration or custom changes that would give your business a competitive advantage are impossible. Also, the most crucial features required for scalabilities such as order management and complex product catalogs are not supported by Shopify. In the end, what you get is an easy to setup e-shop with minimal functionalities. This might be a good option for a business that is just starting up. However, if you have any plans for scalability, advanced customization or integration with other business systems, you have to keep in mind that these functions are non-existent or very limited when using Shopify.
Contrarily, customization and scalability on Magento are virtually limitless. If you have an idea, you can be pretty sure that there is a way to make it a reality in Magento. Be it ERP, CRM, PIM integrations, dynamic menus, one-of-a-kind extensions or custom product categories – there is always a way to implement it. You can even build separate e-shops with different languages and control all of them from a single Magento dashboard. Moreover, Magento has a strong community knowledge-base built around it, which means that you can always find inspiration and custom-made solutions on the web, that you’ll be able to adapt to your e-shop. Another important thing to note is that Magento is based on the widely-used PHP programming language which is used by millions of developers worldwide, so resources for finding help are plentiful.
Even though every business will have different requirements for their eCommerce platform of choice, we will go through the must-have feature comparison of Magento and Shopify.
Future of the platforms
When choosing a digital platform for your eCommerce business it’s important to know where the companies controlling them are heading. Whether your business is a fresh startup or a giant enterprise that eats startups for breakfast, investment in your eCommerce presence carries costs and commitments that have to be taken seriously.
Previously owned by Varien, eBay and lately Permira private equity, Magento was recently purchased by a digital experience giant Adobe. This is definitely good news for Magento. Stable ownership and strong financial backing from Adobe will allow Magento to reach for new highs while adding more stability to the future development of the eCommerce platform and its community.
Shopify has chosen a different path through venture capital and public funding. After launching their API platform in 2009, the Canadian company received over $125 millions through three series of venture capital financing in 2010, 2011 and 2013 respectively. In 2015 Shopify went public and raised another $131 million. Even with some inevitable fluctuations in the stock market, Shopify maintains a healthy growth and will remain a strong player in the eCommerce market.
Either one of these two platforms is a viable investment to grow your eCommerce business. Both of them have their pros and cons. Shopify allows you to quickly and comparatively easily setup your new e-shop, although with certain restrictions for customization and scalability. Magento requires a decent upfront resource investment but allows you to scale indefinitely and implement custom integrations to get the critical competitive advantage. It’s up to you to make the call and choose the path for your business.
One thing is clear – sales in retail eCommerce will continue growing rapidly, so the timing is right. Make the call and jump aboard the digital train. And if you decide that Magento way is the path for you, Adeo Web is always happy to help.