Most modern sellers have moved online — and for good reason. The technology-savvy shoppers of today have great appreciation for ecommerce channels and the various advantages — superior product selection and convenient shipping, to name a couple — that accompany them. To reach these customers, retail businesses must cultivate strong online sales infrastructure. Fortunately, sellers now making the move to the digital realm or embarking on ecommerce optimization have many options when it comes to selecting and implementing online retail tools, as there are numerous platforms available on the market. However, a select few of these solutions are head and shoulders above the rest — most notably, Magento and Shopify. Together, these two ecommerce systems support more than a million retail organizations worldwide and drive approximately $200 billion in annual sales.
Retail businesses embarking on online expansion would be smart to explore each of these solutions, as well as the ever-evolving ecommerce environment in which they function.
Mapping the ecommerce landscape
Ecommerce sales have steadily gained ground on physical retail sales over the last decade, per research from the U.S. Census Bureau. In 2009, online shoppers accounted for just 4% of all stateside retail sales. That figure had increased to almost 10% by the conclusion of Q4 2018. Why? Widespread mobile technology adoption was one driving factor. Between 2011 and 2018, smartphone ownership among American adults grew from 35% to 77%, as those advanced devices transformed from luxuries into essentials, according to analysts for Pew Research Center. Over roughly this same span, millennials — individuals born between 1981 and 1996 — moved into the workforce and began demonstrating their buying power and inclination toward technological innovation by embracing online retail, Pew Research found. These and other developments, including the Great Recession and its aftermath, catalyzed ecommerce expansion, encouraging the emergence of new online ventures, boosting existing ones — Amazon saw its quarterly sales increase from just under $10 billion to more than $43 billion between 2011 and 2018, per Recode — and pressuring strictly brick-and-mortar sellers to go digital.
Today, most retail businesses move within the ecommerce realm and therefore maintain internal and external processes designed to meet the needs of digital-first shoppers, beginning with front-of-house sales operations. The ecommerce website is, of course, the centerpiece for many retailers. Here, customers enter and progress through the sales funnel. Amazon, which remains the top ecommerce brand worldwide, hosts about 2.4 billion online customers per month via its website, according to research from SimilarWeb. As demonstrated by the sales figures quoted above, the ecommerce giant effectively converts many of these visitors into buyers. How? Its robust product pages do most of the heavy lifting. These spaces are designed to meet the needs of both quick decision makers and pragmatic deal hunters. The former can scan the composite customer rating and add to cart, while the former have the opportunity to dive into detailed user reviews containing images and view product specifications. In addition to drawing and converting shoppers who access it directly or find it via search, the Amazon website connects seamlessly with social networks, which are responsible for driving more than 5% of all its traffic, per SimilarWeb.
Amazon and other ecommerce companies must quite literally deliver on their online promises through streamlined logistics processes. It all starts at the point of sale, where customer orders must be accurately recorded and moved through to shipping and fulfillment for processing through enterprise resource planning technology. Warehouse personnel receive the orders, pull the necessary items and pack them for shipping. Meanwhile, the ERP records all of the inventory that leaves the warehouse and informs both internal stakeholders responsible for restocking and customers through real-time data integration modules. There is little margin for error when it comes to getting orders out to the online shoppers navigating the post-Amazon marketplace. An estimated 63% of these buyers consider delivery speed when making product selections, researchers for UPS discovered. Almost one-quarter of all online orders come with two-day shipping requests, the logistics provider noted. And, more than 40% of digital buyers attest to regularly requesting same-day delivery. Shoppers who receive shipment late regularly make their displeasure known, according to analysts for Parcel, who found that almost one-third register complaints for non-essential packages that are just one day behind schedule. That figure skyrockets for time-sensitive items — birthday or holiday gifts, for example — as 66% of consumers say that they contact retailers if such shipments arrive one day late. Order condition is perhaps the only variable in the ecommerce shipping and receiving equation that carries more weight than speed — almost 90% of consumers will reach out should they receive damaged goods, per Parcel.
Operations do not stop post package delivery, of course. Customer service is perhaps now more important than ever, as shoppers expect retailers to deliver positive brand experiences, not just products. Offering streamlined feedback and problem-solving channels is often the key to success here, according to Forrester Research, which found that 66% of buyers believe “valuing their time is the most important thing a company can do to provide them with good customer service.” Most consumers gravitate toward self-service options as a consequence and therefore favor newer support options — most notably, website-based chat components, including those with artificial intelligence capabilities that fall into the so-called chatbot category. Retailers that embrace these expectations and offer robust support channels tend to see significant benefits. An estimated 70% of U.S. consumers attest to spending more money at businesses with strong customer service options, per research from American Express. And when things go bad, many disengage altogether. Half of shoppers abandon their digital carts following one bad support experience, while around one-third check out at checkout and never return.
Overall, 85% of American customers are happy with the current ecommerce environment, according to UPS. Keeping these satisfaction levels relatively high while also pursuing improvement is no easy task, even for industry behemoths such as Amazon. However, retail organizations of all sizes can meet expectations and improve in this challenging space by implementing strong, reliable ecommerce solutions that anchor equally robust online sales and customer service networks. As mentioned above, there are two specific platforms that can facilitate digital retail operations of this kind: Magento and Shopify.
Platform story: Magento
UCLA students Roy Rubin and Yoav Kutner founded an ecommerce startup called Varien in the mid 2000s with the intention of cornering the osCommerce implementation market. The open-source product was among the most popular solutions within the burgeoning online retail space but from Rubin’s perspective quality implementers were few and far between. The two entrepreneurs found fast success and immediately began considering how they might get funding to launch their own ecommerce solution. The answer came in 2007 in the form a large client, which Rubin reeled in using an opportune, 50-cent Google Adwords buy. This contract allowed Varien to develop its own open-source product called Magento, which the startup released in 2008. Within one year, more retailers were using Magento than the osCommerce product. And in 2010, Varien became Magento.
The company, which Adobe acquired in May 2018, now boasts 250,000 global customers, including major brands such as Canon, The Coca-Cola Company, Nestle and Rosetta Stone. Why do these large sellers leverage the Magento? Its open-source, and therefore wholly customizable, framework is an immense draw. The original iteration of the platform, released in 2007 as Magento Community Edition, still exists today under the Magento Open Source moniker, lending retail companies basic infrastructure off of which they can build engaging and revenue-driving ecommerce experiences. The software provider also offers a cloud-based platform called Magento Commerce, which comes with a larger variety of features, as well as highly responsive technical support. However, sellers that opt to implement Magento, no matter the product option, can expect to benefit from the massive community of skilled developers that continue to enrich the software. There are an estimated 300,000 of these backend technical experts working today, including around a thousand so-called “solution and technology partners,” or organizations that provide more formalized Magento implementation and support offerings.
The ecommerce powerhouse continues to expand its product selection with assistance from both internal and external contributors. In November 2018, Magento debuted version 2.3 of its platform, which includes more robust page-creation tools and support for progressive web applications. The refreshed solution also allows retailers to integrate their sites with Amazon Commerce and Google Ads, and comes with new online payment options designed to reduce the likelihood of cart abandonment. In the decade since Rubin and Kutner launched Magento, the software has grown into an online retail essential.
Platform story: Shopify
Tobi Lukte and Scott Lake founded their outdoor supply business in 2004 with one objective: sell as many snowboards as possible. The two technology professionals and winter sports enthusiasts dreamed of supplying snowboarders, snowshoers and skiers with top-notch equipment but encountered problems almost immediately. Lukte, who worked in software development before launching the retail startup, encountered significant issues while building the brand’s online store. The leading enterprise ecommerce platforms on the market at the time — Microsoft Commerce and Yahoo Stores were perhaps the most prominent offerings available then — struck Lukte as inelegant and difficult to use. The developer set out to create his own digital sales software using the then just-released Ruby on Rails framework. Snowdevil took off soon after but both Lukte and Lake soon realized there was more commercial promise in the custom ecommerce software than the snowboards they were selling. So in 2006 the duo brought on a third business partner, packaged the software and renamed the company Shopify. Lutke’s standing within the Rails community helped the rebranded operation land its first dozen or so small contracts. In 2007, outside investors entered the picture and catalyzed an expansion that continues today.
An estimated 800,000 retailers worldwide use Shopify, including emerging brands such as Magnolia Market and KYLIE Cosmetics. Even entertainment and sports personalities like rapper 2 Chainz and professional football player Marshawn Lynch use the platform to sell custom merchandise. There are several reasons why these and other retail entities flock to Shopify in such large numbers, beginning with its simplicity. Sellers that leverage the platform can configure online stores without tapping developers — Shopify is an out-of-the-box solution made for retail companies that want to hit the ground running. The platform is also known for its ancillary advertisement and marketing services, which allow retailers to cultivate and maintain integrated promotion and sales channels. In recent years, Shopify has begun exploring new ecommerce territory, including startup fundraising and artificial intelligence.
Product options: Magento
Magento offers two primary products: Magento Open Source and Magento Commerce. As mentioned above, each of these offerings is wholly unique.
- Magento Open Source resembles the bare-bones product the company started with more than a decade back. While there are no bells and whistles, this open-source, non-hosted asset comes with everything internal or external developers need to embark on building engaging ecommerce experiences, including:
- Integrated checkout, payment and shipping
- Mobile-ready shopping
- Worldwide retail sales
- Application marketplace support
- Catalog management
- Instant purchasing
- Website search
- Magento Commerceis obviously more sophisticated than its predecessor. In addition to the base features that accompany Magento Open Source, this platform includes a host of advanced modules meant to lay the groundwork for richer digital storefronts, while also leaving room for customization. These impactful extras include:
- Business intelligence dashboards
- Business-to-business sales capabilities
- Advanced marketing tools
- Content staging and review
- Customer loyalty tools
- WYSIWYG page builder
- Visual merchandising
- Hosted cloud support
- Account management support
- Technical assistance
There are three iterations of the Magento Commerce solution on the market — 1, 2 and 2.3. The latter offers simpler checkout and engagement tools, improved business intelligence components and optimized infrastructure designed for speed. Magento Commerce 2.3 also comes with Progressive Web Applications Studio, an innovative mobile experience creation module that gives developers the power to develop, test and deploy centralized purchasing portals that work across all devices. And, all of these offerings, including Magento Open Source, benefit from the hundreds of thousands of developers who contribute new features and streamline existing ones via their open-source structures.
Product options: Shopify
Shopify has three primary products, along with two specialized versions of its proprietary platform. Four of these offerings are subscription-based and come with two-week free trials. Shopify provides hosting for all of its solutions and handles the domain registration process.
- Basic Shopifyis ideal for burgeoning retail business intent on establishing their brands and bringing in their first customers. The platform comes equipped with several salient features, including:
- Online store
- Unlimited products
- Two staff accounts
- Around-the-clock support
- Multiple sales channels
- Manual order creation
- Discount codes
- Free SSL certificate
- Abandoned cart recovery
- Shipping discounts of up to 64%
- Shipping label printing
- Online payment support
- Payment fraud analysis
- Shopify point-of-sale app access
- Third-party POS app integration
- Peripheral hardware support
Retailers using Basic Shopify with payment support are subject to 2.9% + 30 cent transaction fees on online card charges, 2.7% transaction fees for in-person card charges and 2% transaction fees for third-party payment app usage.
- Shopifyis perhaps the best option for growing retailers looking to take their ecommerce efforts to the next level. In addition to all of the features included in Basic Shopify, this iteration comes with various advanced modules, including:
- Five staff accounts
- Gift cards
- Professional reports
- Shipping discounts of up to 72%
- U.S. Postal Service Priority Mail cubic pricing
- Register shifts
- Unlimited Shopify POS PINs
Sellers deploying Shopify for payment purposes are subject to 2.6% + 30 cent transaction fees on online card charges, 2.5% transaction fees for in-person card charges and 1% transaction fees for third-party payment app usage.
- Advanced Shopifyis made for retail companies intent on achieving significant scale. This product includes all of the features that accompany Basic Shopify and Shopify, along with several other more robust components designed to facilitate expansion, including:
- Fifteen staff accounts
- Advanced report builder
- Shipping rate calculations for third-party apps
- Shipping discounts of up to 74%
Retailers leveraging Advanced Shopify for payment purposes are subject to 2.4% + 30 cent transaction fees on online card charges, 2.4% transaction fees for in-person card charges and 0% transaction fees for third-party payment app usage.
- Shopify Liteis ideal for sellers with existing websites that want to roll out additional online functions or embrace social commerce by selling directly to Facebook users. The platform comes equipped with a simple feature set that includes:
- Facebook store integration
- Facebook Messenger integration
- Embeddable buy buttons
- POS payment support
- Invoice creation
Retail businesses using Shopify Lite for payment are subject to 2.9% + 30 cent transaction fees on online card charges, 2.7% transaction fees for in-person card charges and 2% transaction fees for third-party payment app usage.
- Shopify Plusis the company’s most robust offering, giving sellers the opportunity to develop and maintain large-scale digital sales frameworks meant to drive revenue at scale. Unlike the offerings covered above, Shopify Plus does not come with a subscription plan and requires intensive custom configuration support. There are therefore no common platform features. Instead, retailers can work with developers to create bespoke platform modules that address essential operational functions such as:
- Online sales
- Multichannel retail
- Ecommerce automation
- Marketing and sales promotion
- Global sales
- Wholesale operations
- Popup experiences
- B2B commerce
Sellers that ultimately go with Shopify Plus can also take advantage of intensive merchant support — this includes access to vendor-vetted launch engineers and technology partners — and migration assistance.
Product pricing: Magento
Unfortunately, there is no definitive amount associated with Magento implementation due to the fluid nature of the platform. Retailers can download Magento Open Source free of charge but must devote internal resources or source external partners for development. And, Magento Commerce comes with licensing fees that vary, depending on project scope. That said, some in the Magento development community have pinned down rough ranges. Smaller Magento deployments might cost as little as $22,000 annually, while larger builds for retail businesses with annual revenues that eclipse $25 million might devote around $190,000 per year. Again, the cost varies depending on the project.
Product pricing: Shopify
The pricing for Shopify is easier to understand thanks to the relative simplicity of the subscription model. Here are the cost breakdowns for each product:
- Basic Shopify: $29 per month
- Shopify: $79 per month
- Advanced Shopify: $299 per month
- Shopify Lite: $9 per month
Shopify Plus pricing is, of course, far more nebulous. Like Magento Commerce, this product necessitates custom development work, the cost of which varies immensely. Shopify once advertised a projected $2,000-per-month price tag for the platform but has since reverted to recommending that potential clients request quotes, which is the ideal option when working with an especially configurable ecommerce solution such as Shopify Plus.
Making the right choice
Deciding between Magento and Shopify is not an exact science. Each product possess unique advantages and drawbacks, depending on the implementation scenario. However, the most effective method for navigating the selection process might be assessing the overarching outlooks associated with each one. Magento is often considered the best choice for retail businesses that want granular control over their online sales infrastructure and are therefore interested in investing in customized workflows and modules. The open-source community that comes with Magento influences this perception, as adopters typically feel as though they can do what they want after purchasing Magento Commerce or handing over a Magento Open Source installation to trusted developers. Additionally, the solution is among the few larger ecommerce platforms on the market that is deployable on-premise, making it the perfect match for retail companies that are prepared to embrace the digitization but not necessarily the cloud.
Conversely, Shopify is normally linked to the out-of-the-box enterprise information technology adoption approach — a product made for accelerated deployment yet capable of delivering consistent results. This notion reflects reality, as Shopify’s subscription-based offerings do indeed come ready to install and scale. While Shopify Plus does open the door to customization, allowing sellers to develop made-to-order feature sets on top of some core software components, standardized architecture reigns supreme. This is ideal for retailers that want to quickly establish themselves in the online marketplace and start selling.
Finding the right solution partner
There are, of course, many firms circulating this particular IT niche. However, few are as experienced and capable as Pixafy, which is rated among the top Magento and Shopify development agencies worldwide. We collaborate with retailers of all sizes in every market, leveraging our talented, award-winning in-house development team to create ecommerce experiences that meet the high expectations of today’s online shoppers and facilitate frictionless backend operations. From user experience design to ERP integration, our staff executes with ease at every turn. Whether it’s a small seller looking to dip its toe in the proverbial ecommerce waters via Shopify adoption or a mature retail organization intent on creating a one-of-a-kind omnichannel setup with Magento, Pixafy can deliver.
So, is your retail business eyeing a move to the digital realm or simply interested in scaling up an existing site to gain ground within the ecommerce environment? Consider connecting with us today to learn more about our services or to explore some of our past projects.