Commerce

Composable Commerce

Fri, 26 Feb 2021 06:00:59 -0500

I discussed the Composable Commerce trend with Kelly Goetsch, the Chief Product Officer of commercetools. Composable architectures allow you to build the best possible commerce solution with the best possible shopping experience.

Acquia partners with BigCommerce

Tue, 06 Nov 2018 11:45:23 -0500

Today, Acquia announced a partnership with BigCommerce, a leading cloud commerce platform. BigCommerce recently launched a headless commerce solution called BigCommerce Commerce-as-a-Service to complement its "traditional" commerce solutions. Acquia's partnership with BigCommerce will center around this Commerce-as-a-Service solution to enable customers to take advantage of headless commerce architectures, while leveraging Drupal and Acquia to power content-rich shopping experiences.

With BigCommerce and Acquia, brands can use a commerce-as-a-service approach to quickly build an online store and oversee product management and transactional data. The front-end of the commerce experience will be powered by Drupal, built and managed using the Acquia Platform, and personalized with Acquia Lift.

This month, Acquia has been focused on expanding our partnerships with headless commerce vendors. This announcement comes on the heels of our partnership with Elastic Path. Our partnership with BigCommerce not only reinforces our belief in headless commerce, but also our commitment to a best-of-breed commerce strategy that puts the needs of our customers first.

The rise of headless commerce

Wed, 31 Oct 2018 11:10:18 -0400

Today, Acquia announced a partnership with Elastic Path, a headless commerce platform. In this post, I want to explore the advantages of headless commerce and the opportunity it holds for both Drupal and Acquia.

The advantages of headless commerce

In a headless commerce approach, the front-end shopping experience is decoupled from the commerce business layer. Headless commerce platforms provide a clean separation between the front end and back end; the shopping experience is provided by Drupal and the commerce business logic is provided by the commerce platform. This decoupling provides advantages for the developer, merchant and shopping experience.

For developers, it means that you can decouple both the development and the architecture. This allows you to build an innovative shopping experience without having to worry about impacting a system as critical as your commerce backend. For instance, you can add ratings and reviews to your shopping experience without having to redeploy your commerce platform.
For merchants, it can provide a better experience for administering the shop. Traditional commerce solution usually ship with a lightweight content management system. This means that there can be competition over which system provides the experience layer (i.e. the "glass"). This can introduce overlap in functionality; both systems offer ways to manage URLs, create landing pages, manage user access rights, theming systems, etc. Because headless commerce systems are designed from the ground up to integrate with other systems, there is less duplication of functionality. This provides a streamlined experience for merchants.
And last but not least, there is the shopping experience for end-users or consumers. Consumers are demanding better experiences when they shop online; they want editorials, lookbooks, tutorials, product demonstration videos, testimonials, and more. They desire the content-rich experiences that a comprehensive content management system can provide.

All this is why Acquia is excited about our partnership with Elastic Path. I believe the partnership is a win-win-win. It's a win for Acquia because we are now better equipped than ever to offer personal, unique and delightful shopping experiences. It is a win for Elastic Path as they have the opportunity to provide contextual commerce solutions to any Acquia customer. Last but not least, it's a win for Drupal because it will introduce more organizations to the project.

Note that many of the above integration challenges don't apply to native solutions like Drupal Commerce for Drupal or WooCommerce for WordPress. It only applies when you have to integrate two entirely different systems. Integrating two different systems is a common use case, because customers either already have a commerce platforms in place that they don't want to replace, or because native solutions don't meet their needs.

Acquia's commitment to best of breed

Acquia remains committed to a best-of-breed strategy for commerce. There isn't a single commerce platform that meets the needs of all our customers. This belief comes from years of experience in the field. Acquia's customers want to integrate with a variety of commerce systems such as Elastic Path, SAP Hybris, Salesforce Commerce Cloud (Demandware), Magento, BigCommerce, Reaction Commerce, Oracle ATG, Moltin, and more. Our customers also want to use Drupal Commerce, Drupal's native commerce solution. We believe customers should be able to integrate Drupal with their commerce management solutions of choice.

My thoughts on Adobe buying Magento for $1.68 billion

Tue, 22 May 2018 15:20:56 -0400

Yesterday, Adobe announced that it agreed to buy Magento for $1.68 billion. When I woke up this morning, 14 different people had texted me asking for my thoughts on the acquisition.

Adobe acquiring Magento isn't a surprise. One of our industry's worst-kept secrets is that Adobe first tried to buy Hybris, but lost the deal to SAP; subsequently Adobe tried to buy DemandWare and lost out against Salesforce. It's evident that Adobe has been hungry to acquire a commerce platform for quite some time.

The product motivation behind the acquisition

Large platform companies like Salesforce, Oracle, SAP and Adobe are trying to own the digital customer experience market from top to bottom, which includes providing support for marketing, commerce, personalization, and data management, in addition to content and experience management and more.

Compared to the other platform companies, Adobe was missing commerce. With Magento under its belt, Adobe can better compete against Salesforce, Oracle and SAP.

While Salesforce, SAP and Oracle offer good commerce capability, they lack satisfactory content and experience management capabilities. I expect that Adobe closing the commerce gap will compel Salesforce, SAP and Oracle to act more aggressively on their own content and experience management gap.

While Magento has historically thrived in the SMB and mid-market, the company recently started to make inroads into the enterprise. Adobe will bring a lot of operational maturity; how to sell into the enterprise, how to provide enterprise grade support, etc. Magento stands to benefit from this expertise.

The potential financial outcome behind the acquisition

According to Adobe press statements, Magento has achieved "approximately $150 million in annual revenue". We also know that in early 2017, Magento raised $250 million in funding from Hillhouse Capital. Let's assume that $180 million of that is still in the bank. If we do a simple back-of-the-envelope calculation, we can subtract this $180 million from the $1.68 billion, and determine that Magento was valued at roughly $1.5 billion, or a 10x revenue multiple on Magento's trailing twelve months of revenue. That is an incredible multiple for Magento, which is primarily a licensing business today.

Compare that with Shopify, which is trading at a $15 billion dollar valuation and has $760 million of twelve month trailing revenue. This valuation is good for a 20x multiple. Shopify deserves the higher multiple, because it's the better business; all of its business is delivered in the cloud and at 65% year-over-year revenue growth, it is growing much faster than Magento.

Regardless, one could argue that Adobe got a great deal, especially if it can accelerate Magento's transformation from a licensing business into a cloud business.

Most organizations prefer best-of-breed

While both the product and financial motivations behind this acquisition are seemingly compelling, I'm not convinced organizations want an integrated approach.

Instead of being confined to proprietary vendors' prescriptive suites and roadmaps, global brands are looking for an open platform that allows organizations to easily integrate with their preferred technology. Organizations want to build content-rich shopping journeys that integrate their experience management solution of choice with their commerce platform of choice.

We see this first hand at Acquia. These integrations can span various commerce platforms, including IBM WebSphere Commerce, Salesforce Commerce Cloud/Demandware, Oracle/ATG, SAP/hybris, Magento and even custom transaction platforms. Check out Quicken (Magento), Weber (Demandware), Motorola (Broadleaf Commerce), Tesla (custom to order a car, and Shopify to order accessories) as great examples of Drupal and Acquia working with various commerce platforms. And of course, we've quite a few projects with Drupal's native commerce solution, Drupal Commerce.

Owning Magento gives Adobe a disadvantage, because commerce vendors will be less likely to integrate with Adobe Experience Manager moving forward.

It's all about innovation through integration

Today, there is an incredible amount of innovation taking place in the marketing technology landscape (full-size image), and it is impossible for a single vendor to have the most competitive product suite across all of these categories. The only way to keep up with this unfettered innovation is through integrations.

An image of the Marketing Technology Landscape 2018. For reference, here are the 2011, 2012, 2014, 2015, 2016 and 2017 versions of the landscape. It shows how fast the marketing technology industry is growing.

Most customers want an open platform that allows for open innovation and unlimited integrations. It's why Drupal and Acquia are winning, why the work on Drupal's web services is so important, and why Acquia remains committed to a best-of-breed strategy for commerce. It's also why Acquia has strong conviction around Acquia Journey as a marketing integration platform. It's all about innovation through integration, making those integrations easy, and removing friction from adopting preferred technologies.

If you acquire a commerce platform, acquire a headless one

If I were Adobe, I would have looked to acquire a headless commerce platform such as Elastic Path, Commerce Tools, Moltin, Reaction Commerce or even Salsify.

Today, there is a lot of functional overlap between Magento and Adobe Experience Manager – from content editing, content workflows, page building, user management, search engine optimization, theming, and much more. The competing functionality between the two solutions makes for a poor developer experience and for a poor merchant experience.

In a headless approach, the front end and the back end are decoupled, which means the experience or presentation layer is separated from the commerce business layer. There is a lot less overlap of functionality in this approach, and it provides a better experience for merchants and developers.

Alternatively, you could go for a deeply integrated approach like Drupal Commerce. It has zero overlap between its commerce, content management and experience building capabilities.

For Open Source, it could be good or bad

How Adobe will embrace Magento's Open Source community is possibly the most intriguing part of this acquisition – at least for me.

For a long time, Magento operated as Open Source in name, but wasn't very Open Source in practice. Over the last couple of years, the Magento team worked hard to rekindle its Open Source community. I know this because I attended and keynoted one of its conferences on this topic. I have also spent a fair amount of time with Magento's leadership team discussing this. Like other projects, Magento has been taking inspiration from Drupal.

For example, the introduction of Magento 2 allowed the company to move to GitHub for the first time, which gave the community a better way to collaborate on code and other important issues. The latest release of Magento cited 194 contributions from the community. While that is great progress, it is small compared to Drupal.

My hope is that these Open Source efforts continue now that Magento is part of Adobe. If they do, that would be a tremendous win for Open Source.

On the other hand, if Adobe makes Magento cloud-only, radically changes their pricing model, limits integrations with Adobe competitors, or doesn't value the Open Source ethos, it could easily alienate the Magento community. In that case, Adobe bought Magento for its install base and the Magento brand, and not because it believes in the Open Source model.

This acquisition also signals a big win for PHP. Adobe now owns a $1.68 billion PHP product, and this helps validate PHP as an enterprise-grade technology.

Unfortunately, Adobe has a history of being "Open Source"-second and not "Open Source"-first. It acquired Day Software in July 2010. This technology was largely made using open source frameworks – Apache Sling, Apache Jackrabbit and more – and was positioned as an open, best-of-breed solution for developers and agile marketers. Most of that has been masked and buried over the years and Adobe's track record with developers has been mixed, at best.

Will the same happen to Magento? Time will tell.

Content and Commerce: a big opportunity for Drupal

Thu, 10 Nov 2016 10:08:20 -0500

Last week Acquia announced a partnership with Magento. I wanted to use this opportunity to explain why I am excited about this. I also want to take a step back and share what I see is a big opportunity for both Drupal, Acquia and commerce platforms.

State of the commerce market

First, it is important to understand what is one of the most important market trends in online commerce: consumers are demanding better experiences when they shop online. In particular, commerce teams are looking to leverage vastly greater levels of content throughout the customer's shopping journey - editorials, lookbooks, tutorials, product demonstration videos, mood videos, testimonials, etc.

At the same time, commerce platforms have not added many tools for rich content management. Instead they have been investing in capabilities needed to compete in the commerce market; order management systems (OMS), omnichannel shopping (point of sale, mobile, desktop, kiosk, etc), improved product information management (PIM) and other vital commerce capabilities. The limited investment in content management capabilities has left merchants looking for better tools to take control of the customer experience, something that Drupal addresses extremely well.

To overcome the limitations that today's commerce platforms have with building content-rich shopping experiences, organizations want to integrate their commerce platform with a content management system (CMS). Depending on the situation, the combined solution is architected for either system to be "the glass", i.e. the driver of the shopping experience.

Lush.com is a nice example of a content-rich shopping experience built with Drupal and Drupal Commerce.

Drupal's unique advantage for commerce

Drupal is unique in its ability to easily integrate into ambitious commerce architectures in precisely the manner the brand prefers. We are seeing this first hand at Acquia. We have helped many customers implement a "Content for Commerce" strategy where Acquia products and Drupal were integrated with an existing commerce platform. Those integrations spanned commerce platforms including IBM WebSphere Commerce, Demandware, Oracle/ATG, SAP/hybris, Magento and even custom transaction platforms. Check out Quicken (Magento), Puma (Demandware), Motorola (Broadleaf Commerce), Tesla (custom to order a car, and Shopify to order accessories) as great examples of Drupal working with commerce platforms.

We've seen a variety of approaches to "Content for Commerce" but one thing that is clear is that a best-of-breed approach is preferred. The more complex demands may end up with IBM WebSphere Commerce or SAP/hybris. Less demanding requirements may be solved with Commerce Tools, Elastic Path or Drupal Commerce, while Magento historically has fit in between.

Additionally, having to rip and replace an existing commerce platform is not something most organizations aspire to do. This is true for smaller organizations who can't afford to replace their commerce platform, but also for large organizations who can't afford the business risk to forklift a complex commerce backend. Remember that commerce platforms have complex integrations with ERP systems, point-of-sales systems, CRM systems, warehousing systems, payment systems, marketplaces, product information systems, etc. It's often easier to add a content management system than to replace everything they have in place.

This year's "State of Retailing Online" series asked retailers and brands to prioritize their initiatives for the year. Just 16% of respondents prioritized a commerce re-platform project while 41-59% prioritized investments to evolve the customer experience including content development, responsive design and personalization. In other words, organizations are 3 times more likely to invest in improving the shopping experience than in switching commerce platforms.

The market trends, customer use cases and survey data make me believe that (1) there are hundreds of thousands of existing commerce sites that would prefer to have a better shopping experience and (2) that many of those organizations prefer to keep their commerce backend untouched while swapping out the shopping experience.

Acquia's near-term commerce strategy

There is a really strong case to be made for a best-of-breed approach where you choose and integrate the best software from different vendors. Countless point solutions exist that are optimized for narrow use cases (e.g. mobile commerce, marketplaces and industry specific solutions) as well as solutions optimized for different technology stacks (e.g. Reaction Commerce is JavaScript-based, Magento is PHP-based, Drupal Commerce is Drupal-based).

A big part of Acquia's commerce strategy is to focus on integrating Drupal with multiple commerce platforms, and to offer personalization through Lift. The partnership with Magento is an important part of this strategy, and one that will drive adoption of both Drupal and Magento.

There are over 250,000 commerce sites built with Magento and many of these organizations will want a better shopping experience. Furthermore, given the consolidation seen in the commerce platform space, there are few, proven enterprise solutions left on the market. This has increased the market opportunity for Magento and Drupal. Drupal and Magento are a natural fit; we share the same technology stack (PHP, MySQL) and we are both open source (albeit using different licenses). Last but not least, the market is pushing us to partner; we've seen strong demand for Drupal-Magento integration.

We're keen to partner with other commerce platforms as well. In fact, Acquia has existing partnerships with SAP/hybris, Demandware, Elastic Path and Commerce Tools.

Conclusion

Global brands are seeing increased opportunity to sell direct to consumers and want to build content-rich shopping journeys, and merchants are looking for better tools to take control of the customer experience.

Most organizations prefer best of breed solutions. There are hundreds of thousands of existing commerce sites that would like to have more differentiation enabled by a stronger shopping experience, yet leave their commerce capabilities relatively untouched.

Drupal is a great fit. It's power and flexibility allow it to be molded to virtually any systems architecture, while vastly improving the content experience of both authors and customers along the shopping journey. I believe commerce is evolving to be the next massive use case for Drupal and I'm excited to partner with different commerce platforms.

Special thanks to Tom Erickson and Kelly O'Neill for their contributions to this blog post.

Demandware acquisition heats up the customer experience market

Thu, 02 Jun 2016 16:00:00 -0400

The battle for the marketing cloud just got way more interesting. This week, Salesforce announced its acquisition of Demandware for $2.8B in cash. It will enable Salesforce to offer a "Commerce Cloud" alongside its sales and marketing solutions.

The large platform companies like Oracle and Adobe are trying to own the digital customer experience market from top to bottom by acquiring and integrating together tools for marketing, commerce, customer support, analytics, mobile apps, and more. Oracle's acquisition of Eloqua, SAP's acquisition of hybris and Salesforce's acquisitions of ExactTarget were earlier indicators of market players consolidating SaaS apps for customer experience onto their platforms.

In my view, the Demandware acquisition is an interesting strategic move for Salesforce that aligns them more closely as a competitor to marketing stack mega-vendors such as Adobe, Oracle and IBM. Adding a commerce solution to its suite, makes it easier for Salesforce's customers to build an integrated experience and see what their customers are buying. There are advantages to integrated solutions that have a single system of record about the customer. The Demandware acquisition also makes sense from a technology point of view; there just aren't many Java-based commerce platforms that are purely SaaS-based, that can operate at scale, and that are for sale.

However, we've also seen this movie before. When big companies acquire smaller, innovative companies, over time the innovation goes away in favor of integration. Big companies can't innovate fast enough, and the suite lock-in only benefits the vendor.

There is a really strong case to be made for a best-of-breed approach where you choose and integrate the best software from different vendors. This is a market that literally changes too much and too fast for any organization to buy into a single mega-platform. From my experience talking to hundreds of customer organizations, most prefer an open platform that integrates different solutions and acts as an orchestration hub. An open platform ultimately presents more freedom for customers to build the exact experiences they want. Open Source solutions, like Drupal, that have thousands of integrations, allow organizations to build these experiences in less time, with a lower overall total cost of ownership, more flexibility and faster innovation.

Adobe clearly missed out on buying Demandware, after it missed out on buying Hybris years ago. Demandware would have fit in Adobe's strategy and technology stack. Now Adobe might be the only mega-platform that doesn't have an embedded commerce capability. More interestingly, there don't appear to be large independent commerce operators left to buy.

I continue to believe there is a great opportunity for new independent commerce platforms, especially now Salesforce and Demandware will spend the next year or two figuring out the inevitable challenges of integrating their complex software solutions. I'd love to see more commerce platforms emerge, especially those with a modern micro-services based architecture, and an Open Source license and innovation model.

Why WooMattic is big news for small businesses

Thu, 21 May 2015 23:38:46 -0400

Earlier this week Matt Mullenweg, founder and CEO of Automattic, parent company of WordPress.com, announced the acquisition of WooCommerce. This is a very interesting move that I think cements the SMB/enterprise positioning between WordPress and Drupal.

As Matt points out a huge percentage of the digital experiences on the web are now powered by open source solutions: WordPress, Joomla and Drupal. Yet one question the acquisition may evoke is: "How will open source platforms drive ecommerce innovation in the future?".

Larger retailers with complex requirements usually rely on bespoke commerce engines or built their online stores on solutions such as Demandware, Hybris and Magento. Small businesses access essential functions such as secure transaction processing, product information management, shipping and tax calculations, and PCI compliance from third-party solutions such as Shopify, Amazon's merchant services and increasingly, solutions from Squarespace and Wix.

I believe the WooCommerce acquisition by Automattic puts WordPress in a better position to compete against the slickly marketed offerings from Squarespace and Wix, and defend WordPress's popular position among small businesses. WooCommerce brings to WordPress a commerce toolkit with essential functions such as payments processing, inventory management, cart checkout and tax calculations.

Drupal has a rich library of commerce solutions ranging from Drupal Commerce – a library of modules offered by Commerce Guys – to connectors offered by Acquia for Demandware and other ecommerce engines. Brands such as LUSH Cosmetics handle all of their ecommerce operations with Drupal, others, such as Puma, use a Drupal-Demandware integration to combine the best elements of content and commerce to deliver stunning shopping experiences that break down the old division between brand marketing experiences and the shopping process. Companies such as Tesla Motors have created their own custom commerce engine and rely on Drupal to deliver the front-end customer experience across multiple digital channels from traditional websites to mobile devices, in-store kiosks and more.

To me, this further accentuates the division of the CMS market with WordPress dominating the small business segment and Drupal further solidifying its position with larger organizations with more complex requirements. I'm looking forward to seeing what the next few years will bring for the open source commerce world, and I'd love to hear your opinion in the comments.