It was announced back in November last year that Magento was being moved under eBay Enterprise. (The photo to the right is Roy Rubin on stage expanding upon this at the 2104 Imagine conference.) Here is my personal perspective on why I think this is a good thing all around.
Normal disclaimer, the following is personal opinion based on public information. I do not claim to represent the official position of eBay in this post.
Obviously eBay is a for-profit business. So does this conflict with Magento being made available as open source? Why is Magento being open source good for eBay? We all know that projects need to be profitable or achieve some goal for a company to get bigger investments. The more potential a project has, the more investment it will receive. To me the good news is I think there is a sound business model for eBay Inc with Magento 2 being both open source and extensible.
(Oh, should I insert an additional disclaimer here about being more of an Engineer than a marketing expert or business strategist?)
What is eBay?
So what is “eBay” really? eBay Inc is the parent company across eBay Marketplaces (the ebay.com web site), PayPal, eBay Enterprise, and numerous other related smaller companies. The overarching vision of the eBay family of companies is to provide services to the commerce space. The ebay.com marketplaces web site is a service that allows people to buy and sell online without having to run any IT systems themselves. PayPal is payment service taking the risk out of online transactions – all the IT infrastructure is run for you. eBay Enterprise offers a wide range of services for their clientele. They do everything from hosting online stores, order management, display ads, photography of products, marketing services, warehouse management, omni-channel fulfillment (including ship from store), and more. These are all services you can use, if you decide the cost is worth the benefit for your business.
eBay Inc is also a commerce enabler, rather than being a merchant itself. It’s purpose is not to buy or sell products but rather enable others to do so. This is a part of the core purpose of the company. I remember hearing Pierre Omidyar (eBay Founder) say he aligned the beginning of commerce with the beginning of civilization. The fact that commerce occurs helps both the producer and the consumer. Commerce is not something to be ashamed of (“I am trying to extract money from you against your will”) – it is something to be proud of (“I can save you time and money, and give you access to things you would not have had access to otherwise”). OK, this is true for most businesses anyway! So enabling commerce brings good to people on both sides of the equation. Enabling more commerce to occur is a metric of success for eBay, and Magento certainly aligns with that vision – lowering the barriers for businesses to do commerce.
Magento / eBay Enterprise Alignment
The alignment of Magento with eBay Enterprise is a strategic decision by eBay. One goal is to make eBay Enterprise services available to a broader audience – the Magento community. However eBay (rightly in my opinion) has decided not to lock Magento in to eBay Enterprise services. Instead eBay has renewed (even expanded) it’s commitment to Magento being an open source platform. That is in complete alignment with the greater eBay Inc goals of enabling commerce. Being open source is good for the existing Magento community and new businesses who want to get into the online space. The eBay Enterprise alignment is then a bonus for those merchants who can benefit from the scale and expertise of eBay Enterprise. Such merchants will have the option of adopting eBay Enterprise services as their businesses grow.
Over the next year or two I expect to see better and better alignment of eBay Enterprise services with Magento. It won’t be instant, but it is clearly the direction. Existing eBay Enterprise customers won’t be forced to Magento, just as Magento customers won’t be forced to eBay Enterprise. But barriers will be broken down to make adoption of eBay Enterprise technologies in Magento easier and more cost effective. It is the scale of the Magento community that has the potential to drive down costs. The end result is technologies and services that were traditionally only available to the top end of the market will work their way down market. Businesses will be able to take advantage of advanced technologies as services provided by eBay Enterprise, without the overheads associated of running them.
How to make such integration of eBay Enterprise services into Magento be more efficient and lower adoption risk? By improving the upgradability of Magento, reducing extension conflicts, improving modularity, and … sound familiar? (See my previous blog post on Magento 2 goals.) That is, the same set of features that are good for the Magento community and ecosystem are also good for eBay! This is the ideal – eBay investing in its own goals and ambitions, with direct benefit for the community.
First Integration Examples
For me, it was great to see a few first examples of this integration at the Magento Imagine 2014 conference. As well as the integration of Magento 1 with the eBay Enterprise back-end Retail Order Management (ROM) system (use Magento as the front-end, but backed with a hosted highly functional and powerful back-end, with lots of other follow-on services you can then expand into), it was nice to see two other eBay Enterprise extensions hit Magento Connect for the conference: the eBay Enterprise Display Extension and the eBay Enterprise Affiliate Extension. Both are services offered by eBay Enterprise (the Magento modules are free, the services are for fee). The first can help target your ads on other sites to people have visited your site before (a way of reminding them later about your site to try and bring them back), the second can help you manage affiliates to direct more traffic to your site (with a pre-existing network of thousands of affiliates to tap into). It is an example of how eBay can make technologies not normally available to smaller business accessible to the broader commerce community. I believe some customers have already gone live with these extensions within weeks of them hitting Magento Connect.
To me this is all good news. The plans for Magento 2 benefit both the community and eBay at the same time. eBay wants to enable more partners to develop solutions for merchants. eBay wants to help grow businesses around their e-commerce strategy. eBay wants to make eBay Enterprise services available to the Magento community bringing higher end technologies available down market. eBay sees the value of Magento being open source. And eBay wants to build features into Magento that are good for the Magento ecosystem. All of this to me indicates a rosy future for Magento under the eBay Enterprise mantel.
There is a big issue with this. You will be competing against your industry partners and potentially your solution partners aswell. And the competition is totally biased, because eBay is able to push their own technologies over that of its partners and will likely win. Its very much like the way Microsoft put Internet Explorer in Windows and knocked out Netscape, not because of the product being superior, but they had the platform and the resources to smother the competition.
There is no doubt in my mind that this push down from eBay Enterprise will happen, and if it does that means as you say we will get eBay software inside Magento CE/EE.
And that is where I believe you then have a problem. Because those partners (that incidentally have spent the last 5 years propping up Magento whilst they have been sorting themselves out), will jump ship and go work on other eCommerce platforms and even completely different projects where they are going to be able to get better ROI. Because the reality is that open source, and even paid offerings are only workable if companies are earning good revenue from it. And if that stops happening then watch your community shrink.
I also feel here that there is a total disrespect of what companies like WebShopApps have done over the last 5 years. You should be working with us, not looking at taking us out of the revenue opportunities. It’s shocking to see this approach, and greatly disappointed me to find out this was the route being taken at Magento Imagine.
What I’m afraid of then is that you will be basically with a community where its effectively people doing unpaid open source work. And the issue you have there is that actually that doesnt work, it doesnt give the level of quality required to make a great platform, you only have to look at the likes of osCommerce to see the issues with the open source community (I appreciate the platform is less solid but nonetheless there is no money there and as a result you get a certain type of quality and a certain type of support).
So in conclusion I disagree with this approach, you could greatly affect the balance around the extension and industry marketplace, and I can categorically say that eBay will not be able to build the tools that are anywhere near as powerful as what this community has come up with over the last 5 years. An effective argument is not to say the pie is big enough for all, its clear if you start going a certain route with offerings they will only expand, so eventually eBay will be taking most of the pie, leaving the crumbs. Don’t expect companies like WebShopApps stand by and watch that happen, we would be having a very good look at our options on other platforms.
Firstly, thanks for the comment! Not an easy one to answer as not my primary area of responsibility, but happy to openly share my views as best I am able.
I don’t run a business, so certainly don’t want to come across as having more experience than others here, but here is why I see it differently. Hey! Call me biased! I do work at eBay after all! But here is my personal view. It boils down to ecosystem and market segments.
Oh, and I will obviously only base my personal comments here on public information – I value my job! 😉
While I absolutely acknowledge that I have never run a Magento business like you have, I was however involved in a University spin-off back in Australia where we had to make profit to pay our own salaries. We did both core product development and custom application development for customers. So while I am primarily an Engineer, it is not that I have never been involved in running an IT business doing its best to thrive and grow.
A fundamental principle to me is if you increase the water in a lake, everyone in the lake rises with the tide. There can ripples and waves on the lake in the process with boats bumping into each other occasionally, but the end result is a bigger lake with more opportunities for everyone. As I read it, your concerns are if the lake does not get bigger, then eBay being more active could reduce the size of the remaining lake for others. I view the eBay plans as a way to make the lake bigger for all. If you read nothing else, I suspect that is the key point.
First, look at eBay Enterprise current customer profile (http://ebayenterprise.com/clients/). They support Toys’R’Us, Dicks Sporting Goods, Sony, Ralph Lauren – these are top end names with high end expectations. Large companies tend to want to deal with other large companies. (That was certainly the trend back in Australia anyway.) Coming down-market from there is still large(ish) scale, and is currently not the strongest current market segment for Magento (from what I see). By increasing market share there, the ecosystem will have a larger number of larger potential customers for their services, and ones with deeper pockets. They will have different needs that different partners can service. This is an example of raising the level of the lake helping everyone.
With respect to integration partners, to reach more customers eBay sees value in the Magento partners out there. Magento has always had an Expert Consulting Group (ECG). This has not stopped other partners from doing well in the past. I don’t see this changing in the future. If you look at the Retail Order Management (ROM) integration, eBay has been talking with integration partners to do projects. I have not seen eBay trying to keep all these projects to themselves. eBay I think recognizes it can be more successful by leveraging the partner community rather than trying to replace it.
One other market I know a bit about is PeopleSoft consulting (again, back in Australia). Oracle have their own consultants, but there are a lot of system integration companies out there that very successfully compete for work. In fact, it is a common pattern to get a system integration partner for most of the work and then bring in an Oracle consultant for part of the work – say for reviews. Customers feel safer knowing they can call upon Oracle directly if needed, so it can actually help partners to get work.
Does this mean there will be zero competition or change with the new strategy? No! But if I look at public actions eBay has been taking, they are working with integration partners, they are trying to increase market share (providing more opportunities for integration partners and extension developers), and the extensions I see are more likely to be targeted at the upper end of the market where there is currently less extension developer activity (although you would know the accuracy of this better than me! – and I somehow suspect you will let me know if this is the case! 😉 ).
Is eBay talking with integration partners, extension developers, and customers? I see lots of two-way discussions go on at conferences etc. I could well believe more of this occurs with customers (merchants) as they are the ultimate decision makers and source of funds, but this is not my area so I cannot really comment here.
I don’t need to tell you that there are a lot of other extension developers out there competing with each other. Any business has to compete and be aware of shifts and what their competition is doing. There are also other product lines other than Magento. If eBay does nothing there is the risk that the Magento “lake” will shrink rather than grow, and I think that has more potential to do harm than eBay rocking some boats while doing things to increase the lake size. And do you see the other product lines as being more friendly to extension developers than a company who makes the core platform available as open source and is investing to make it even easier to extend the base platform?
I do think the community being so open with so many forums and meetings is pretty savvy. They learn what works well and what does not, and what circumstances one product is more suitable than another. I do not believe that eBay will get an automatic huge unfair advantage if it does release a service similar to an extension developer. I believe market is too smart and knowledgeable for that. There is also the question that there may not be enough money in the lower end of the market to even make it worthwhile for eBay to try to do anything there. For example, I don’t understand how eBay could be successful trying to make a business from selling $100 or even $1000 extensions – I think (really personal opinion here!) eBay will be more successful with companies who grow beyond what the current Magento ecosystem can support well. Keeping such merchants in the Magento family longer I can only see has helping the ecosystem as a whole.
In terms of eBay software inside CE/EE I will simply point at announcements at Imagine such as eBay increasing its commitment to open source, and increasing its commitment to making the platform as modular as we can. The code is on GitHub. eBay cannot wave a magic wand and generate software suddenly twice as fast (boy I wish we could!). What you see there is what you are going to get. Will eBay include more features in the core Magento product? That is nothing to do with eBay Enterprise alignment. It also feels like dammed if we do (eBay may hurt some extension developers) and dammed if we don’t (“why isn’t eBay investing in the product?”). This is just a hard call that eBay must make at times. I can only point again at increasing the total market size as ultimately being more important for the community as a whole.
Bottom line is I see eBay investing into areas where Magento is weaker and if they increase the market size, everyone can benefit. But obviously this is my opinion.
I see your angle, and appreciate the position, I am not stupid, or naive, I understand business and corporations, and I understand they need to make money. I still maintain I believe the approach and business model is wrong. I know there are other ways this nut could be cracked without going this route, which ultimately would be more lucrative to Magento/eBay and actually use far less resources, whilst producing much better products. And balance open source with the need to generate revenue, not just for eBay but for this massive community that actually IMO is Magento right now.
Just make sure you ensure “lake superior” still has feeder lakes where there are plenty of large fish. Plus ensure that eBay can produce a better product than the community, because if it can’t you risk the lakes drying up and people fishing elsewhere. Most of us make our revenue from the big fish, and we support the small fish as part of that. Its an ecosystem, you disrupt it too much it collapses. Says someone who has sat right in the middle of this for 6 years.
I have never heard the words “stupid” or “naive” with the name WebShopApps! I know I am relatively new to the Magento ecosystem so value any feedback, whether nice or painful… 😉 So thanks for the feedback.
Alan, we (Wagento) are in a little different place that WSA. We are an integrator, so some of these possibilities are quite exciting. Especially if we can tack on a Magento front-end to a eBay enterprise backend. I know there are a lot of moving pieces and many things still needed to be put in place, but it seems like (at least on the surface) this will only enhance what Magento can do for the end user and open the market to even more users. Thanks for a great article!
I am relatively new to the Magento ecosystem compared to many, but the success of Magento feels to me to be a result of its flexibility. So making it more flexible feels to me to be good for all. If different segments of the market go different ways, that is fine – even good. That Magento can adapt is good. I am glad this flexibility is being supported, even encouraged, internally.