Eye on eCommerce: Mark Lavelle, CEO, Magento

$50 billion worth of products are sold via Magento infrastructure every year, that's over a quarter of the world's websites sitting on the open source eCommerce platform.

"Imagine the amount of people working on the platform, the amount of innovation happening and the learning that takes place," Magento's CEO, Mark Lavelle, tells Essential eCommerce.

In fact, 250,000 businesses run on the Magento platform, working with one of the company's 300 systems integrator partners or army of thousands of Magento developers.

"Magento would be second only to Amazon if it was one site, that's how massive the Magento ecosystem is," says Lavelle, noting how the company itself is less than 1,000 employees based in Cupertino, California.

And that's a lot of responsibility for a company which is less than a decade old. Acquired by eBay in 2011, it was only at the end of last year, after absorbing critical investment and learnings from the marketplace giant, that Magento became an independent company. Lavelle was closely involved with Magento during his role as SVP of strategy and business development at eBay, and after the company was spun out by the Permira private equity fund in November, he stepped up to the role of CEO.

"Inside of eBay, Magento has grown to be the number one omnichannel commerce provider. Now we're independent and we've got the Magento brand, which is well known by developers and systems integrators all over the world."

But Magento has had a rocky start to its independence, with a series of cyber attacks, one last autumn and another at the end of January which could allow attackers to access sensitive data.

Of course, Lavelle says Magento takes security seriously, acting quickly to patch any possible vulnerabilities and communicating the new security releases to its customer base and partners.

But separating from eBay will make the business stronger, insists Lavelle, giving it the opportunity to focus on retail technology innovation.

"That is what a smaller company can do – move fast and focus," he explains. "So we're innovating a lot faster and our message and brand is a lot clearer."

"Not just eCommerce"

And a clear strategy going forward is not only eCommerce, but a more holistic approach to digital and retail.

"It's not just eCommerce now," he says, describing how brands are asking for technologies to support the full digital experience for customers.

"Depending on which study you read, but let's just say 50-70% of a customer's buying preference starts on a digital platform, even if 80% of what happens, happens in the store. Your brand is digital, because your customer is digital."

He says the days are over when retailers can think of eCommerce as a separate silo. "The difference in screen sizes matter, whether customers are experiencing you on Twitter or a Pinterest Buy Button, whether you decide to sell on Alibaba, Amazon or eBay – you have to have a branded experience which is consistent."

While retailers have realised this for some years, this omnichannel movement is still new to a lot of famous brands, which up until now, have not had much control over selling their products.

And over the last couple of years brands have become Magento's largest growth area, enabling the company to put in more capabilities specific for B2B and D2C retailing because whether their clients are wholesale, vendors, or customers, Lavelle says they all expect the same thing – digital experiences, curation, personalisation and omnichannel fulfilment.

This is demonstrated by Magento's recent customer win, Jack Daniels, which is definitely not your typical 'retailer'.

"They have their website, social media and they engage with their customers everywhere and Magento helps them do that," explains Lavelle. "But they used to have one [wholesale] order, but now you've got an order coming in from the website, or maybe from a pop-up store in Manhattan, they have to connect that with their supply channels, and that's where our commerce order management comes in."

The order management system takes payments, manages inventory, as well as the customer relationship to help create a seamless shopping experience across different channels.

"With brands like Oscar De La Renta and Christian Louboutin creating gorgeous websites on Magento, you know when companies like that are putting their brand on your platform it's all about being able to create a unique defining brand experience."

Open source eCommerce

But what Magento is really famous for is open source. "That's what really differentiates us today," says Lavelle.

Magento 2.0 was released in November and as with previous iterations, the platform's building blocks are open source and available to anyone. "This means it is highly integratable and extendible to everything you want to do."

And importantly, open source means retailers are not locked in. Where Magento makes its money is by offering enterprise services which plug into the open source platform and allow the company to scale and upgrade to include functionalities like the order management system. And Lavelle says most brands tend to select enterprise packages right from the beginning – like Jack Daniels which has a strategy and needs solutions to solve particular challenges. In fact, 3,000 of the 250,000 businesses running Magento use its enterprise package.

But Lavelle is so confident with Magento's added-extra services he believes a replatform to Magento will be the last replatform a retailer ever does. He said most retail clients have built their own webstores internally using legacy systems which are outdated, so Magento doesn't really take customers away from its competitors.

"We want that to be the last platform decision you ever make," he says. "While you may swap out varying technologies – maybe a CRM system or product information management (PIM), the things that are changing really fast – you don't really want to replatform anymore, it's too expensive and that's the company we've created."

But technologies and retail trends do keep coming in and out of fashion. Take click & collect, for example – it's been a phenomenon in the UK for a couple of years, radically changing how customers get hold of their online purchases, but the US, due to its size, has been further behind in the adoption.

"In-store availability is probably the game-changer of the decade for merchant profitability and for customer growth," says Lavelle, who explains that click & collect is now the next big thing for retail.

"But over the next couple of years, you'll be talking about social platforms like Pinterest having a big impact on leads and demand generation – we have 8,000 extensions which happen on our marketplace, so when we see Facebook Commerce is the number one download, that tells us people are experimenting with it, so I think that's next."

But none of this innovation can happen without commitment from the retailer and board-level investment.

"The pace of change is really hard on our clients and we could do everything right on the software side, but it's a whole company decision to be digital," adds Lavelle. "It's how your marketing works, how your customer support works, it's about your fulfilment."

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