Leaving eBay and the Future of Magento

On November 3, Mark Lavelle, CEO of Magento Commerce, sent out a letter to all Magento partners and associates officially announcing that Magento has become…
  • Alyssa Schaad
  • Support Operations Manager
  • January 20, 2016 Estimated reading time: 4 minutes

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On November 3, Mark Lavelle, CEO of Magento Commerce, sent out a letter to all Magento partners and associates officially announcing that Magento has become an independent company, backed by Permira. As with any transition or acquisition, consumers of the product are bound to have questions. What does this change mean for merchants and their storefronts? What does it mean for the agencies that are exclusively relying on the existence of Magento?

Permira is a global investment firm that backs and sponsors brands and has a reputation for financing large enterprises. For the average consumer, the most known company in their portfolio will be Doc Martens, the modern and distinctive shoe brand based out of Northampshire England. Permira’s history of investing in successful enterprises and encouraging those enterprises to grow is one of the highlights of this transition.

Since the takeover, more and more websites that run on Magento have launched. Backed by the successful announcement of Magento 2, the platform only seems to be growing.

But why did eBay decide to sell Magento in 2015? Especially when it was acquired by eBay in late 2010 and even announced that decision in 2011.

The answer comes in the form of one man: Carl Ichan. Mr. Ichan is eBay’s major investor. He controls some of the largest parts of the machine, and he’s responsible for nominating those in charge of running and managing eBay’s board of directors.

Early in 2015, he engaged in a proxy war with eBay, firmly stating that a separation of Paypal and eBay would benefit both companies. When met with resistance, he released only one statement and stuck with that until the end, “eBay would benefit from the separation of PayPal at some point in the near future and [I] intend to continue to press my case through confidential discussions with the company.”

It didn’t take long before whispers began, stating that it wasn’t just Paypal Ichan wanted to separate from— it was Enterprise as well. Long since assimilated with eBay’s Enterprise program, the Magento community was suddenly thrust into center stage. What was going to happen, who was going to get what, and how was it all going to end? For months the eCommerce community watched with rapt attention, waiting to hear eBay’s response.

In 2012, of websites ranking 250,000 or higher, 8,087 websites were built on the Magento platform. A total of 23% of the market share. However, by 2014 that statistic increased drastically. 12,252 websites were built on the Magento platform, totalling almost 30% of the market share. The next closest competing platform is WooCommerce with 7.8% of eCommerce websites built on that platform. And that trend only continued in 2015. Both Magento CE and EE retained nearly 30% of the market share.

Magento seemed only to be solidifying itself as a contender here to stay, but Ichan’s determination continued. In July, the eBay/Magento team released the Beta for Magento 2. Then, more development news soon followed. Launch dates, impressive excitement at the 2015 Imagine conference, and new discussions on where things would go.

And then, almost inevitably, eBay conceded. Ichan’s decision to split Paypal and Enterprise from eBay was set in stone. eBay would move on, leaving Magento to fend for itself.

The good news, however, is that Magento was doing progressively better. It’s capital, it’s business, and it’s market share all held true. And now, it was no longer in eBay’s shadow. One of the most detrimental parts of being a subsidiary to a goliath such as eBay is the fact that everything Magento wanted to do was restricted by the focus of eBay’s marketing and internal review team. Magento had no freedom to grow, had no freedom to improve, and it had no freedom to change.

Endless corporate reviews, constant changes in structure and lengthy pauses amongst the development and support teams left Magento post-Ichan in a maelstrom. One that seems to have long last begun to settle down.

The stock is divided once more, allowing new investors to seek gain by becoming involved with a “new” company with strong prospects. Increased attention to the core values of Magento now allows for new opportunities and possibilities. Mark Lavelle, CEO of Magento, said as much himself in his welcome letter to all Magento partners. Calling themselves “a new company that combines our flagship Magento platform with innovative mobile and omnichannel products, focused on driving growth in every facet of commerce…Today, we emerged with the resources and established product set of a market leader, yet with the energy, independence, and innovation of a start-up.”

Magento’s proven success as a platform and the start of the Magento 2 platform that’s already showing great promise is something that helps pull in new investors, merchants, and agencies.

So while it might seem scary knowing that Magento is no longer a part of eBay, it is an improvement that will allow Magento to continue growing and retaining its core standards. Two months in, Lavelle’s hope that Magento maintains high “customer expectations, faster technology cycles, [and a]competitive differentiation” seems to be well in place.

Merchants and agencies look forward to seeing how Magento evolves from this transition, and building more websites on this new, but old, platform.

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