My answer to this question was originally posted in the Clarity.fm Q & A area. I shared my answer and wanted to repost here.
Shopify is the best use case for $0 to $1M ish, depending on product line, how many transactions that makeup, and if there are some custom things that are not possible on Shopify that realistically lead to huge gains that would cover more costs of a custom solution with something like Magento.
I recommend Shopify to everyone starting out.
That’s what we used at Diamond Candles up until about a $5M run rate. We were/are growing quickly so we hit a point where payoff of customizing checkout flow, add of social sign-on, etc. that could not be done because of Shopify, would cover and surpass costs of a more custom option.
Best to think about this simplistic example.
Ecom Platform Market in 3 Buckets:
- Starting out: $0-$1M ish
- Wow looks like you have a business, congrats: $1M-$20 or 50ish
- You are/could be publicly traded on the stock market: $50M+
Take a look at usage #’s for market share size from independent third-party analytics tools from Builtwith:
http://trends.builtwith.com/shop/Shopify/Market-Sharehttp://trends.builtwith.com/shophttp://trends.builtwith.com/shop/hosted-solution
Just because something is found on the web more isn’t the full picture.
Ex: I could make a blogging platform and have a bunch of scripts and bots install it on millions of domains and I would have the majority of the market for blogging platforms (ya that would take a while and isn’t a realistic scenario but you can get the point).
Providers leading these categories? (List not intended to be exhaustive)
- Shopify, BigCommerce, Volusion, Magento Go,
- Magento (varying editions), Yahoo Stores, Symphony Commerce
- Demandware, GSI Commerce (now eBay Enterprise), Magento (varying editions)
At the end of the day, a good illustration goes like this.
A truck and a moped are two different things. A truck is not trying to out ‘moped’ a moped and a moped not trying to out ‘truck’ a truck. They are both perfectly suited to different applications, situations, needs, and circumstances. The same goes with who you choose to handle your ecom platform.
For 2-3 search for internet retailers first 500 and second 500 lists. Pull off all e-commerce companies doing between $10-$50M as an example. Use the builtwith.com chrome toolbar to tell you what platform they are using. Hire someone for $2 an hour via odesk to make a spreadsheet of everything and the make a pretty little pie chart. Now you know what each revenue volume level chooses as 1, 2, 3 preferred platforms.
Option 3 as a side note but very important one, is primarily a platform and commerce as a service model with companies like Demand Ware and GSI Commerce leading the market with platform and services including but not limited to customer service for the brand, fulfillment, marketing services, website product photography etc. Their pricing models are based on gross revenue share. ie. SportsAuthority.com does $100M online this year, GSI takes 30% of that to cover everything.
(I am not attempting to have intimate knowledge of the exact #’s of the agreement between both parties, this is just an example)
You can almost pick any traditional brick and mortar retailer and if they have a website where they sell things, they all do, GSI or DW are the people behind the scenes running the call centers, shipping etc.
Diamond Candles, my company, who started on Shopify decided to not go with the market-dominating option of Magento for a few reasons. One of which being the upfront cost for an agency or on staff Magento CTO type. We decided to partner with a newer entrant, Symphony Commerce, which blends the 3rd category model of platform plus service.
Rev. cut is significantly smaller than providers in category 3, but still get benefits of volume savings on shipping volume, scalable customer support that can handle rapid growth and occasional spikes without us having to worry about scaling or implementing best practices, and a fully customizable platform as a service so to speak that doesn’t require us to have in-house tech but where we are essentially renting part-time e-commerce engineers from with resumes that list Google, FB, Twitter, Magento, Amazon, etc.
So in summary…
If you are <$1M in revenue just roll with Shopify. Greater than that but less than $50M ish then I would recommend looking into Symphony.
If Symphony is interested in letting you in then you after you apply then you won’t have to incur the upfront costs of an agency and implementation and you will have an ongoing partner equally incentivized in your long-term success financially. We preferred that element obviously that is why we decided to go with them. An agency model is incentivized to offer a one-time finished product and their revenue is not tied to my financial success.
It is the closest thing to an equity partner while returning our full equity.
What platform(s) have you had experience with at your companies (whether employee/owner/founder) and where do think they excelled within their market focus?
Thanks so much for sharing Justin!
Your welcome Ray!
What makes you qualified to give advice to business with over $50 million in revenue when you sell a tenth of that in only candles?
Ouch, not sure where I claimed to know everything about ecommerce. Just sharing some things that I have learned and what has been helpful for me. If you don’t find what I share to be helpful then feel free to read things somewhere else 🙂