Since the announcement of Magento’s acquisition by Adobe, I have been getting a lot of messages asking me what I think about the deal and where all of this may be headed.
The biggest concerns are about the potential changes that Adobe may apply to Magento’s price list. This is no surprise to me as Magento contracts give clients the ability to adjust pricing on a yearly basis. This is important as any investment in an eCommerce ecosystem/environment constitutes a 5 to 6 year project.
There are also concerns about whether or not Magento will maintain a certain level of independence in the long run.
There is no official answer to these questions and preoccupations, simply because Adobe has not had yet made their intentions clear. They have, however, been clear about the fact that they want to preserve the community and ecosystem dynamics, and about the fact that Magento will help them close the loop in their “customer experience” story.
One thing is for sure, Adobe has all the tools to fill the gaps that Magento had in terms of experience-driven commerce, content management, personalization and AI.
What I can tell you, however, is what I would do if I was in Adobe CEO Shantanu Narayen’s shoes, following the acquisition.
Don’t change the pricing model. Address the elephant in the room, which is on everyone’s mind, from Magento prospects to clients to partners.
The first and most common question I have been getting since the acquisition announcement has been about pricing.
Magento has been extremely strong in the mid-market and has gained momentum with large corporations lately, both on the B2B and B2C commerce space. This being said, Magento is facing stiff competition for the SMB portion of the market from Shopify and Big Commerce.
SalesForce Commerce Cloud (formerly Demandware) and Hybris are making big pushes in the lower end or SMB portions of their own markets.
Shopify and Big Commerce have aggressive pricing by default, and SFCC has been lowering their price to become more attractive to smaller merchants.
The Magento discount model attached to average order value (AOV) has been a very clever way to accommodate B2B, where margins are smaller – though, in my experience, any price increase would make Magento a tough sell to B2B companies, an area where Magento has made great progress thanks to its accessibility and feature set.
Combined, these factors suggest that the balance is fragile at this time. Any major change – other than lowering pricing – could put the current customer base at risk, jeopardizing one of Magento’s key competitive differentiators.
Recommendation: I would not make any major changes in the pricing structure.
Capitalize on Magento’s strong position in the mid-market:
Magento is very strong in the mid-market, whereas historically, Adobe has struggled to penetrate this key segment.
By acquiring Magento, Adobe gains access to thousands of enterprise customers and, maybe more importantly, gains access to hundreds of thousands of merchants who are Magento Community users, a significant point of entry into a highly-coveted market.
Similarly, big data, business intelligence/analytics, content management, digital asset management, etc. have never been Magento’s strongest point.
I would definitely try to find a way to commercialize Adobe’s solutions to that huge potential client base.
Integrate Magento and Adobe Experience Manager (AEM)
I would invest in developing a headless version of Magento that would perfectly integrate with Adobe Experience Manager (“AEM”, Adobe’s content management platform).
That edition would definitely have a specific price tag attached to it.
While I am at it, I would incorporate a PWA (Progressive Web App) approach into this at the same time. That product would become my “Adobe Commerce Cloud Edition.”
Brand: Leverage Magento’s brand capital and identity
In its communications thus far, Adobe has highlighted the importance of Magento’s strong community of developers, which is indeed enthusiastic and has been key to Magento’s success.
I hope Adobe truly understands the emotional connection there. Developers in the Magento ecosystem are proud to be Magento devs, and certified devs wear that as a badge of honor.
There is a hard-to-measure but quite tangible “cool factor” to have those Magento skills, and to have them recognized in a community of peers.
If Adobe tries to replace the brand by clumsily imposing the bigger, more corporate Adobe identity, that emotional tie would be threatened.
I am not saying that Adobe isn’t cool, I’m just saying that to Magento people, well, Adobe simply isn’t Magento.
I think Adobe should consider maintaining the Magento brand within Adobe’s corporate and brand structure (Magento Commerce by Adobe?), while coming out with the headless version I was referring to in the previous point.
As for Magento Commerce Order Management and Magento BI, these products don’t have a significant footprint yet and are agnostic. Those could immediately be rebranded as Adobe Commerce products.
“Use the Force”: Leverage Adobe’s enterprise sales team, who are already on the field
One thing SalesForce did really well when they integrated with Demandware was leverage their enormous and very effective sales team to promote the new SFCC offering. Adobe has a strong sales force and should move swiftly to leverage that significant asset.
How? Unify and align the Adobe sales team to strongly push Magento to Adobe’s Enterprise customers and prospects.
Bottom line, there is tons of synergies that can be exploited in this major transaction.
First things first, though. It will be important for Adobe to quickly communicate their intentions about the pricing structure which is, in my opinion, the most critical and urgent element.