eBay & Magento: consolidation of e-commerce market

eBay & Magento: consolidation of e-commerce market Banner

“All developers from Ukraine, who we know, have the excellent professional level” Yoav Kutner , Co-Founder/CTO at Magento, Inc.

Regarding to the investigation of market-research agencies, such as Forester, the world e-commerce market is formed on present. It grows from year to year in about 10%, and world on-line sales will reach about $249 billion in 2014. In the USA Internet commerce influences to more than half of all retail market – through Internet tools, that helps customers make purchase decisions.

In this situation of stable growing prospective market, the key players of e-commerce unite assets and coordinate strategic policy. Recently the most famous world brand of on-line trading, eBay, informed about acquiring Magento, one of the leading e-commerce platform.

Earlier, in February of this year, eBay announced that had made a $22.5 million investment in Magento.

This deal could seem small, especially in comparison with other eBay purchase this year – GSICommerce, maker of e-commerce and marketing tools, which cost for eBay $2.4 billion. But forSMB e-commerce market deal with Magento can create huge impact.

Magento is very comfortable platform, especially for custom software development company, that develops custom e-commerce applications – it allows to build module solutions with flexible web application development prices.

From its start at 2001 Magento (first name of company was Varien) actually as software outsourcing company –  all development center located in Ukraine. Low cost Magento developers allows the company to keep the high level of profitability.

Uniting PayPal, Magento and its original web application services, eBay plans to accelerate development of their own open source e-commerce platform for retailers of all sizes – X.Commerce. eBay tries to become a strategic commerce partner for all kinds of online merchants and web application developers. Without doubts, Magento, which mission is “to be at the core of ecommerce”, has achieved distinguished results on the way of building e-commerce ecosystem. Magento and its new software-as-a-service (SaaS) solution called Magento Go use tens of thousands e-commerce merchants today and eBay hope using this web developers network to include Magento’s innovation techniques and skills into their strategy.

From other site, in its press-release eBay announced that Magento strategy will not change in the near future, and both brands, Magento and X.Commerce will develop simultaneously. It looks strange and little inconsistently.

It remains a lot of uncertainties in strategy of new X.Commerce platform. Maybe the most important  question is: how it will be able to overcome the biggest challenge in the e-commerce world – converge of online and offline shopping. We hope, the situation will become clearer after X.Commerce Innovate conference on October 12-13 in San Francisco this year.

July 28, 2011