For online retailers, there are a wide choice of eCommerce platforms to choose from, with varying benefits and functionality. At the mid-level end of the market, the pot gets much smaller, with a relatively low number of platforms offering the levels of functionality, security and scalability that £1m – £20m turnover clients typically require. In this article, we take a look at two of the primary options in the mid-level eCommerce marketplace, Magento Enterprise Edition and Shopify Plus, to see how they compare against one another.
I’ll be focusing on Magento 2 Enterprise Edition (EE) and Magento 2 EE Cloud, both of which are relatively new to market. Magento 2 is designed to be more scalable than the Magento previous Magento 1.x, however merchants moving to it may face issues with stability, a lack of available modules / extensions (vs Magento 1.x) and complex integrations. As much as I think that Magento 2 will be a very strong solution for the mid-level eCommerce market, it does have issues at the moment and merchants moving over are still essentially early adopters.
Introductory Overview
In terms of market share, Magento is ‘probably’ the world’s biggest eCommerce platform (some studies claim WooCommerce is bigger in terms of merchants), with over 250,000 live stores from all over the world. Magento is also the leader in terms of the number of the top IR1000, IR250 and IR100 merchants, which is impressive. However, almost all of the stores are on Magento 1.x, which is a very different platform. Examples of large brands using Magento (all versions) include Paul Smith, Nike (AU), Nobel Biocare, Agent Provocateur, Hermes, Harvey Nichols, Fred Perry and lots more. The largest merchants on the platform are said to turnover close to $1bn online, although there are very few at that level.
In comparison, Shopify Plus’s market share is far smaller, however they’re gaining momentum really quickly. Shopify Plus have a very different proposition to Magento – providing a fully hosted, fully supported (24/7 store support) platform with various supporting products, including a popular POS system and several other routes for selling (e.g. Facebook shop). Shopify Plus have only been really pushing growth for the last ~12 months and they now boast brands such as Tesla, Matalan Direct, LA Lakers, Shore Watches, Herschel, Vanity Planet and many more. Overall, Shopify’s number of merchants, but it more at the lower level, is comparable to Magento.
Magento EE and Shopify Plus both have price tags that all but prohibit their use for smaller retailers. Magento EE licensing starts from around $20k and increases based on the merchant’s turnover, whereas Shopify Plus is a flat $2,000 per month. Magento 2 EE Cloud has an additional cost for the cloud architecture, which will vary dependant on the merchant – things like load, setup etc are factored into the cost.
On the face of it, these costs don’t seem hugely different. However, Shopify Plus is a fully hosted, cloud-based platform, whereas Magento EE (non-cloud version) is a self-hosted platform that requires a robust and resilient server setup with plenty of processing power to handle Magento’s resource-hungry core, which adds significantly to Magento’s operating costs. Generally, I’d say that a mid-level merchant will pay hosting fees of anywhere from $4,000 per year to $40,000 per year, however, Magento EE Cloud will work out slightly more than this.
Both the self-hosted approach (Shopify and M2 EE Cloud) and the fully-hosted approach (Magento EE) could be seen as either a positive or a negative. Since Shopify Plus is fully hosted, on Level 1 PCI DSS compliant servers, PCI compliance is more or less taken care of for the retailer, whereas a merchant using Magento EE has to personally ensure that their own server configuration meets all PCI compliance regulations. Likewise, a Magento EE client is responsible for all server security, as well as the application of patches to the Magento core codebase, whilst this is all taken care of for Shopify Plus clients. All areas of a Shopify Plus store are fully encrypted using SSL, not just the checkout pages. Whilst this is perfectly possible to do within Magento EE, it would add to the processing power required to serve up those pages.
Pricing in more detail
The costs associated with Magento will generally be higher – the license fee starts from ~$20k per year and case rise to around $75k, which is based on turnover. There are four tiers for Magento pricing are:
Up to 1M
1M – 5M
5M – 10M
10M – 25M
In addition to these costs, you also have the integrator costs, which is where the high initial costs are going to come in. A Magento 2 Enterprise build is likely to start at $100k and can go up to around $1.25m from experience.
Shopify Plus currently have a flat $2k per month fee, which covers all licensing and support costs. This is a real benefit of Shopify as it’s both affordable and covers a lot of the core areas where additional costs would come in (such as hosting, managing scale, account management, support etc). The costs around developing the store itself are also likely to be lower – I’ve generally found the hourly rates to be lower than the top tier of Magento agencies, more in-line with $100 an hour, although this would vary.
One of the biggest things that sets these two platforms apart is the pricing – both in terms of licensing costs and on-going development. Shopify’s flat $2k per month is really appealing, especially as you get very strong support included within this – this covers development, using the platform and things like conversion marketing / growing the store etc, which is a real benefit.
Paying Magento’s license cost is the only real time you’ll deal directly with them, unless you want to use the Enterprise Consulting Group, which is very expensive (but they’re also very good). The real cost of using Magento 2 Enterprise Edition lies with the systems integrator, who generally charge high fees, compared to Shopify Plus. The average rate for a Magento agency for merchants can expect to pay the top tier of agencies is anywhere from $100 – $250 per hour.
One thing I would say though (and I’ll come onto this in more detail later), is that the Magento partners are generally very experienced with the platform and they’re required a lot more, whereas Shopify Plus is still new and the agencies are generally pretty new to the platform (apart from a few exceptions).
From experience, a Shopify Plus project is likely to cost considerably less because of the amount of work that Shopify take on (systems integrator / agency cost) – plus, if you’re migrating from Magento, they’ll handle all of the data import and give you 6 months’ licensing for free.
Core Functionality
Anyone logging into both Magento EE and Shopify Plus will see instantly that Magento has a much richer core functionality than Shopify Plus. Whilst Shopify Plus has a comprehensive feature-list that will satisfy lots of mid-level retailers, Magento EE excels in areas such as sales promotions, customer segmentation, attribute management and merchandising.
In terms of the standard features, I’ve split out some of the core things that merchants would look at below:
Product types and management – Magento Enterprise Edition has 7 core, standard product types, which are simple products, configurable products, bundled products, downloadable products, virtual products, bundled products and the 7th (enterprise only) is gift cards. Shopify only has two types of products, which are simple and configurable products. Magento has a lot more freedom for complexity in this area and is far more suitable for merchants with complex requirements around product management. Shopify, however, is easier to use on this front and is perfect for standard product catalogs selling simple products, like fashion retailers for example. That said, there are
Magento Enterprise Edition has 7 core, standard product types, which are simple products, configurable products, bundled products, downloadable products, virtual products, bundled products and the 7th (enterprise only) is gift cards. Shopify only has two types of products, which are simple and configurable products. Magento has a lot more freedom for complexity in this area and is far more suitable for merchants with complex requirements around product management. Shopify, however, is easier to use on this front and is perfect for standard product catalogs selling simple products, like fashion retailers for example. That said, there are third party extensions and other options to extend the types of products and the functionality for Shopify, but Magento is stronger out of the box. I would say that’s a theme throughout to be honest – Magento generally has a stronger default feature-set, but most of the functionality can be achieved with Shopify too, just with development or use of a third party extension.
One aspect of product management that Shopify is arguably stronger with is the CSV import, which, for an average merchant with a relatively straightforward catalog, is much easier to get right. I’ve used this function a couple of times on Shopify and I’ve not had any issues, whereas with Magento it’s always been a big headache.
Multi-brand / store management
Multi-store is one of Magento’s key selling points, allowing merchants to manage multiple brands, regional stores and B2B / B2C stores from one Magento interface. The main benefit here is that the product catalog can be shared across different websites, stores and store views, with freedom to make changes to the different entities. Shopify Plus does allow for multiple stores and there are examples of multi-brand and international stores that are live. I’m not too sure on how robust their multi-store functionality is in comparison to Magento 2 EE, however as far as I know it’s more basic than Magento’s. In order to utilise this feature-set with Shopify Plus, the stores would run independently and there wouldn’t be the same level of flexibility from a management perspective.
Internationalisation
Magento has a lot of great features for internationalisation and this is a reason why lots of merchants tend to use the platform, however Shopify also supports some of these features. Quadlock is a good example of a Shopify store that’s trading in multiple countries, with localised content, currency etc, as can be seen below.
Magento does have one big advantage in that you can manage all stores from one instance at a global level, whereas Shopify Plus would have separate stores. The multi-store functionality in Magento is definitely a key strength of the platform and this is something where Shopify Plus has some catching up on, as far as I’ve seen.
Merchandising
Magento 2 EE does have a visual merchandising solution, which is based on the previous OnTap Visual Merchandiser extension, that they bought and added into V1 EE. They have, however, re-built it in M2 EE, which is a good improvement. Shopify does allow you to choose the sorting order of your products, be it manually or in a set order, which can be defined at a category level, as below.
Here are the options for automating sorting.
Mobile – both Shopify Plus and Magento 2 Enterprise Edition have fully responsive themes and all available themes would be fully responsive, as are the admin interfaces. Shopify is the stronger of the two as they have an app for merchants to use for reporting and order processing and they also have their own SDK for mobile applications. That said, both can be extended very easily.
Things like order management and inventory management are comparable, but again Magento has more of a robust, customisable solution. I would say that a lot of the larger merchants would look at using an order management system (OMS) rather than using the standard feature-set anyway. Again, both platforms can be extended in this area, but a third party solution (such as something like OrderHive, OrderWise or Linnworks) may be a better solution.
Third Party Extensions and Apps
Both Magento 2 Enterprise Edition and Shopify Plus have well-established marketplaces for third-party extensions and apps. Magento’s extension marketplace is brand new, but the Magento Connect marketplace (the legacy module marketplace which had very little vetting and quality control around extensions) is more extensive than that for Shopify Plus app store, but Shopify enforce tighter quality controls on its third-party apps than Magento Connect. The new Magento marketplace follows the likes of Demandware and Shopify in vetting the extensions that are listed, which is something that lots of integrators and merchants had been asking for. It is worth noting that lots of the most commonly used extensions haven’t been developed for Magento 2 yet, such as One Step Checkout and Visual Merchandiser, but this situation is gradually improving.
Following on from third-party extensions, there is the issue of the codebase to consider. Magento is open source and self-hosted, which means that clients are free to extend or customise any element of the code as they see fit. Shopify Plus’s code is proprietary, and clients do not have access to the main codebase or the database. Shopify Plus does enable client customisations via the admin panel, using its own coding language which is called Liquid. Since Magento is written principally in PHP, with supporting JavaScript, it is relatively easy to build a team of developers to support or customise the Magento platform. Finding developers who are proficient in Liquid may well be a more difficult task and they’re only able to undertake front-end tasks.
Two of the biggest benefits of the two platforms is the existing integrations available with other systems, some of which falls under the extensions and others comes under middleware and APIs. Because they’re two of the more mainstream platforms on the market, they’ve been integrated with the majority of the popular third party systems, like ERPs, fulfilment services, payment gateways etc. Magento’s open source codebase allows for third party integrations and this can be delivered by a development agency. That said, Magento 2 does have a lot less existing integrations than Magento 1, which is something that should be improved over the next 6-12 months. Shopify work with the Shopify Plus partners on integrations, as it adds an additional level of quality control.
B2B Capabilities
One key selling point for Magento is that it provides native support for B2B merchants, plus they’re due to release a new B2B product for Magento 2, with a view to improving this offering. Customer groups, tiered pricing and customer based pricing and promotions are all standard features of Magento 1 and 2. It’s also easy to set up payment methods such as purchase orders, and to put in place a deferred approval process for order confirmation.
With Shopify Plus, all of this can be achieved, but only via third-party apps and the platform is generally not as proven in this area. Examples of large B2B merchants using Magento 1 and 2 include Nobel Biocare, Burger King, 3663, Lecot, Screwfix and Builders Depot. You can read more about Magento 2 and B2B here. There are also multiple B2B merchants turning over > $500m online per year using the Magento 1 platform.
Support
Both Shopify Plus and Magento Enterprise Edition offer customer support, however at different levels. For Shopify Plus clients, this is via phone, email or live chat, whereas for Magento Enterprise clients, it is purely developer support and it doesn’t have the best reputation – although for an additional cost, an Enterprise Edition client can purchase the services of a Magento Technical Account Manager (TAM), a dedicated expert who is available for a specified amount of time each week, including one week per month spent at the client site. You could also choose to work with the Magento Enterprise Consulting Group (ECG), however this comes with a big price tag.
One of the key selling points for Shopify Plus is definitely the support they provide, which arguably reduces the need for an on-going relationship with a development agency and a consultant (dependant on your in-house skill-set). With the $2k per month license fee, merchants get access to a dedicated 24/7 account management function, who are able to help handle technical issues, general platform-related questions, fix bugs, provide guidance around marketing and conversion rate optimisation and pretty much anything else. Although you’ll still need developers to implement complex changes and for front-end work, the support would cover what a merchant would usually pay for from a development support / SLA perspective. The other consideration is that because Shopify is a fully-hosted system (like Demandware is), merchants don’t really need a development support retainer anyway.
Vendor / Service Provider Lock-In
We’ve already mentioned the fact that Shopify Plus users do not have access to the codebase or the database behind their store. Whilst this means they do not have to worry about security patches etc, and they can rely on Shopify to keep the code up to date, it does mean that they are more ‘locked in’ to the platform, although I’d say that the pros outweigh the cons on this front. At the enterprise level, for some organisations with strong in-house development teams, the thought of not having absolute control of the platform could rule out Shopify Plus as an option, the same applying to Magento 2 Enterprise Cloud to some extent.
In terms of systems integrators, I would say that Shopify Plus users would be far less reliant on the third party, making it much easier to switch providers. If a Magento merchant had a store built by an integrator, there would be an overhead around getting the code checked, understanding any custom extensions / integrations and ultimately handing everything over. This wouldn’t be the same for Shopify Plus because it’s essentially a platform-as-a-service. That said though, both platforms are right at the top of the list for not having vendor-lock in as there are so many options for the merchants.
The biggest selling point for Magento in my opinion is the community, as there are thousands and thousands of strong developers on-hand should you need them. The same applies to systems integrators – if you need to move providers, chances are you’d be able to find a partner to meet your requirements that would be willing to take over your store with minimal investment (most likely a code audit and some time transferring everything across). This isn’t a big area to worry about with either platform.
Payments
Both Magento 1 and Magento 2 Enterprise have a host of options when it comes to accepting payment options, including existing integrations with PayPal and most of the mainstream payment gateways. One issue with Magento 2 is that some of the less mainstream gateways don’t have modules built yet, however this doesn’t add too much work from a development perspective.
One advantage of Shopify Plus is that Shopify also offer Shopify payments as an option, which is owned and managed by Shopify and it’s very competitive in terms of fees. They also work with all of the mainstream payment gateways too and I’ve worked on a handful of Shopify stores that have used everything from Braintree or Stripe, to Sagepay, which have all had easy integrations.
SEO
Although there’s a lot of work that needs to be done from the out-of-the-box setup, Magento provides a lot more flexibility from an SEO perspective because the system is more open. Due to the hosted nature of Shopify, it’s not possible to make changes to things like the URL structure and hierarchy or implement things like meta robots directives. Shopify Plus does support things like canonical URLs out of the box and also allows merchants to edit the robots.txt etc etc, but it’s definitely not as flexible as Magento.
Reporting
One of the biggest weaknesses of both Magento 1 and Magento 2 is the reporting, including when using third party modules (as there’s not really a good one in existence. The out of the box Shopify reporting is much, much better! Although it doesn’t cover everything, Shopify has a much nicer and cleaner reporting interface and covers all of the core metrics, as can be seen below.
Magento on the other-hand is really weak in this area and only provides basic reporting on revenue. There are modules available (like advanced reports from Aheadworks), but these still don’t provide the level of reporting / insight that merchants turning over > £1m online require. Magento did recently acquire RJMetrics (now Magento Analytics), which looks promising. They offer a really nice reporting product priced at £1k per month, however this is still quite expensive for lots of merchants who feel that they need something in between this solution (which includes the creation of custom dashboarding, marketing channel effectiveness reports etc) and the native Magento reporting.
Community
The almost undoubtable biggest selling point of Magento is the community – there are thousands of skilled, experienced Magento developers out there capable of helping you build and maintain Magento stores at all levels. Other platforms just don’t have this – because of the community-led nature of the platform and the reliance of stores on their development resource, merchants have a lot of options here. The Magento certifications and partner program (although I don’t really agree with how the partner program is managed etc) also help to give merchants guidance in selecting the right service providers (which can also be an issue because of the level of demand around the platform).
Shopify doesn’t have this. There isn’t anywhere near the same level of need for Shopify developers, so developers don’t really become attached to the platform. Obviously there are some developers who only focus on Shopify, but there aren’t many.
Whilst you could argue that this is because Shopify do such a good job with managing the platform, it also means that the third party applications / extensions don’t grow to the same level and this is, in my opinion, why Magento is so scalable. Magento’s improvement over the last few years (and the fact they still exist after all of the issues they have around the launch of Magento 2) is in the most part down to the community and the amount of developers that contribute to the growth of the platform.
Conclusion
As can be seen by this brief assessment, there are advantages and disadvantages on both sides. On the one hand, Shopify Plus offers a fast and easy to use platform that includes all key components of an enterprise level ecommerce solution, without the requirement for specialist development teams, complex server setup or lengthy learning processes for staff. For merchants who have the technical knowledge and resources available in-house, however, the flexibility and scalability of Magento, coupled with its enormous functional capabilities, may mean that Magento 2 Enterprise Edition is the more logical choice. The decision on which platform is the best choice should ultimately be a highly individual one, based on a clear and detailed assessment of the client’s specific functional requirements and in-house resources. It will undoubtedly be interesting to observe how, over the coming months or years, these two eCommerce giants fare against one another.
Magento 2 Enterprise is almost definitely going to cost you more than Shopify Plus, purely because you need to pay integrators more money (both in terms of higher rates and more hours required) and the fees are likely to be higher (particularly if you’re a high turnover merchant).
In terms of scalability, I would personally say again that Magento is the better option, however I’ve not seen any real case studies around stores really challenging Shopify Plus around features and capabilities.
If I was running a relatively simple store and I didn’t have many complex requirements, I’d seriously look at Shopify Plus. If I was a store with some complex requirements, a need to scale quickly or if I wanted to go with a non-hosted platform, I would look at Magento 2 Enterprise.
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