What Adobe’s Acquisition of Magento Means For the Future of Ecommerce

Ok, admit it. You probably didn’t expect this one.

Through his Twitter account, Brad Rencher, the Executive VP of Adobe Digital Marketing, has made a rather surprising announcement. That Adobe is currently in the process of acquiring Magento.

Unless you moved out to Mars, you’ve definitely heard about the $1.68 billion acquisition deal. It’s all everyone has been talking about over the past few days.

I’d like to be in the same boat and say that this was entirely unforeseen. But for me, it wasn’t. Not at all.

Well, of course, I was somewhat surprised that the sale is happening sooner than I predicted. The past couple of months have been far from smooth for Magento, to say the least. But I assumed that with eBay out of the marriage, the self-proclaimed “future of e-commerce” might be packing some heat to recover from the wounds.

At least for some time before flirting with the idea of acquisition later.

Then boom!

Adobe enters into the party and changes the entire landscape.

But come to think of it, this move has been a long time coming. They’ve been window shopping with a case full of money since Salesforce beat them to acquire DemandWare in 2016.

To be honest, the company has been snooping around the ecommerce space for some time now, without the right corresponding products to reinforce it. So, of course, the resultant acquisition should be welcome news for its community.

As we anxiously wait for additional news from Adobe’s team, we can only speculate what’s in store going forward.

And most importantly…

The elephant in the room- the effect this acquisition alone might have on the future of ecommerce.

To assess it comprehensively, therefore, let’s briefly start with Magento’s overall position in recent years:

Impact Magento Has Had on Ecommerce

One thing’s for sure…

Magento has been more than just an ecommerce solution over the last couple of years. It systematically expanded its product base plus industry solutions, and partnered with a wide range of technology powerhouses.

In addition to order management, its extensive ecosystem provided content management, business intelligence, plus a wide array of social solutions.

On the flipside, however, the platform has had its fair of struggles.

But, make no mistake…

Magento, at one time, was the principal option for any ecommerce business seeking to replatform. But, as they say, even the all-powerful Roman Empire eventually collapsed after more than five centuries of dominance.

Over the last five or so years, the platform has been increasingly losing out to its competitors. More specifically- IBM and Oracle, both of which have progressively crept up to the very top of the market pyramid.

Other notable players that have gladly taken a bite off Magento include Shopify and Salesforce. We’ve seen these two ascend from mere startups to hosting micro then small enterprises, and ultimately position themselves as leaders in the medium-business bracket.

Here’s a graph showing relative consumer interest in the respective platforms over the last 5 years, according to Google’s search trends.

Now, what could be cooking in Adobe’s kitchen?

Predicted Future Impact of The Acquisition

Increased Competition Among Platform Providers

For starters…

Adobe is definitely about to turn up the heat on competitor platforms.

As a matter of fact, just scratch that.

Because, technically, the competitors’ goose is already cooking. Yet the actual acquisition isn’t due until the third quarter of 2018 fiscal year.

Here’s what happened…

After Adobe dropped the bombshell, it seemingly landed some of the competitors’ stock prices. Case example- Shopify, which recorded a dip of 5%. And even more surprisingly, it’s yet to fully recover as I write this.

Evidently, Adobe is not a regular pushover. It’s here to not just stay. But to spark a revolution.

The 2017 Magic Quadrant for Multichannel Campaign Management report by Gartner even placed Adobe ahead of IBM and Oracle. At a time when it’s marketing cloud suite was incomplete.

Now add Magento to its war chest, plus an $8 billion share buyback program, and you have yourself one heck of a contestant in the blue corner.

Over to the red corner…

The experienced market leaders like IBM, Oracle, Shopify and Salesforce will certainly not take this lying down. We should consequently see progressive innovation, plus improved efforts to adapt to the rapidly changing consumer trends.

And you know who is left smiling all the way home?

Yes, you’re right. You, the user.

Direct Ecommerce and Creativity Integration

When you think about ecommerce, chances are your thoughts are fundamentally focused on sales and marketing. So, of course, it makes complete sense why the bulk of platforms are centered on direct ecommerce and performance marketing.

But the thing is…

That’s not all there is to it. There’s a rather less predominant set of solutions that are alternately optimized for increased creativity. Popular examples include Drupal, Umbraco, and Sitecore, all of which offer very limited direct ecommerce tools.

Now, we rarely talk about creativity and design without mentioning Adobe. It provides what is, by far, one of the most comprehensive ecosystems for creatives.

Marrying that with Magento results in a rather dynamic ecosystem that extensively covers both ends. You will soon be able to not just design an exciting store, but also leverage a wide range of direct ecommerce tools. All in one single platform.

Development of a Holistic Magento 3

Magento basically comes in two primary versions. Magento 1 preceded the recent Magento 2.

Of course, it doesn’t take a genius to guess that 2 is pretty much a revamped version of 1. That should have you migrating your store immediately, right?

Well, here’s the shocker.

And, undoubtedly, one of Magento’s biggest downsides. It’s practically impossible to simply migrate your store directly from 1.x to 2.x. The entire process is extremely tedious and quite expensive. Plus, you’ll be forced to completely halt sales for days.

Thankfully, here’s a positive prospect at last.

Going by Magento CEO Mark Lavelle’s promises published on their official blog, the platform is now on the verge of a radical transformation.

The merger might give rise to an exceedingly holistic Magento 3 optimized for both B2C and B2B environments.

And guess what?

They’ll now have every reason and all the right resources to build a version that can handle seamless migration from both Magento 1 and Magento 2.

Try-Shopify

All things considered…

There could be more. But, we’ll just have to wait until official trailers begin rolling in.

And even then, that will only be the first wave. We might have to be patient for some years to accurately assess overall market response.

I’m particularly curious about the route Adobe is planning to take with this one. Will they stick to their closed tradition, or give in to the open source trend? What do you think?