Magento 2 Enterprise Edition vs Shopify Plus
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 – £25m turnover clients typically require.
In this article, I’m focusing on two of the primary options (and the two that I work with most) in the mid-level eCommerce marketplace, Magento Enterprise Edition (now called Magento Commerce) and Shopify Plus, to see how they compare against one another. There are other options (such as Shopware, Blubolt, Parispar, BigCommerce, Salesforce Commerce Cloud etc), but these are generally the most mainstream ones and also the ones that I tend to work with most.
I’ll be focusing on Magento 2 Commerce (formerly Enterprise Edition) and Magento 2 Commerce 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 who acted as early adopted generally faced a lot of issues with stability, a lack of available modules / extensions (vs Magento 1.x) and general bugs with core functionality (as well as project delays and increased costs).
Magento 2 has improved considerably – I work with one of the first Enterprise Edition / Commerce retailers and they really struggled to operate when they launched on 2.0, but most of the clients I work with now are more stable operating on late 2.1 releases. Magento 2.2 also seems to be a big step forward, with nearly 500 bug fixes, including a number of important ones that were impacting a number of my clients. That said, there are still a lot of bugs – however, I think that these are more manageable and the platform will be in a very strong position in ~12 months’ time when (hopefully) more bugs have been addressed and things like Bluefoot (Magento’s new CMS solution) are available.
In terms of market share, Magento is ‘probably’ the world’s biggest eCommerce platform (they have less live instances than WooCommerce and Shopify, but they have a much bigger share in the mid-level market), 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 merchants, which is impressive. However, most of the really well-known stores are still on Magento 1.x, which is a very different platform and a different level of maturity. Examples of large brands using Magento (all versions) include Paul Smith, Nike (AU), Nobel Biocare, Agent Provocateur, Hermes, Harvey Nichols, Fred Perry, Missguided and lots more. There are said to be around 10 brands using Magento that are turning over more than $1bn online, which again is very impressive.
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 and I generally recommend them for very different reasons – with Shopify Plus providing a fully-hosted, fully-supported (24/7 store support, inc minor development work) platform with various supporting products, including a POS system, an automation suite, various solutions for multi-channel retail etc.
Shopify Plus have only been really pushing growth for the last 12-18 months and they now boast brands such as Gymshark, Rebecca Minkoff, Finisterre, Kylie Cosmetics, Pavers, Beyond Retro, The New York Times, Tesla, Matalan Direct, LA Lakers, Shore Watches, Herschel, Vanity Planet and many more. Shopify Plus has really taken off over the last ~9 months and, even in the UK, has taken a lot of brands away from Magento, and far more so in the US (such as Rebecca Minkoff and The New York Times).
I’ve now referred several businesses to Shopify Plus, because I believe it’s a very, very good solution for smaller or leaner eCommerce teams who are looking to focus their attention on marketing / product (reducing time being spent on platform maintenance etc). Several of my clients use Shopify Plus now and I’m becoming a real advocate of it.
Magento Commerce and Shopify Plus both have price tags that all but prohibit their use for smaller retailers. Magento Commerce licensing starts from around $22k and increases based on the merchant’s turnover, whereas Shopify Plus is a flat $2,000 per month (Up to ~$800k per month GMV). The hosted Magento Commerce Cloud edition of Magento has an additional cost for the cloud architecture, which will vary dependant on the merchant – this also covers various other costs (such as a Magento BI license, Fastly CDN etc). The new Cloud Starter package is a very similar package to Shopify Plus, costing $2k per month with a very similar offering – this is only offered to merchants turning over less than $5m online and it doesn’t include all of the features offered within the full Cloud option.
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 Commerce Cloud will work out slightly more than this. In addition to this, you also have the maintenance costs associated with Magento (no matter which version you’re using).
Both the self-hosted approach (standard Magento Open Source / Commerce) and the fully-hosted approach (Magento Commerce Cloud and Shopify Plus) 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 Commerce (non-cloud) has to personally ensure that their own server configuration meets all PCI compliance regulations – this can be really valuable for retailers.
Likewise, a normal Magento Commerce 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 Magento Commerce Cloud offers a lot of the benefits that Shopify Plus has on this side, I’d say (in my experience of dealing with clients who use it) it’s nowhere near as polished and finished as Shopify Plus and my general recommendation, if you do go with Magento, would still be to use the standard Commerce option at this point.
Total cost of ownership / Pricing in more detail
The costs associated with Magento Commerce / Enterprise will generally be higher – the license fee starts from $22k per year, but could even go as high as exceeding $1m per year for very large B2C stores and B2B businesses, which is based on turnover.
There are standard tiers for Magento licensing costs, but these are constantly changing and they’re clearly trying to move more towards a GMV-based model, like platforms like Demandware / Salesforce Commerce Cloud. The pricing also varies a lot with the different versions – if you have any questions on this, feel free to email me and I can talk you through what some of my previous clients have paid (as they’re also very flexible / negotiable on costs).
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 Commerce build is likely to start at $100k and the highest cost build I’ve heard of was supposedly around $1.75m (huge multi-brand setup). You then have the costs of the maintaining a Magento store beyond this, which can be very high – this would include things like applying patches, version upgrades, maintaining modules etc etc. In my experience, a support / BAU development retainer for a standard Magento Commerce store could be anywhere from $2.5k per month to $50k per month, depending on the amount of issues you have and the complexity of the store.
Shopify Plus currently have a flat $2k per month fee (for retailers turning over < $9.6m per year), which covers all licensing and support costs. This is a real benefit of Shopify Plus 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, upgrades 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 and the top agencies are more like $130 per hour (which is still lower than a lot of Magento agencies).
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 fee is really appealing 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. I recently did a total cost of ownership analysis piece for a small, high-end fashion brand for Magento Open Source, Commerce and Shopify Plus and Shopify Plus came out as the lowest cost option over a three-year period by quite a way. This was largely due to no hosting fees, lower maintenance costs, no version upgrades, costs associated with integrations / modules and the agency rates. The fact that Shopify Plus Account Managers and Launch Managers offer so much support is also a differentiator.
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 higher 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.
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) and there is generally less complexity. I’ve seen some really nice Shopify Plus stores developed for ~$50k – $100k, which is around the same level as a basic Magento Open Source / Community store.
Based on my last few mid-level projects (relatively simple catalog, ~£4m online turnover, single currency etc), this is what I would suggest that the total cost of ownership looks like for Magento Commerce / Enterprise vs Shopify Plus.
- Average build cost for Shopify Plus (in my experience) – $85,000
- Annual licensing cost – $24,000
- BAU development costs (in my experience) – $36,000
- App costs (average) – $3,000 ($250 per month)
- First Year Shopify Plus Cost: $148,000
- Three Year Shopify Plus Cost of Ownership: $267,000
Magento Enterprise / Commerce
- Average Magento Enterprise build cost (in my experience) – $120,000
- Average annual hosting fees for Magento store (in my experience) – $24,000
- Average annual Magento maintenance retainer (in my experience) – $24,000
- Annual licensing cost – $22,000
- BAU development costs – $36,000
- First Year Magento Commerce Cost: $226,000
- Three Year Magento Cost of Ownership: $438,000
This is very much a finger in the air estimate – but overall I’d say that Shopify Plus is a considerably lower cost option than Magento Commerce. It’s worth pointing out though that Magento Commerce is also more scalable in a lot of cases (depending on growth aspirations and complexity of the store). That said though, for straightforward stores (and stores willing to compromise in areas for the benefits Plus offers), I’ve found myself recommending Shopify Plus a lot recently and I’ve also got some very happy clients operating on Shopify Plus.
Anyone logging into both Magento Commerce Edition and Shopify Plus will see instantly that Magento has a richer core functionality than Shopify Plus. Whilst Shopify Plus has a comprehensive feature-list that will satisfy lots of mid-level retailers, Magento Commerce Edition excels in areas such as sales promotions, customer segmentation, attribute management and merchandising. Product attributes, in particular, is a big strength for Magento and a weakness with Shopify Plus (handled via tags and meta fields).
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 suited to retailers 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 – Magento generally has a stronger native feature-set (which also causes some of the unquestionable complexity with Magento), but most of the functionality can be achieved with Shopify Plus too, just with development work or use of a third party solution.
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.
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) or their back-office system for this anyway, rather than using the standard feature-set.
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. The scope of product attributes can also be set to be managed at a global or storeview level, allowing merchants to assign attributes like ‘product name’ at a global level, but define the price attribute at an individual storeview level.
This feature is one of Magento’s biggest selling points and there are plenty of merchants that I’ve come across who are managing large product catalogs across over 100 storeviews (be it international stores or different brands etc). A few examples of stores doing this include Warner Music (multi-brand), Nestle (multi-brand), Helly Hansen (international) and lots of others. This is really flexible and there are some really impressive implementations.
Shopify Plus does allow for multiple stores and there are examples of multi-brand and international stores that are live, however there’s no proper multi-store architecture. This is by far the biggest reason I’ve seen stores opt against Shopify Plus, but that’s not to said a solution can’t be achieved, particularly if you’re using a back office system or a PIM. There are workarounds currently (that aren’t as seemless as Magento’s solution), but more importantly, it’s said that Shopify are working on this now and will be releasing it at some point next year – which will be a real game changer. With the ability to manage data effectively across multiple stores, Shopify Plus is likely to become even more of a serious contender.
Internationalisation (multi-currency, multi-warehouse etc)
Magento has a lot of great features around internationalisation, as detailed above, and their global multi-store architecture is a huge reason why lots of merchants tend to use the platform. Shopify Plus can achieve a good solution, however there’d be a lot more manual work and I’d personally say it wouldn’t be as solid for larger stores. This is a really big weakness for them and it’s something that’s likely to be addressed really soon.
Magento’s ability to allow the user to manage all components of individual stores (such as specific attributes, stock, the catalog etc) at a global level is a huge advantage, whereas Shopify Plus would have separate stores (clone stores) which would need to then be updated / managed individually.
Magento 2 Enterprise / Commerce does have a visual merchandising solution, which is based on the previous OnTap Visual Merchandiser extension (which they acquired a few years ago and build into the M2 core), allowing merchants to visually sort products in specific categories. This solution is stronger than what is offered by Shopify Plus, but it’s not great still and is lightyears behind Demandware / Salesforce Commerce Cloud’s Einstein solution (which allows for complex rule-based merchandising and is built around machine learning).
Shopify Plus 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, but this isn’t a great solution. This is another area that I’d imagine will be addressed at some point – as mentioned throughout this article, Shopify Plus are great with releasing improvements regularly.
Lots of larger merchants would want to use a third party solution (such as Attraqt or Bloomreach) in this area anyway.
Other aspects of merchandising, such as search (which is equally weak natively on both platforms), product labels etc are comparisble.
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.
Third Party Integrations, Extensions and Apps
Both Magento 2 Commerce Edition and Shopify Plus have well-established marketplaces for third-party extensions and apps. Magento’s extension marketplace is relatively new, but the old Magento Connect marketplace (the legacy module marketplace which had very little vetting and quality control around extensions) was more extensive, but Shopify enforces tighter quality controls on its third-party apps than Magento Connect did (which has now been brought into Marketplace).
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. Some of the low quality modules available via Magento Connect was previously a bit of a threat to Magento.
Following on from third-party extensions, there is the issue of the codebase to consider. Magento is open source and often self-hosted, which means that clients are free to extend or customise any element of the code as they see fit (which definitely has it’s disadvances). Shopify Plus’s code is proprietary, and clients do not have access to the main codebase or the database (again, coming with plenty of benefits). Shopify Plus does enable client customisations via the admin panel, using its own coding language which is called Liquid.
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, fulfillment services, payment gateways etc.
Both systems are pretty good on this side and most integrations can be achieved with both systems.
B2B / Wholesale Capabilities
One key selling point for Magento is that it provides native support for B2B merchants, plus they’ve recently released 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 (both Open Source and Commerce. 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.
B2B is a huge focus for Magento currently and the new module comes with a lot of strong features, such as the ability to manage quotes, create customer-specific catalogs, manage various settings against customers, assign roles to users, assign budgets to users and companies etc. This is a big strength of Magento over Shopify Plus.
With Shopify Plus, a lot 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, Honeywell, Burger King, 3663, Lecot and Builders Depot. There are also multiple B2B merchants turning over > $500m online per year using the Magento 1 platform.
Both Shopify Plus and Magento Enterprise Edition offer application-level 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 also reduces on-going support costs with your agency. As per of 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. Although it’s advised that you still have a development retainer, you wouldn’t have the overhead around a support retainer that you would with Magento.
Control / flexibility
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 have less control over the platform, although I’d personally 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 applies to Magento 2 Enterprise Cloud to some extent, but that’s very much circumstantial. As already touched on, more and more retailers are looking for a hosted, SaaS eCommerce platform and there are definitely big time and cost savings from this approach in my experience.
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.
One of the biggest selling points for Magento, in my opinion, is the community, as there are thousands and thousands of very smart developers that are obsessed with extending and improving the platform. I would say that Shopify has less of this, however this comes down to the fact that there’s less complex development work required with Shopify and Shopify Plus generally, which again, does have it’s benefits.
In addition to the good developers with Magento, there are also lots of not-so-good ones that have started offering services due to the demand around the platform, but this can be a real issue as you need to be at a certain level to successfully work with Magento 2 in my experience and there are a lot of rescue projects out there as a result of companies selected a lesser experience, non-partner Magento agency. This, again, isn’t as much of a risk with Shopify as you can generally judge an agency’s work on the front-end as Shopify are supporting the application and agencies aren’t able to access the core.
Shopify Plus also have some excellent partners and this list of Plus partners is growing all the time – examples of really good Shopify Plus partners that I’ve either worked with or that appear to be doing great work include:
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.
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 certain technical SEO components easily. The lack of multi-store can also make things like hreflang logic harder to create, but it can certainly be done (and has been by lots of merchants).
I’d say that Shopify Plus is probably stronger out-of-the-box from a technical SEO perspective than Magento, which requires work to prevent some issues (e.g. indexation of dynamic pages etc).
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 well as having a real good API to support this.
Magento recently acquires RJMetrics (now Magento BI), which is a very strong solution that adds a lot of value to the merchant. They offer a really nice product available from just $100 per month, but it’s not natively available in Magento. Magento BI gives you access to some really nice reports that aren’t readily available, such as customer lifetime value, purchase lead-time, category-level top purchasers, various product reports etc. Magento BI is essentially a data warehouse and you can also pull in data from other systems and sources, which is really powerful.
The almost undoubtable biggest selling point of Magento is the community, as mentioned above – there are thousands of skilled, experienced Magento developers out there capable of helping you build and maintain Magento stores at all levels (as well as work with other Magento products, such as Order Management and BI). Other platforms just don’t have this – because of the community-led nature of the platform and the ability to do highly complex things with the platform. The Magento certifications and partner program (although I don’t fully agree with how the partner program is managed etc) also help to give merchants guidance in selecting the right service providers.
Shopify’s partner network is getting really strong too now – with the platform growing at a crazy rate! In the UK, there are lots of strong partners that have built several Plus stores and several long-term Magento agencies have started offering Shopify Plus build services, such as CTI, Meanbee and Screen Pages.
Magento 2’s improvement over the last ~12 months (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 number of developers that contribute to the growth of the platform. Magento are now accepting a huge amount of contributions from community developers and Creatuity’s Instant Purchasing solution is a good example of a feature that has now been built into the core of the platform.
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. I’ve had several clients who have moved to Shopify Plus and saved a huge amount of time that can now be spent on growing their store through developing their product range and marketing.
For merchants who have more complex requirements (particularly in terms of large, complex catalogs and multi-store requirements), however, the native flexibility and scalability of Magento may mean that Magento 2 Enterprise Edition is the safer choice, but I think that’ll change soon when Shopify release a solution for the weaker areas mentioned above.
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).
If I was running a relatively straightforward store and I didn’t have complex requirements, I’d personally be seriously looking at Shopify Plus – to be honest, this is becoming a bit of a no-brainer. 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.
I’d like to thank James from Strawberry (a seemingly very strong Shopify Plus agency) for emailing me comments on this post that led to me updating it again (December 2017). James rightly pointed out that certain points were out of date and others could be mis-construed, which I’ve now adapted.
If you have any questions about anything in this post, please feel free to email email@example.com.
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