Magento Open Source vs Magento Commerce (& on-premise vs cloud)

With a global presence in the SMB, mid-market and enterprise eCommerce platform space stretching back over 10 years, Magento (now an Adobe company) remains a giant in the eCommerce world that makes it onto most platform shortlists / RfPs.

For those considering Magento as their next platform, there are some important decisions to be made, with the main one being whether to select Magento Open Source or Magento Commerce. If Magento Commerce is the preferred option, the decision then needs to be made on whether to choose the on-premise solution (which is no longer as compelling from a commercial standpoint) or to go with Magento Commerce Cloud (which has faced scrutiny in the past). This guide is designed to highlight key differentiators between the options from a features standpoint, a cost standpoint and a flexibility & stability standpoint.

Magento Open Source

Originally known as Magento Community Edition (or CE), the free version of Magento became Magento Open Source as part of the 2017 rebranding of the entire product range. Available as a free download, Magento Open Source has long been a popular choice for SMB merchants who want a feature-rich, highly extensible platform that can compete with the big names online.

Despite often being associated with SMBs, Magento Open Source does have a wide range of enterprise clients too – which generally comes from it being more lightweight (without the modules available as part of Commerce) and the newer licensing structures not being viable for high volume retailers. For example, retailers like Brand Alley use Magento Open Source and have then developed customised solutions on top of it. This is really common and, at one time, the majority of the larger merchants using the Magento platform were using Magento Open Source. With the right infrastructure and development team in place, Magento Open Source can easily compete with Magento’s other offerings, and with other enterprise platforms.

Magento have improved the Commerce proposition considerably over recent years – there were very little differences in terms of functionality in the past, but this has definitely changed now. Features such as page builder, visual merchandising, content staging and preview and the new B2B suite are examples of things that make it much easier to justify. We’ll talk about the core features that you won’t have access to later on.

Overall, Magento Open Source is a great platform that is easily suitable for enterprise-level retailers – however I would argue that it’s not really suitable for SMB merchants anymore, due to the high costs of maintaining and developing the Magento platform in general (coming as a result of Magento 2 being built for enteprise).

Examples of larger Magento customers on Magento Open Source include:

  • Brand Alley
  • Bucherer
  • PMT Music
  • PrettyLittleThing
  • The V&A
  • Erdem
  • Christian Louboutin
  • Tog24
Brand Alley use Magento Open Source.

Magento Commerce

Magento Commerce is the product, previously known as Magento Enterprise Edition (EE), that is, in theory, aimed at larger organisations that require premium support levels and a broader set of functionality. Whilst Magento Open Source is free, Magento Commerce has a license fee that starts at $24,000 per year. It is offered either as an on-premise solution, or as a platform-as-a-service hosted solution, in the form of Magento Commerce Cloud. The codebase for the two Commerce options is essentially the same, although some level of platform updates will be applied automatically on the Cloud platform.

The on-premise version of the platform was previously available from $24,000 per year and was based on a tiered model, largely coming from GMV – however, earlier this year Magento announced that on-premise licensing would be priced at a similar level to Magento Commerce Cloud, which is frustrating for merchants who don’t want to use the hosted version of the platform. The cloud version of the platform has a number of tiers available, with the most commonly used ones being Cloud Starter and Cloud Essentials. There’s then now a series of packages available that also feature Adobe products, such as Adobe Target, Adobe Campaign, Adobe Experience Manager, Adobe Analytics etc. There’s then a premium option for large enterprise retailers built more around Adobe’s enterprise offerings, encompassing all core, relevant Adobe products and being offered with additional layers of servicing.

It’s worth noting that Magento Commerce has been strengthened considerably over the last two years and there are a number of native features that add a lot of value for most retailers (making commerce a much easier sell). The platform-level support has never been great in my experience, however it’s a good thing to have in theory – but I’d say the biggest reasons to choose Magento Commerce come from page builder, the B2B module, content staging and preview etc, with value-add from Magento BI (included as part of the cost of the license now), Magento shipping, pre-installed modules and things like RMA. There are a lot of modules available to server most of these, but they’re generally not as good and only add to overheads around maintaining and upgrading the platform.

Examples of large Magento Commerce customers

  • Helly Hansen (Magento Commerce Cloud)
  • Paul Smith (Magento Commerce On-Premise)
  • End Clothing (Magento Commerce On-Premise)
  • Made.com (Magento Commerce On-Premise)
  • BrewDog (Magento Commerce Cloud)
  • Paperchase (Magento Commerce On-Premise)
  • Bulk Powders (Magento Commerce Cloud)

You can also read this piece providing examples of complex and well designed Magento stores.

Paul Smith use Magento Commerce.

Functional differences between Open Source and Commerce

Whilst the core codebase for the two platforms is the same, there are some significant additional features available in Magento Commerce (as already touched on a couple of times) that push the functional capabilities of that version much further. There are also some features that aren’t as strong – I’m going to use this section to provide my honest opinion on the features as well.

Elastic Search for better on-site search capabilities – although this is slightly better than the options available in Magento Open Source and it helps to improve performance, it’s still a long way behind where an enterprise Magento merchant would want it to be. The vast majority of merchants I know that use Magento Commerce would use a solution like Klevu or Algolia in place of this. For this reason I wouldn’t consider it a plus currently – although, this said, Magento have recently announced that they’re going to be pushing this area and releasing an enterprise-grade search solution that can compete with a service like Klevu around NLP, machine learning, merchandising etc.

Comprehensive B2B / wholesale functionality – the Magento B2B suite (which was released properly last year) is a hugely valuable addition to the platform, featuring a range of importrant features for B2B merchants, such as:

  • RfQ functionality / price quoting and negotiation
  • Customer-specific pricing and catalogs
  • Credit limits
  • Quick checkout options
  • User roles, purchasing limits and permissions
  • Customer-specific payment options
  • Customer-specific purchasing limits and thresholds
  • Support for quick puchase lists

These are just a few of the features available via the Magento B2B suite / module and retailers are also able to extend the functionality around their specific requirements. This has been one of the biggest functional developments for Magento for a number of years and supports their focus on B2B and wholesale.

Page Builder (formerly Bluefoot CMS) – page builder is another major feature that’s only available as part of commerce planes, allow merchants to manage content and templates far more effectively. Page builder (which originates from Magento’s acquisition of BlueFoot CMS) allows for drag-and-drop management of content and the ability to build components to manage content and pages. Page builder can be extended by developers and can be used across all core page templates – I’ve been very impressed with what I’ve seen of page builder so far and I’d imagine it’ll continue to improve over time.

Content staging, preview and scheduling – this isn’t a new feature, but it’s become betterr integrated, more stable and a lot more user-friendly over the last year or so. These features allow for previewing of content changes and scheduling of varying changes and tasks – content scheduling in particular is generally very well received by merchants and is a “must” in most platform requirements docs.

Visual merchandising – although the visual merchandising is pretty basic in Magento, it’s pretty easy to use and is more stable than the Visual Merchandiser module that was acquired by Magento and plugged into Magento Enterprise 1.13. This functionality, again, is usually deemed critical and, although basic, it’s not available in all of Magento’s competitors’ platforms. I’d like to see Magento introduce rule-based merchandising (based on attributes and pre-set logic), saved merchandising logic and the ability to merchandise groups of categories at once as a minimum.

Advanced marketing features, such as customer segmentation, abandoned cart emails, gift registry, private sales, rewards points and store credits – although most of these rarely get used in my experience, they are useful to have when someone does need them. Customer segmentation is good for quick reporting and can be used for basic personalisation etc and things like private sales can be really useful for those that do use it. The rewards points feature can be a good starting point for loyalty, but most merchants tend to move to a more specialist solution over time. Store credit is also a must have feature for a lot of retailers.

RMA processing – again, although quite basic out of the box, RMA is a good feature to have for those that need it and it’s a good starting point. Larger retailers tend to take this function out of the platform (using something like Rebound Returns for example), but if you need to be able to manage RMAs, it ticks the box and can be extended. This feature also allows for utilisation of store credit.

In addition to these features, you can also benefit from Magento BI and Magento Shipping being included in Magento Commerce plans, which saves money for merchants and contributes to the cost of the licensing. Magento BI, in particular, is a very useful additional to the base reports – allowing merchants to quickly see reports around things like customer lifetime value, lead time between purchases, lots of detail on what’s selling to different types of customers etc.

Behind the scenes, depending on the version of Commerce you’re using, there are further additional features that bring more power and flexibility to the Commerce platform – these include full page caching, diagnostic tools, backup and rollback options, database clustering, Fastly CDN and the Magento Message Queue Framework, based on RabbitMQ.

Magento Commerce Cloud vs Magento Commerce On-Premise

For merchants that make the decision to launch or replatform with Magento Commerce, the next decision that needs to be made is whether to choose to go with on-premise or Magento Commerce Cloud. Large merchants that may already have a large and experienced in-house dev team, along with experience of running on-premise enterprise grade systems may want to work with an on-premise option. It may actually be difficult for this type of organisation to even consider using a cloud-based approach – I’ve seen this in the past when speaking with clients around options.

For many retailers, however, this is not the reality, and the prospect of managing this internally or having to manage a hosting company is quite daunting. According to Magento itself, almost half of all new Commerce customers are choosing the Cloud option now. In the past, I’ve been quite critical of Magento Cloud, purely because I’ve had a lot of clients who have had bad experiences (be it via downtime, deployments, stability of environments, support etc) – however it has very clearly got better. There was a period where most partners would recommend against Cloud edition, however this has changed in most instances now – it’s also not getting the same bad press around deployments and Magento are clearly investing in improving support. I think it’s in a better place now and it’ll continue to get better – eventually becoming an amazing cloud-based platform.

In theory, Magento Commerce Cloud offers a scalable solution that brings all the benefits of Magento as a platform, with none of the headaches associated with self-hosting. Costs are predictable, and the burden of security, PCI compliance and maintenance are largely passed to the platform. Magento Commerce Cloud has a strong stack, utilising Amazon Web Services (AWS) for its infrastructure and the likes of Fastly CDN, Blackfire.io, a Rabbit MQ job queue framework and NewRelic built-in. Additional benefits that come with Magento Commerce Cloud include protection via the Fastly Web Application Firewall (WAF) and performance improvements via Fastly’s image optimisation and CDN (as already mentioned).

Overall, I think, with the right Magento partner, both of these options are fine now – as long as there are no feature requirements which require more control over the server and processes. In the event that you do want to go down the on-premise route, I’d recommend using a reliable, enterprise-grade hosting partner, such as Akoova (AWS-based). Sonassi are also a very strong hosting partner that I recommend a lot.

Conclusion – Commerce vs Open Source vs Cloud

Magento has seen a huge amount of change as a business over the last couple of years – with Magento 2 and then Magento Cloud edition initially being under huge scrutiny after they were released and the platform generally moving up the food chain in terms of suitable users – leading to lots of smaller and less complex merchants leaving the platform for the likes of Shopify Plus and BigCommerce. Enterprise-focused platforms like Salesforce Commerce Cloud, Elastic Path and CommerceTools have also benefitted from the uncertainty around Magento, however Magento is definitely back in a good place now, with lots of larger merchants moving over from Magento 1.x and other platforms and their reputation being back in a good place.

It may still have its faults and not be suited to merchants in all brackets anymore, but for now at least, Magento remains a hugely powerful eCommerce platform that is really growing in the enterprise space and continues to be the market leader in the mid-market space.

Whether you use Magento Open Source or Magento Commerce is up to you really – the key decision making aspects are going to be price (licensing can get very expensive for high volume merchants and needs to be justified), need for features (whether you actually need the features that are available via Commerce), business fit for cloud vs on-premise and need for flexibility (this can impact the choice a lot – for example if you decide to use a headless CMS to manage content independently etc). Most of these are going to be specific to a business – if you have any questions around the different versions, please feel free to comment below or email me on [email protected]

Paul Rogers

Paul is an experienced eCommerce Consultant, specialising in all aspects of replatforming, requirements gathering and platform selection projects.

Paul has worked with most mainstream eCommerce platforms and has supported complex replatforming projects with retailers from all over the world. Paul also works on customer experience projects and solutions-focused work with various platforms - primarily Magento and Shopify Plus.

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