eCommerce platform strategies:a proven alternative for Enterprise retailers using Magento

May 2017

An eStar Guide

1

Magento users are evaluating their eCommere platform options with support ending in 2018 for 1.x versions1.

Why is eStar a proven alternative for retail eCommerce players?

Following the Country Road Group 2013

acquisition of the Mimco and Witchery brands,

eStar’s eCommerce platform was chosen after

an extensive selection process to migrate off

Magento. The migration allowed the Witchery

and Mimco brands to to leverage the platform’s

enhanced features and scalability.

1 https://www.statementagency.com/blog/2017/01/magento-

1-upgrade-or-time-to-re-platform

2

Overview

eCommerce platform strategies: a proven alternative for Enterprise

retailers using Magento

When Magento 2.0 was released in November 2015, the reaction from

the Magento community was mixed: some rejoiced and said it was

just about time to get that long-awaited upgrade, while many felt that

that the Magento 1.x version they were on addressed their needs and

didn’t feel any sense of urgency to “upgrade”.

With official Magento support for the 1.x versions ending in 20182,

Magento users are at a crossroads: do they stay in an unsupported

platform, do they continue on with the new 2.0 version, or is it time to

re-evaluate and consider alternatives?

Changing platforms is always a strategic business decision. The

platform will be the foundation of your eCommerce business, and it

should be the platform that will best help address your requirements

today and support your continuous growth in the years to come.

eStar’s iSAMS, is a cloud-based end-to-end eCommerce solution

that has helped some of the most prominent Australasian brands

maximise their online sales opportunities and optimise their digital

customer experience for the past sixteen years. This Guide will help

you evaluate eStar as an alternative to Magento.

2 http://info2.magento.com/rs/magentosoftware/images/Developer%20Webinar%20Questions%2012.22.2015.pdf

3

A challenging upgrade path

One of Magento’s greatest strengths is being Open Source, and the community that

surrounds it. By having access to the core, or source code of the platform, Magento

developers have had a free hand in creating tailored sites with custom code

and extensions.

This flexibility is traded-off against the cost of complexity. Changes made to the core

code may be incompatible with the updates, making simple patch application or

moving up to a new version more time-consuming.

The Magento 2 platform is vastly different from the Magento 1 platform – a complete

overhaul of the inner workings of Magento 1. “Upgrading” from Magento 1.x to the

Magento 2 platform is not possible. It is a replatform. Due to the re-architecture of the

core code in the Magento 2 version, themes and customisations made in Magento

1.x will be completely incompatible and will need to be rebuilt. The same is true for

extensions. All these result in complexity moving from the old 1.x version to the new

Magento 2 platform.

As stated in The Forrester Wave™: B2C Commerce Suites, Report Q1 2017, many

Magento customers are concerned about the magnitude of the upgrade process from

Magento 1 to Magento 2. In addition, the Magento 2 Marketplace still has some gaps

for popular Magento 1 extensions, and Magento 2 needs further refinement in areas

like personalisation and site search capabilities.

The Magento 2 platform is vastly different from the Magento 1 platform –

a complete overhaul of the inner workings of Magento 1.

“Upgrading” from Magento 1.x to the Magento 2 platform is not possible.

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Specifically this means:

• No upgrading and migrating to newer versions needed. Clients have access to

new features immediately on release; enabling the new features will be entirely

up to you and your solution roadmap.

• Extensions and customisations never touch the core code of the platform,

minimising risk of conflict between updates, customisations and extensions, and

downtime when updates and upgrades are deployed on the platform.

• Updates to the platform and security patches are released at least once every

week. You do not need dedicated in-house resources to make sure that your

eCommerce website is up-to-date and secure.

• All upgrades and updates are tested against extensions and customisations

created for your eCommerce site before application so you can rest assured you

eCommerce site runs like a well-oiled machine.

eStar’s approach is to minimise the impact of any platform upgrades and updates, which are released and applied automatically with minimal to zero downtime.

5

Platform absolutes: stability, flexibility, reliability and scalability

Although the Magento community has long been waiting for version 2.0, not many

are rushing to make the giant leap of re-platforming from Magento 1.x to 2.x (version

at the time of writing is at 2.1). A majority are playing the waiting game: waiting for the

platform to stabilise3, and waiting for extensions to be available on the new platform.

Waiting while competitors are seeking to relentlessly innovate and respond to

market opportunity.

eStar’s iSAMS platform is an end-to-end solution, providing all the standard modules

you need to run an eCommerce site: web content management, payments, fraud risk

management, stock management, pick-pack-dispatch, and freight and

logistics integration.

eStar’s iSAMS platform’s open APIs make integration with any line-of-business systems

possible. eStar also have connectors with some of the most popular email marketing

solutions in the market such as Bronto and MailChimp; with financing options

AfterPay, ZipMoney and OpenPay. eStar has integrated with Apparel 21, Harmony,

Dynamics RMS, NetSuite, Salesforce, and Zendesk, among others.

eStar’s world-class hosting and network environment is used by its clients, seamlessly

scaling to handle millions of transactions. For some clients, the platform processes

over 1,500 orders an hour during click frenzy-type sale promotions.

The eStar service has been proven to be perfectly reliable in performance and

uptime, even through a number of real-world disaster recovery situations – including

major power outages, rogue snowstorms, as well as a number of major earthquakes

– without disruption to service. eStar eCommerce sites have an uptime of at least

99.97% and routinely hit 100% uptime.

3 As of the writing of this document, there are 1,835 open issues of varying complexities in the Magento 2 GitHub.

Magento 1.x users are waiting while competitors are seeking to relentlessly innovate and respond to market opportunity.

6

Security and PCI Compliance

This is the headline of an article4 that ran on TheRegister.co.uk, alerting Magento users

of a vulnerability that is found in both Magento 1 and 2 that allows a user to provide

an email address that contains Javascript code and potentially steal an administrator

session or act on behalf of a store administrator. Another vulnerability that affected

over 5,900 unpatched Magento websites allowed a credit card skimming malware to

steal customer payment information5, and still another vulnerability called the Shoplift

bug6 could allow hackers to potentially fully take over web stores.

Many Magento websites have fallen prey to vulnerability exploitations as described

above due to a number of reasons: general unawareness of the vulnerabilities, lack of

internal resources to address the vulnerabilities, or lack of budget to get third-parties

to address the vulnerabilities.

4 https://www.theregister.co.uk/2016/01/26/urgent_magento_update/5 http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=117290226 http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=11439675

“If you are one of millions using Magento – stop whatever you’re doing and patch now [!]”3

The Register.co.uk

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Security and data privacy are paramount in eStar’s iSAMS platform. As part of

maintenance activities, eStar ensures that all hosted environments and in turn their

customers’ data are protected with up-to-date software and security patches as part

of platform maintenance. As part of our PCI-DSS Level 1 certification compliance,

vulnerability assessment and penetration tests on the platform are routinely conducted.

On the merchant front-end, a fraud risk management tool, eStar’s RMProfiler, is built

into the eStar platform. All orders are assessed for fraud risk before further processing.

Risk assessment can be configured to run automatically based on business-nominated

thresholds, or manually, assisting the online site administrator/s to make expert

decisions based on fraud detection algorithms derived from analysis of over 16 years of

eCommerce fraud and risk data collected. Individual merchants are able to configure

RMProfiler to match their required business rules and industry ordering profiles.

Algorithms across the eStar platform ensure higher accuracy, and higher order volumes

with less false positives. eStar clients report reduced online fraud rates between 0.05%

and 0.2%, way below the industry average of 1% .

8

Establishing true platform ownership costs

In terms of upfront licensing costs. Magento has always seemed one of the

cheapest options in the market. As an Open Source platform, the Community

Edition (CE) of Magento is free – i.e. requires no license fees – and the Enterprise

Edition (EE), at US$18,000 per server per year, is cheap compared to tier one

eCommerce platforms. Extensions can be downloaded from the Magento

Marketplace for free or for a minimal one-time fee.

With Magento 2, CE is still free but EE’s pricing structure has fundamentally

changed, moving from server-based licensing to value-based licensing (GMV or

gross merchandise volume formula), which Magento bloggers peg to be between

0.3% - 3.6% of total sales on the platform and a minimum US$22,000 license fee

for small online stores that make less than US$1 million up to around US$75,000

license fees for online stores that make between US$10M – US$25M7. Extensions can

still be downloaded from the Marketplace for free or for a minimal one-time fee.

7 https://blog.mdnsolutions.com/magento-2-enterprise-edition-license-cost/

With Magento 2 the enterprise pricing structure has fundamentally changed, moving from server-based licensing to value-based licensing (GMV or gross merchandise volume formula), which Magento bloggers estimate to be between 0.3% - 3.6% of total sales on the platform.

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Many stop counting the cost of ownership at licence fees. Calculating the total cost of

ownership for your eCommerce platform requires considering a broader set of costs:

• Cost of design, maintaining in-house developers.

• Cost of server hardware, hosting, and overall platform maintenance – which

includes ensuring that software patches are up-to-date, and addressing

vulnerabilities on the platform and the customisations made on the platform,

among other activities.

• Cost of scaling your business. As your business grows and the retail experience you

want to provide your customer evolves, you will need to make additional hardware

and hosting investments. Magento extensions do not necessarily plug-and-play

into the platform – they usually require additional development and integration

effort to implement. These costs add up over time.

• Cost of conducting regression testing (or even more – the cost of forgoing it).

Regression testing becomes more complex and more costly as the number of

extensions in the Magento site grows. This best practice requirement lengthens

the time-to-market of new features that a Magento retailer wants to have, such

that, typically, full regression testing is completely ignored to hasten release

to production. This shortcut in itself incurs further costs: opportunity costs for

when the eCommerce site breaks, and opportunity costs for when undetected

vulnerabilities in the eCommerce site are exploited.

• Cost of complexity. Magento developers and development houses often need

to modify the Magento core code to get the outcome they require. Add to this

different extensions installed, updating with hotfixes and upgrading to another

version of the platform, platform management becomes a complex and costly

activity requiring more effort to identify potential conflicts and to fix the resulting

conflicts. Simple updates can take up more time and resources than expected.

10

Simplify your Operations

By simplifying your operations you can improve your control and reduce many of these costs:

• Remove dependencies on internal IT resources for a reliable and secure site. As part of

platform maintenance and support services, the eStar Operations Team take care of the

nitty gritty maintenance activities – including applying platform updates and upgrades,

security patches, and firmware updates – freeing your IT team to focus on strategic and

critical technology initiatives.

• Updates are released at least once a week with minimal to zero downtime for eStar

clients. As part of our PCI-DSS Level 1 certification compliance, vulnerability assessments

are conducted on all eStar client sites regularly, and penetration testing conducted at

least once a year.

• eStar eCommerce sites have an uptime of at least 99.97%, and routinely have a 100%

application availability. As a hosted solution, you may rest well knowing that your site

will be up and running even when natural disaster strikes. Our data centres are located in

Christchurch, New Zealand and Sydney, Australia; when the 2010 Canterbury earthquake

occurred, our clients experienced zero downtime.

• Scalability on demand. You need not worry about investing in and maintaining hardware

resources sized for those couple of days in the year when you have your biggest sales.

• Eliminate complexity. With eStar’s platform architecture, there is zero risk for

incompatibility between new platform features and adding new custom features created

for your business with the core platform. This results in less time needed for integration

and regression testing, and leads to faster deployment.

• Critical support when you need it. Local support teams are available during ANZ business

hours, and emergency support teams are available on-call 24 x 7.

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Focus the key: retail brand experience and digital strategy expertise

Reliability, scalability, performance, agility, security. These are the minimum expectations for

an Enterprise eCommerce platform. Magento users can typically achieve a platform solution

with most of these attributes, with the right level of expertise and investment. But the online

retail game has moved beyond platforms.

The ability to successfully meet your customers’ expectations, has changed. The Flagship store

isn’t on Pitt Street, Castlereagh or Bourke Street anymore, it’s digital. For example, the average

Myer store has five million visitors, their online store fifty million. The biggest impact on your

customer journey is your digital store.

Google in 2010 estimated five digital touch points in an average customer journey, in 2015

it is thirteen. You must design for customer journeys with your brand – whether they are

purchasing in-store or online.

The world is here. Digitally we are as close to London as we are Melbourne or Auckland.

Suddenly competition is global. It means then understanding your brand and the customer

experience / journeys you will deliver for them:

• What makes your retail brand great?

• What experience can you offer that keeps customers wanting it?

• Leverage your assets – use stores, use your digital flagship store, in store network – store

fulfillment and Click & Collect.

eStar at its core is a retail company, that understands this. It has the right mix of people,

technology and experience – in retail, eCommerce and digital strategy – to ensure your success,

truly - Brand Experience. Delivered Together.

We would welcome the opportunity to discuss your eCommerce challenges and opportunities.

www.estaronline.com

sales@estaronline.com

Brand Experience. Delivered Together.AU 1800 503 891

NZ 0800 151 655

The biggest impact on your customer journey is your digital store.

Contact us to arrange a call