EP071 BigCommerce's Mid-Market Showdown: Can They Eclipse Shopify?
===

[00:00:00] Darin Newbold: Well, and good day and welcome to Commerce Today we have a very exciting episode here, hands-on e-commerce 

All right. Good day and welcome. Hey, Josh. Guys, this is a little bit different, uh, atmosphere for us. Uh, this is, of course, Josh and my name is Darin uh, we're excited to be here for Commerce Today and we have some interesting Shall we say late breaking almost news to, uh, to discuss in this episode.

What do you think, 

[00:00:25] Joshua Warren: Josh? 

Yeah. It's so rare in our industry that we have true like breaking news, but we actually do a couple days ago I told Darin I think we should do a podcast episode on BigCommerce, And I feel like someone must have heard us because there has been big announcement after big announcement coming out of BigCommerce the past, uh, two weeks. Really 48 hours, even this morning.

So, and I think a lot of this, the situation's moving very quickly, I think. So they have a quarterly earnings call tomorrow morning, and, uh, it is rare that I will try to make a prediction 12 hours in advance or. uh, however long that is, I guess, 18 hours. I think there's going to be a surprise in that earnings call, and I think it's going to be either very good or very bad surprise because I have not seen a public company since maybe Tesla do so much to generate so much news in the days leading up to a earnings call, especially news.

that's kind of like, don't worry. It might look bad, but we're on it. So, I, maybe I'll be wrong, but I think there's a good chance that tomorrow morning's earnings call, uh, might be a little brutal for big commerce. 

[00:01:27] Darin Newbold: I see. So you're, uh, you're calling it for the negative. So, uh, so you're updating your resume to take, uh, take that spot on CNBC for, uh, for the next round.

I 

[00:01:36] Joshua Warren: see. There 

we go. There we go. Yeah. Or I'm going to be horribly wrong and never be invited to CNBC. ever. So 

[00:01:43] Darin Newbold: enough about CNBC, let's, let's kick this off. We wanted to start off a little bit about BigCommerce and, and really kind of their arch rival in this case, Shopify.

So. Let's go there. 

[00:01:54] Joshua Warren: So I started looking at that and kind of the, the points that Rick made was that outside of Shopify, there's no other American public market e commerce platform solely focused on e commerce.

So if you are looking at American publicly traded it's Shopify and BigCommerce. and even Shopify technically. Canadian, but it counts North American. Also when you look at e commerce SaaS platforms, especially American e commerce SaaS platforms it's Shopify and it's BigCommerce. And there's a few other smaller ones in there, but the, big fast growing ones, it's just those two.

And we're at an interesting inflection point where enterprise brands are, Really looking at SaaS and looking at Shopify and BigCommerce more than they used to, like used to the mid market and especially the enterprise level wouldn't even consider Shopify or BigCommerce. Both of those platforms have introduced kind of enterprise y additions and have really attracted a lot of attention that way.

And so kind of the, the thesis, I think of Rick's article, and we'll get into this a little bit later in more detail, but Shopify's play has been around, we can do your logistics and we can do your payments and there's a lot of bigger brands that don't want their e commerce platform doing their payments, Shopify wants to take a cut of that.

And so BigCommerce doesn't do that creates a little bit of differentiation. And definitely a potential there for BigCommerce. 

[00:03:18] Darin Newbold: Well, it allows those companies on BigCommerce, obviously, to take more of the profits of what they're doing and not give it away, which is definitely a huge thing. Yet here we are.

So along these lines as we're going, you know, the big announcement or the big thing that, uh, that just broke was about BigCommerce, at least for sale or looking for uh, Uh, new investor. 

[00:03:44] Joshua Warren: Yeah. So um, Reuters broke the news early this morning or late last night, depending on your time zone, that BigCommerce engaged an investment bank to explore the sale of the company.

So they're currently publicly traded. So this would most likely look like someone buying them and taking them private or Another publicly traded company buying them. I secretly hope maybe Adobe buys them. I think that, you know, BigCommerce plus Magento all in one company. I start to get pretty excited there.

Um, Probably not likely, but it's really interesting to me though, because they announced this two days, or they didn't announce it, Leaked to the press two days after they announced that they've appointed a new president Travis Hess, who has quite a bit of e commerce industry experience as well as a new vice president of Americas for enterprise sales.

So originally it looked like, oh, there's, they're going to have this big push into enterprise sales. They're going to try something new. I have a hard time believing that a company like BigCommerce would appoint a new president, especially somebody like Travis and then surprise him with this acquisition talk.

I think that probably informed him in advance and maybe I even I'm getting kind of flashbacks, but slightly in reverse of when eBay brought in Mark Lovell to run Magento, basically to help them spin Magento off into a private equity situation and then grow it so that Adobe bought it. Could be that Travis has a similar mandate to do this for BigCommerce.

know you're 

[00:05:10] Darin Newbold: going on here, but I wanted to ask you specifically about Travis. He comes from Accenture and last I remember there was a, uh, Adobe and Accenture are pretty, pretty tight. you think that 

[00:05:25] Joshua Warren: could signal something? 

It could Travis, however, though, also has fairly close ties to Shopify.

So the whole thing is interesting. So Travis has worked at a number of different agencies. One of those agencies was acquired by Accenture. That's how he ended up at Accenture. So. Yeah, there's a lot of connections there. I mean, he's someone that is very well connected into the e commerce ecosystem.

I mean, he even has experience with a couple of um, agencies we're familiar with here in the Dallas area. So like he is well connected, but it does point to, you know, there's some Shopify connections, some Adobe connections, it's, it'll be interesting to see how that shakes out yeah, probably the most interesting part of that Shopify connection is he actually served on their partner advisory board.

So like he was in some. Pretty high level conversations with Shopify. And now he's taking that information and experience straight to big commerce. 

Um, 

[00:06:19] Darin Newbold: I guess that leads then to, uh, for those that might speculate and want to, uh, invest, uh, in, uh, in the stock. because BigCommerce is a publicly traded company.

what all is happening there that, uh, is also related. 

to this? 

[00:06:32] Joshua Warren: Yeah. So one of the reasons there's all these talks of someone acquiring them is BigCommerce is on sale. Um, Their stock is down 90 percent from where they IPO'd in 2020. And that's why so many people are talking about acquiring it. They've had some challenges with revenue growth with a public company, especially if you're not constantly growing and growing faster than you were growing before the market doesn't like that.

And since 2022, their revenue growth keeps decelerating. Basically Shopify is growing, Shopify is capturing a greater market share. And BigCommerce is shrinking a little bit. They also have a lot of debt in the process of going public and growing and going public. They acquired a lot of debt, have a high debt load.

That's a variable interest rate debt. So that's putting you pressure on the balance sheet. And then their sales are down and actually their CEO has cited in a lot of earnings calls now that. Consumer spending is lower, higher interest rates. That means merchants are taking longer to decide to switch platforms.

The number of merchants replatforming is reducing. So that has put a lot of stress on them. I think fundamentally. I actually long, long ago worked at a company called Interspire on a product called Interspire shopping cart. And for those that don't know, Interspire shopping cart became BigCommerce, and Interspire became BigCommerce. And so I've actually helped write some of the code that may even still be out there. Who knows? Hopefully not at this point. Um, But just from that experience, I would say like the fundamentals behind the platform and behind the company are sound it just seems like a really bad set of competitive and um, kind of environmental and financial circumstances are hitting them.

pretty hard. 

[00:08:10] Darin Newbold: Interesting. Well do you think that with the addition of a new president, the announcement of looking for at least potential buyers or investment and then something that I think they also just recently announced this open source B2B portal or buyer portal, I should say. Do you think that those are things that could tip the scales in a more positive direction possibly?

[00:08:35] Joshua Warren: I think they're trying to put together a number of um, items to either attract a buyer or to attract customers or both. And yeah, this open source B2B buyer portal is really interesting to me.

So they just announced this. They're calling to the open source B2B buyer portal. Kind of their tagline for it is giving B2B enterprise customers full control to build and customize optimal buying experiences. Sounds really interesting. Sounds intriguing kind of being able to have a big commerce platform, a SaaS platform running your B2B business.

But being able to have the open source ability to really customize the the buying experience. the challenge I have with it is how does BigCommerce and especially their marketing team here define open source? so far there is no source that is open. I went and I looked, BigCommerce does have. And we'll have it in the show notes, a repository where all of their open source items are listed.

And this isn't listed there. So I'm wondering if what they actually mean is if you buy this, we will give you a copy of the source under a restrictive non open source license where you can modify it and use it for your business. That's not quite open source. That's still cool and interesting, but it's not quite open source.

I was looking for the source because if this is truly a full open source product, then that to me signals, it could be a play towards Adobe and Magento open source. It could be a play towards shopware. Like they could be doing some interesting things, but so far it's mainly a press release more than anything else.

And so we'll have to see, is it truly open source or not? And kind of what that means. 

So not a lot, 

[00:10:14] Darin Newbold: at least backing it at this point. Now the one thing to remind everybody as we're going through this, we've talked about several topics. Uh, our show notes have links to all of these topics, so definitely want to remind, remind everyone on that.

Well, as we kind of bring it all together, kind of what's the strategic market positioning for, for big commerce? What, uh, what do you see as you look at your crystal ball there, Josh? 

[00:10:40] Joshua Warren: Yeah. So BigCommerce, they're in a good spot, maybe not financially, maybe not economically, but as far as in the market, I feel like they're in a good spot.

They have a solid focus on both B2B and B2C. They have that kind of space away from Shopify. I mentioned earlier where they're not they're not trying to be your payment gateway. They're not trying to be your shipping provider. They are trying to be your e commerce platform with that. really simple, transparent pricing versus kind of that percentage model that Shopify will use.

And IDC actually just put out updated Marketscape reports, and they showed that for B2B, they now show BigCommerce as a leader and for mid market B2C, they show BigCommerce as a major player, which is a big upgrade for them. So like they are definitely getting a solid niche carved out in the market for themselves.

This is a bit of a, uh, kind of a Goldilocks, you know, not too hot, not too cold situation. The platform, really one thing that I've always liked about big commerce is there's just more to it from a technical standpoint than Shopify. Like I feel like it is a little more complex, a little more robust.

Just a lot more you can do with it. If you're technically savvy, I think Shopify has always really tried to focus on without a developer, without any code, get a site up and running out of the box. But they're all. kind of Pretty similar. And require a lot of plugins, BigCommerce gives you more room to customize, I feel like, and then it doesn't bring in all the complexity you get from a fully composable platform, something like a commerce tools.

So again, it's kind of in that, that middle. And I think that middle is a really good place to be right now. And then if they do add true open source around this B2B piece again, that's a good kind of hedge against shop where magento open source, things like that. And then again, you don't have that payment gateway tie in and fee structure Shopify.

So it really. If they navigate this well whether it's taking them uh, private, being acquired by another public company, if they navigate that piece, well, get into a a little bit better financial situation. I think they represent a really interesting option on the market. I do think though, if you're a um, retailer out there and you're considering switching platforms, going to a new platform, it does have to give you pause.

You have to kind of think, wait, do I, do I want to. Sign up with BigCommerce right before they're potentially acquired by someone else and everything could change. Like, I think that getting solid messaging out and getting through this acquisition phase as fast as possible is going to be important because I just, I think that this news alone is going to slow down some of their sales cycles.

[00:13:12] Darin Newbold: definitely could. I mean, companies all the time, whenever there's announcements, it does create pauses. Do you think there's any, uh, any possibility that instead of, I know you were excited about possibility of Magento or Adobe being the purchase or the investment on, what if the flip side, what if it's Shopify to look to maybe add a more complex solution to their, to their repertoire, if you will.

[00:13:39] Joshua Warren: That's an interesting idea. I wonder though what the federal trade commission would say about that. I know, I feel like a lot of our lawmakers don't understand e commerce, don't understand these platforms, but I think that even they might, hear the word Shopify wants to buy BigCommerce and think, wait, these are the only two big North American players in SaaS e commerce.

Maybe, maybe that would be an anti competitive move, but I think it could be a smart move, but I don't know if regulators would go for it. And I think especially looking at. All the impact that um, Adobe's failed acquisition of Figma had whenever the FTC stepped in. It may give Shopify some pause on that.

Hmm. 

[00:14:21] Darin Newbold: Interesting. Well, it sounds like there's, there's a lot to think about around this. The, the broader implications of a, what does this potentially do to big commerces? Internal their sales, their outbound sales, well, as their potential purchase, uh, inside the marketplace. of The company overall, Uh, I guess what's your, what's your last thoughts, takeaways as we land this, uh, land this show.

[00:14:51] Joshua Warren: I think I have a number of people I know, friends, acquaintances over the years that are working at BigCommerce. There's a lot of smart people there doing some really cool things. And so I don't think just like there was a wall street journal article earlier this week that. polarized the entire industry between if online or offline was more important.

I think there's gonna be some articles saying, you know, this is the death of big commerce. This is the end of big commerce. That's not, it's not, they're going to continue in some form or fashion. It'll be potentially under a different company's name. But our industry has seen that happen multiple times, you know, in my role working with Magento, I've been through a few acquisitions now.

And yeah, it'll create change, but big commerce is going to be around for quite some time. And so I think it's, it could be a good opportunity, actually, if you are a merchant considering replatforming and you need, you know, you've said, Hey, it's got to be a SaaS. I want a SaaS. Don't just automatically go to Shopify.

Definitely look at big commerce and if anything especially on the enterprise level, given that they just appointed also a new vice president of enterprise sales for the Americas, you might be able to get a good deal. It might be a good time to say, Hey, you know, I don't like some of this news I'm hearing, but your platform's interesting.

What can you do to convince me to, switch to big commerce? So definitely. Keep them on your list. Maybe move them up your list. If you're looking for a SAS based e commerce platform, right? 

now. 

[00:16:16] Darin Newbold: Excellent. Well, as they say, let's make a deal. And, uh, and, I guess if Travis Hess is listening out there and we hope he is, uh, definitely reach out to, uh, to Joshua Warren on LinkedIn and all the others, as well as all of you listening.

We definitely love to hear from you, explore big commerce, Uh for your businesses, and we definitely want to hear your feedback and questions. I have a feeling that this topic may come back around at a later point to have a have a revisit to see what ultimately happens. But with that, we thank you all for joining us.

Definitely subscribe and uh grab the information. We'd love to hear from you. Until next time, we'll talk to you 

[00:16:56] AUDIO-1: soon.

​