Why Adobe Acquired Magento

Posted by DJ Basumatari on Aug 8, 2018 2:55:44 AM

Reason's in the Past

Let’s travel some five years back when online shoppers started to become more demanding. They weren’t satisfied with the convenience alone - they wanted "experience". To serve them, the e-retailers introduced Omni channel using tools like Microsoft Dynamics 365 and IBM WebSphere.

That was also the time when Adobe introduced Adobe Experience Manager (AEM) - a content creation and management system for e-commerce players - and tied knot with IBM and SAP. As customers wanted a more personalized content experience, and the Adobe AEM could allow that across channels, the Adobe-IBM or Adobe-SAP unison worked out to be really beneficial. With such a combination of tools, e-retailers could practically place the customers at the center, understand their needs at a granular level and offer them more targeted services. The market truly shifted from B2B to C2B.

In parallel, as the tools allowed for studying the fine-drawn customer data and communicate with them individually, marketers started defining strategies for the Segment-of-One.

Marketers’ Tools

Serving the Segment-of-One in the C2B environment was a trying task. A Forrester Research suggested, that the every brand stories should have three distinct characteristics: they should be deeply personalized, they should be contextual, and they should offer an interactive digital experience.

When the marketers probed deeper to find out what would make for “personalized contextual content”, they found the answer in a Getelastic report that suggested, “over 90% of online shoppers say visuals are the most influential factor driving a purchase decision. Moreover, offering multiple product views and other alternative images lead to 58% more web sales.”

These two findings steered them towards a solution that can:

    •  Work across channels and touchpoints
    •  Work with multiple types of content
    •  Make content adaptive to different form
    •  Offer content storage, creation, and distribution capability
    •  Work with people from operation and marketing without involving IT

The marketers also realized that content by itself evolved in two aspects. First, it started playing a role in revenue generation. Second, its creation wasn’t a publisher’s prerogative anymore. Even the users started creating content. This made the marketers notice that every online player started thinking about content differently. They identified whether it was a communication from a business to its customer, or the other way round, multiple types of content needed to flow seamlessly across devices and touchpoints. The need for a sophisticated content solution somehow got riveted with an e-commerce solution.

The IBM-Adobe and SAP-Adobe alliances fit perfectly in these channels to guide a customer throughout the buying journey. While the e-commerce systems allowed for marketing data management, segmentation, and predictive and cognitive analytics-driven market insights, the content management system offered freedom to create appealing visual and intuitive experience by both a service provider or consumer.

The Present Ecosystem

E-commerce today has become matured to deliver an experience. A brand today, stands by its customer across devices, online or offline. The platform on which a brand sets up its business has become smarter to manage procurement, merchandising, selling, logistics and marketing. Marketers have become sensitive in understanding consumer preferences, astute in crafting communication, and innovative in promoting their brands. Platforms like Hybris, Virtuemart, BigCommerce have already started helping brands by offering both commerce and content solutions. A content service that was offering help from outside five years ago now sits inside an e-commerce system and allows for offering a holistic solution.

Why Adobe Needed Magento

In a time as such, it’s a bit awkward for a content solution leader like Adobe to stick to e-commerce solution providers using only its AEM. Particularly when AEM already drives action in the awareness, consideration, and retention phase of a consumer’s journey. It only lacked in the third phase - purchase.

That lacunae have put Adobe in the back foot. Through the AEM, Adobe had been catering to the digital marketing needs of the marketers. It’s content authoring, content and digital asset management and delivery functionalities perform great, not only on the web but across multiple channels, including print and social communities.

But its partners (IBM, SAP, et al), on the other hand, have been doing most of the heavy lifting. Management of purchase and its derivatives like purchase data, customer data, predictive and cognitive analytics, customer behavioral insights seem to deliver greater business value in comparison to marketing alone.

In the past, although SAP teamed up with Adobe to offer marketing solution over its Hybris platform, the acquisition of a behavioral marketing platform SeeWhy and the growth of Hybris to Hybris Marketing, have made Adobe nearly replaceable in the game.

There’re a couple of brighter aspects as well. Presently most of the applications are dependent on the open source model. It is flexible and allows for innovation in building customer experience. Adobe has been quite strong in the open source space. It’s long-time product, Adobe Cloud Platform, relies heavily on open source projects like MongoDB, Apache Kafka, and others prove the point. Therefore, it’s imperative that to get into the e-commerce domain with a focus on delivering a complete experience to a shopper, Adobe will look forward to deepening its involvement with the open-source model.

Additionally, as Adobe has already been an experienced player in the cloud with the Adobe Marketing Cloud, it’ll look out to exploit the technology to the most. Given that microservices-based headless architecture is considered to be the most potent field where cloud technology can be best used, Adobe will try to find out opportunities to get in and make its mark.

With one big threat of being redundant and a couple of equally big promises to hold the ground as a leader, Adobe needs an open source, cloud-based, e-commerce arm of its own quickly.

This is where Magento fits..

Why Magento Needed Adobe

On the other side, although Magento enjoys the market leader position in the open commerce domain, it lacks capability in new age CMS. It has realized that its sole focus on making Commerce Management scalable won’t take it far, because a single solution approach to win customers has long become history.

Based on innovation, it has overcome its original limitation of scalability. Its current architecture of v.2x can cater to a wide range of e-retailers from medium-sized to enterprise level who are operating globally. To manage their business volume and catalog, Magento has the best of the breed functionalities. It sets the game on the cloud version of the platform and brings together a series of extensions it has acquired over the years. On top of that, it pushes in its new order management API and support for B2B complexities. These solutions have given Magento a stable foundation to stand as a leader. But when the sellers look up for customer experience management, campaign management or market orchestration, then it falls short of options. Whatever current proposition it has in its kitty is definitely not as sophisticated as a global player would demand or even need to set up a true experiential digital commerce.

Today, if Magento has to retain its market leader position, it either has to find a partner who’ll allow it to explore and extend its capabilities in experiential marketing or feed the capabilities into its core.

To lure someone to shake hands it can definitely count on its couple of strength. First off, it has a few thousands of developers who form the Magento Community Edition. This pool has been its source of innovation. And second, its move towards microservices-based headless digital platform architecture. This is growing to be tomorrow’s solution for e-commerce management and Magento has already dipped into it. If these two are mapped on the shopper’s journey, they’ll perfectly fit as a solution for the “purchase” phase, leaving the other three blank and to be filled by the partner.

This is where Adobe fits..

The Unified Future

The future seems promising. After Salesforce acquired Demandware, the market didn’t have many large e-commerce platforms that also has API based microservices structure. In a situation as such, it makes sense for Adobe to house Magento. In addition, there are already a few successful implementations where Adobe sits on top of Magento. So once they conjoin they can practically claim that a fully packaged solution from Adobe is already present in the market.

With respect to blending in, Magento needn’t worry much. Adobe has a series of successful acquisition history where it has smoothly onboarded the acquired product. Photoshop, Macromedia, and Omniture - the track record is strewn with examples. Currently, the products have become integral with the Adobe suite. Magento can expect nothing short of such an even blend.

From the point of view of features, there are a few overlaps in the combined system. Take a look at the table below to quickly gain an understanding of the strength of the combination:

  Adobe Magento
Modules    
Web content management Strong Weak
Customer experience Strong Weak
Personalization (Machine learning, AI and self optimising algorithms) Strong Medium
Product Catalog Management Strong Medium
Order Management NA Strong
Campaign management Strong Weak
Data Analytics Strong Medium

 

Most importantly, the two brands fit like a glove when it comes to offering a unified experiential commerce solution. The gaps that each of them had as separate entities get completely filled when joined. Adobe comes with strong experience management modules and Magento brings robust commerce modules. As such a combination makes for the ideal pick among both publishers and retailers, we need to wait and watch what innovative features do we get that are capable of elevating our experience.

Tags: Magento, eCommerce, eCommerce Trends & Insights

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