This web app uses cookies to compile statistic information of our users visits. By continuing to browse the site you are agreeing to our use of cookies. If you wish you may change your preference or read about cookies

close

Why Magento's Business Model is so successful?

Get all the answers


Magento’s Company Overview


Magento is a leading provider of cloud commerce innovation to merchants and brands across B2C and B2B industries. Founded in 2007 and headquartered in Culver City, California, Magento offers an open-source e-commerce platform written in PHP. The company provides a range of tools for creating and managing an online store, including marketing, SEO, and catalog management tools. Magento's platform is used by businesses of all sizes, from small start-ups to large corporations, and is trusted by many of the world's leading brands. The platform's flexibility, scalability, and a vast network of extensions and themes make it a go-to solution for businesses looking to grow and succeed online. Business Model: Magento's business model revolves around its open-source e-commerce platform. The company offers two primary products: Magento Open Source, which is free and can be self-hosted, and Magento Commerce, which requires a license fee and offers premium features and cloud hosting. The company's open-source model allows developers to modify the source code to fit their specific needs, fostering a vibrant community of developers and partners who contribute to the platform's growth and development. Additionally, Magento offers a range of professional services, including consulting, training, and customer support, to help businesses maximize their use of the platform. Revenue Model: Magento generates revenue through several streams. The primary source is the licensing fees from its premium product, Magento Commerce. The fees are tiered based on the gross sales revenue of a business, making it affordable for smaller businesses and more expensive for larger ones. Additionally, Magento earns income from professional services such as consulting, training, and support services. The company also benefits from a marketplace where developers can sell extensions and themes for the platform, earning a commission on each sale. Furthermore, through partnerships with third-party service providers, Magento earns referral fees when its customers use these services.

https://business.adobe.com/products/magento/magento-commerce.html

Country: California

Foundations date: 2008

Type: Subsidiary

Sector: Technology

Categories: eCommerce


Magento’s Customer Needs


Social impact:

Life changing: affiliation/belonging

Emotional: design/aesthetics, provides access

Functional: simplifies, integrates, connects, reduces effort, quality, variety


Magento’s Related Competitors



Magento’s Business Operations


Certification and endorsement:

Certification is a term that refers to the verification of an object's, person's, or organization's unique qualities. Usually, although not always, this validation comes in the form of an external review, education, evaluation, or audit. Accreditation is the procedure through which a particular organization is certified. The majority of contemporary software vendors provide certification to standardize and resell their goods and services.

Cross-selling:

Cross-selling is a business strategy in which additional services or goods are offered to the primary offering to attract new consumers and retain existing ones. Numerous businesses are increasingly diversifying their product lines with items that have little resemblance to their primary offerings. Walmart is one such example; they used to offer everything but food. They want their stores to function as one-stop shops. Thus, companies mitigate their reliance on particular items and increase overall sustainability by providing other goods and services.

Customer loyalty:

Customer loyalty is a very successful business strategy. It entails giving consumers value that extends beyond the product or service itself. It is often provided through incentive-based programs such as member discounts, coupons, birthday discounts, and points. Today, most businesses have some kind of incentive-based programs, such as American Airlines, which rewards customers with points for each trip they take with them.

Customer relationship:

Due to the high cost of client acquisition, acquiring a sizable wallet share, economies of scale are crucial. Customer relationship management (CRM) is a technique for dealing with a business's interactions with current and prospective customers that aims to analyze data about customers' interactions with a company to improve business relationships with customers, with a particular emphasis on retention, and ultimately to drive sales growth.

Data as a Service (DaaS):

Data as a Service (DaaS) is a relative of Software as a Service in computing (SaaS). As with other members of the as a service (aaS) family, DaaS is based on the idea that the product (in this instance, data) may be delivered to the user on-demand independent of the provider's geographic or organizational isolation from the customer. Additionally, with the advent[when?] of service-oriented architecture (SOA), the platform on which the data sits has become unimportant. This progression paved the way for the relatively recent new idea of DaaS to arise.

Digital:

A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).

Digital transformation:

Digitalization is the systematic and accelerated transformation of company operations, processes, skills, and models to fully exploit the changes and possibilities brought about by digital technology and its effect on society. Digital transformation is a journey with many interconnected intermediate objectives, with the ultimate aim of continuous enhancement of processes, divisions, and the business ecosystem in a hyperconnected age. Therefore, establishing the appropriate bridges for the trip is critical to success.

Knowledge and time:

It performs qualitative and quantitative analysis to determine the effectiveness of management choices in the public and private sectors. Widely regarded as the world's most renowned management consulting firm. Descriptive knowledge, also called declarative knowledge or propositional knowledge, is a subset of information represented in declarative sentences or indicative propositions by definition. This differentiates specific knowledge from what is usually referred to as know-how or procedural knowledge, as well as knowledge of or acquaintance knowledge.

Licensing:

A formal agreement in which the owner of the copyright, know-how, patent, service mark, trademark, or other intellectual property grants a licensee the right to use, manufacture, and sell copies of the original. These agreements often restrict the licensee's scope or area of operation, define whether the license is exclusive or non-exclusive, and stipulate whether the licensee will pay royalties or another kind of compensation in return. While licensing agreements are often used to commercialize the technology, franchisees also utilize them to encourage the sale of products and services.

Online marketplace:

An online marketplace (or online e-commerce marketplace) is a kind of e-commerce website in which product or service information is supplied by various third parties or, in some instances, the brand itself, while the marketplace operator handles transactions. Additionally, this pattern encompasses peer-to-peer (P2P) e-commerce between businesses or people. By and large, since marketplaces aggregate goods from a diverse range of suppliers, the variety and availability are typically greater than in vendor-specific online retail shops. Additionally, pricing might be more competitive.

Open-source:

Compared to more centralized development methods, such as those usually employed by commercial software firms, the open-source model is more decentralized. Scientists see the open-source approach as an example of collaborative openness. Peer production is a fundamental concept of open-source software development, with deliverables such as source code, blueprints, and documentation made freely accessible to the public. The open-source software movement started as a reaction to the constraints imposed by proprietary programming. Since then, its ideas have extended to other areas, resulting in what is known as open cooperation. Typically, money is generated via services that complement the product, such as advising and maintenance.

Referral:

Referral marketing is a technique for acquiring new consumers by advertising goods or services through recommendations or ordinary word of mouth. While these recommendations often occur spontaneously, companies may influence this via the use of suitable tactics. Referral marketing is a technique for increasing referrals through word of mouth, arguably the oldest and most trusted kind of marketing. This may be done by incentivizing and rewarding consumers. A diverse range of other contacts to suggest goods and services from consumer and business-to-business companies, both online and offline.

Software as a Service (SaaS):

Software as a Service (SaaS) is a paradigm for licensing and delivering subscription-based and centrally hosted software. Occasionally, the term on-demand software is used. SaaS is usually accessible through a web browser via a thin client. SaaS has established itself as the de facto delivery mechanism for a large number of commercial apps. SaaS has been integrated into virtually every major enterprise Software company's strategy.

Solution provider:

A solution provider consolidates all goods and services in a particular domain into a single point of contact. As a result, the client is supplied with a unique know-how to improve efficiency and performance. As a Solution Provider, a business may avoid revenue loss by broadening the scope of the service it offers, which adds value to the product. Additionally, close client interaction enables a better understanding of the customer's habits and requirements, enhancing goods and services.

Embed code:

x
Copy the code below and embed it in yours to show this business model canvas in your website.