Magento Marketplace: what it brings to merchants and developers

magento marketplace

This night I had an opportunity to participate in a webinar from Magento dedicated to upcoming launch of Magento Marketplace. In this post I’ll outline things that I’ve found the most important or interesting regarding this new initiative.

Timeline

  • The launch of Marketplace is scheduled on Q1-2016, so should be in the next 6-7 weeks
  • Initially it will be only for Magento 2 extensions
  • In Q2 2016 Marketplace will include Magento 1.X extensions
  • Magento Connect will be phased out after that

What will be different for merchants with Magento Marketplace

  • The transaction will take place at the marketplace, not at the developer’s website
  • Improved extensions quality, each extension will go through more rigorous review process before it get listed on the marketplace
  • Better search functionality. This is really a problem with Connect, I personally found that it is easier to use Google to find the extension, even if eventually you land on the Magento Connect page
  • Centralised purchase history
  • Easier choice – Magento team plans to vet extensions during the transition process, so apparently there will be no dozens of the extensions providing very similar functionality
  • Possible increase in price. When the process becomes more complex and costly for developers (see next section for details) it means higher costs and more barriers and hence less competition. Therefore you can expect increase in prices.
Magento Marketplace - merchant purchase flow

Magento Marketplace – merchant purchase flow. Click to enlarge

What will be different for developers with Magento Marketplace

More checks for the extension in order to increase quality

  • Automatic code check for security/malware, plagiarism, adherence to Magento coding standards
  • Manual business check  – extension value for merchants, developer’s business information, adherence to marketing guidelines

2016-02-12 (5) 2016-02-12 (4)

The bad (from developer’s prospective)

  • Revenue share – Magento will take 30% chunk of the revenue from Marketplace. At the moment Magento Connect doesn’t charge a commission. Magento plans to implement revenue share with SaaS solutions as well, while it can be tricky
  • Delayed payments – Magento will distribute payments 15th day of the next month
  • Headache with US government forms (W8/W9) and possible taxes withholding
  • Payments in US dollars only at the moment. Magento promises to add more currencies in the future, but at the moment it is USD only. The money will be sent through Paypal, which increases transaction cost

The good, what developers should expect in return for that additional costs

  • Reduced efforts on customer support – some things like download files issues and refunds will be handled by Magento
  • Reduced expenses to support your own store, essentially you don’t have to have one and can rely on Magento Marketplace only (is it smart thing to do or not is another question)
  • Additional ways to promote the extensions within Marketplace
  • Reduced competition from low-quality cheap extensions and copycats – so probably an opportunity to sell the good extension at higher price
  • Sales analytics and insights
  • Promise of increased demand through marketing efforts by Magento team

Developer Benefits

Developer Benefits, click to the image to enlarge

Developer Analytics

Developer Analytics, click to the image to enlarge

Other notes

  • Developers still can sell the extensions outside Magento Marketplace, Magento doesn’t plan to try to prevent it. The message from Magento team is that they believe in the extra value they can provide to both merchants and developers with Marketplace
  • Developers can sell encrypted extensions as long as it is clearly stated and if they OK to provide open-source version for Magento Marketplace team review
  • Developers will be able to apply individual terms and conditions to the extensions they sell on Marketplace

Conclusion

It will be really interesting to see how Magento Marketplace initiative rolls up. I totally understand the agenda behind this initiative: Magento under new private equity ownership seeks for sources of revenue and the current state of Magento Connect isn’t ideal, so the value can be created.

From my point of view however, the critical question is can Magento get the developers on-board, will they see enough value in Magento Marketplace to justify additional costs and complexity involved in taking part there. And for those who take that step, can Magento deliver on the promises.

Another interesting consideration is how this walled marketplace with highly curated content corresponds with Magento DNA as an open system. Can a small team albeit highly professional do the better job than market and community to decide what extension should be allowed on the market and what not? I am not talking about the extension with security breaches and tons of bugs, it is more about who should decide, is there need in say another site search solution or existing dozen is enough?

The images used in this post are screenshots from Magento Marketplace webinar

References

  1. Official Magento Marketplace FAQ
  2. Webinar recording (to be provided once Magento publishes it)

Get fresh eCommerce insights weekly

Subscribe to our mailing list

* indicates required


No, I don't need insights. Just close this pop-up

Consider changing your eCommerce platform?

Learn how to avoid nine deadly mistakes that can ruin your business.

Get free whitepaper from Magenable

Get whitepaper

Get free whitepaper!