What does Magento’s acquisition of RJMetrics mean for ecommerce?

An act of differentiation—or desperation?

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On the first of this month, the news broke about Magento’s acquisition of RJMetrics. As Magento stated themselves, the idea is to allow non-technical business users to quickly and easily integrate with enterprise-grade data sets. Magento also talks a lot about bringing this capability to “multi-brand” and “multi-channel” retailers. But what about to DNVBs? What about the mid-market?

Setting the record straight

News headlines can be deceiving — and this one in particular. RJMetrics was not a company. Rather, RJMetrics was a product of a company, and that product had a team. That product, CloudBI, and 37 of its 67 team members, will join Magento. What happens to the other 30 humans? They stay at the “Organization formerly known as RJMetrics,” which is now Stitch.

Why did they do it?

Well, I don’t have anything better than an opinion, but I like to think that opinion is at least reasonably well informed.

Reason 1: Talent and reach
Or is that two reasons? Never mind… RJ was a huge part of the Philadelphia startup community (see also: Monetate, DuckDuckGo, Curalate, etc.), and this gives Magento the opportunity to have a home base there.

With a presence in Austin, TX, and Campbell, CA, this acquisition gives Magento an East Coast U.S. presence. Now Magento has proximal access to talent in three (of arguably, four, including the Midwest) major regions of the U.S.

Reason 2: “Magento Analytics”
This is a new division of Magento, focused on “cloud business intelligence.” Given that CloudBI is the product Magento bought from RJ, and that RJ’s co-founder and CEO will lead Magento Analytics, I think it’s safe to say that the acquisition is single-handedly enabling Magento to build this division.

Reason 3: D̶e̶s̶p̶e̶r̶a̶t̶i̶o̶n̶ Differentiation

(Disclaimer: Our company is a Shopify Plus Partner.)
For what it’s worth, I pride myself on being pretty unbiased about this “competition” between platforms — I won’t even participate in Shopify’s “Migrate from Magento” campaign. And it’s because we consider ourselves platform agnostic. It just so happens that, for many of our clients, Shopify Plus is the right choice… for a number of reasons I don’t have time to get into.

But make no mistake, Shopify is going after Magento. Hard. And with the data I have access to, albeit empirical at best, I think it’s safe to say that Shopify is winning. So, I think this is a move of desperation and toward differentiation.

It’s at least clear that Magento’s not going to go down without a fight.

So, what’s the big bet?

Magento used to own “mid-market” ($5MM–$200MM brands, IMO) commerce. Since then, the mid-market has grown substantially, and Shopify has eaten much of it.

“Data-based” concepts like “big data,” “conversion rate optimization,” “personalization,” and “business intelligence” — RJMetrics’ strengths — all go hand in hand. However, I don’t believe that any of those concepts have truly made their way from the enterprise downstream to the mid-market. The enterprise is too fractured for anyone like Magento to make a dent, and Magento may not win the mid-market. But with this move, and with Magento 2, it’s at least clear that they’re not going to go down without a fight.

The real question I have is: Will these “data-based” concepts proliferate into the mid-market before Magento loses? Based on the trends that I’m seeing… I’m not terribly optimistic.