No Turn On Red

Last year, Target announced that they would be ending their relationship with Amazon and bringing their e-commerce operations in-house. I only assume that many e-commerce platforms and integration partners were courting the large retailer, touting their services. Yesterday, the retailer announced the full list of vendors that will be involved in the nearly 2 year project:

• Sapient Corp., based in Boston, as the lead partner and integrator,
• International Business Machines Corp., based in Armon, NY, which will provide the multichannel e-commerce platform,
• Oracle, based in Redwood City, Calif., which will provide the database platform,
• Endeca Technologies Inc., based in Cambridge, Mass., which will provide search and navigation functionality,
• Autonomy Corp., based in San Francisco, which will provide content and digital asset-management functionality,
• Sterling Commerce Inc., Dublin, Ohio, which will provide global inventory visibility and cross-channel order-management functionality, and
• Huge Inc.,based in Brooklyn, NY, will provide visual and interaction design.

This is going to be an interesting project to watch and I can’t wait to see what Target and their vendors come up with. A highly visible, successful brand that is already known for a pleasant in-store shopping experience will have a very high bar to meet as re-platform their e-commerce offering.

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Earlier this year, Magento released the Enterprise Edition of their e-commerce platform. While reading up on their integration solutions, I couldn’t help but notice some interesting numbers as part of their partner program.

Integration partners who are at the Enterprise Level must have an $8,000 partner fee and provide Varien (parent company of Magento) with a revenue commitment of $100,000. This may be in enterprise licenses or “other Varien services”. A quick glance at the Magento partners page shows that there are currently 22 Enterprise partners. For a second, let’s consider what these numbers mean if we take them at face value.

This means that Magento is seeing revenues of $176,000 in just Enterprise partners alone (this doesn’t take into considering the $4,500 & $1,500 partner fees for the Professional and Community partnership levels). 22 Enterprise partners means that Varien has $2,200,000 in revenue commitments for the year. At an average deployment cost of $11,125 (according to Magento’s own figures), Enterprise partners must move 197 enterprise licenses this year to meet their commitments.

I know that my math is fuzzy and put together using the information that is publically available. I know that these numbers don’t take into account “other Varien services”. I also know that Varien is a private company with private sales figures. However, I am really interested to hear what others think: can Magento, the quickly growing e-commerce platform, actually see 200 enterprise edition licenses in their first year of offering their Enterprise Edition?

Going one step further and assuming that the average Enterprise Edition customer launches with two production licenses (number completely made up in my head), Magento is still looking at 100 clients. No wonder they are making so much noise in the e-commerce field right now.

So what do you think? Are these numbers, taken for what they are worth, realistically achievable for this e-commerce platform? Or, considering the growth that the platform saw over the past year, are these numbers the low end of what Magento could launch?

(Of course, my numbers could be really off as well. As I said, this is all fuzzy math and estimates. If you feel I’m off base in these assumtpions, please tell me!)

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