WooCommerce Business Model

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Recently I've started using WordPress with WooThemes and WooCommerce. I want to keep this short(er) so just a few bullet point thoughts.

- C5 needs a commerce system similar to WooCommerce where it's free and turnkey.

- The WooCommerce model is powerful because the core software is free and a greatly respected product. They don't need to sell it, people flock to it. The extensions available are costly, but when your site is already up and running and making money, it's easier to justify the purchases.

- Once you have a good commerce package that is free, now there becomes a market for extensions. Checkout the WooCommerce extension here for ideashttp://www.woothemes.com/product-category/woocommerce-extensions/...

- WooCommerce provides almost instant setup. Even though you need to enter settings, the default settings give you a working store out of the box. And when you start putting in products, they show up right away and you can begin categorizing them and see your store come together. Somehow it wasn't that simple using C5 Commerce where there are parts of the process that seem clumsy or more technical.

- Which is better for C5 financially? Selling a weak Commerce package to a few, or improving it as an open source product and giving it away to thousands? I feel the sale of Commerce Themes and Commerce Extensions would be more lucrative than the sales of commerce licenses. Plus it's better for C5 as a whole, because it can help attract developers to C5 when commerce is part of their site.

- With any ecommerce system today, very important to solve the problem of selling digital products or processing donations or bookings. Don't just think about a typical store filled with widgets. It's important to be able to use the commerce system to process payments almost like a stand-alone process. This allows developers to work with the system, maybe even without a catalog. To be able to make dynamic products on the fly and then push the item to the cart for processing. Bottom line is try to avoid needing a "product object" to exist in order to process a payment.

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zest replied on at Permalink Reply
zest
Totally agree,

As a C5 developer that has built quite a number of eCommerce sites (about 1 every couple of months for the last year and a bit) with the ecommerce add-on as built by the C5 team i would love to see them poor some more time and energy into this to grow it to be competitive with other eCommerce solutions such as wooCommerce.

The add-on as it stands is perfect for smaller ecommerce sites with a dozen products or so, which as i understand is what they set out to create when they built it, but unfortunately lacks more advanced inventory management features etc. if you require a solution for larger scale ecommerce sites.

However as far as it being free that would be great but i would not mind having to continue to pay for a license for each site if the revenue was put toward supporting further development of the add-on.

With Concrete 5.7 getting closer to being released it would be nice to hear from the C5 team on their stance on the future eCommerce in C5.

TL;DR I have built many C5 eCommerce sites using the C5 teams ecommerce add-on and overall it is a great system, however it would be nice to see it developed more to something that could compete with more full featured eCommerce systems.
frz replied on at Permalink Reply 1 Attachment
frz
Whelp a few thoughts.

* eCommerce Today
Yes, eCommerce was designed quickly, a long time ago, with the idea of
serving a small design centric store. As always when we solve a problem
there were some unique approaches and some of them have stood the test of
time better than others. My take is it's a pretty solid framework for the
ecommerce stuff (cart) but the presentation layer sucks and the assumption
that product pages/categories should always be individual pages in the tree
and not just dynamically served through a set of single pages is probably
off. Checkout should be rebuilt to be a bit more flexible as well.

When/if we have the time to do a rebuild we'd likely make the catalog
automatically build all the time and then give you the ala cart approach
that it is built around now as a secondary option. We'd also get rid of all
the ganky formatting of the product list block which certainly started to
get a bit schizophrenic as we tried to build to disparate use cases.
Its never been the heart of what we do, and it has existed to a great
extent to finance the core. That's not really fair to poor old ecommerce
which would certainly benefit from more ongoing rebuilds and attention.

* Woo and Business
I'm a noob to wooCommerce's business model. At a glance looks like
WooCommerce is free but the extensions are a good deal more expensive than
the typical ones here (avg $199 or so and you might need a few). There's a
support link with lots of talk about the policy, but for the life of me I
can't easily see if its something I pay for or not.

Obviously I like bringing the cost down to be more inclusive, but we're
getting a little apples to oranges here. Woo sells a lot of themes for
wordpress. They don't have to build wordpress, Matt/Automattic does that,
and has raised quite a bit of money to that end (most recently another
$166mm). We're entirely self funded. Frankly the entire history of our
project adds up to single digit millions of dollars of development hours
I've paid for Andy and gang to work on concrete5 over the last decade.
That's a rounding error in automattic's marketing budget at this point.

The way I see it, Woo made a bunch of money selling themes on top of a
framework they incurred no costs at all to create and manage. They then had
the wisdom to invest some of that money into building their own free
framework to fill a void (ecommerce for WP) and that has enabled them to
sell more add-ons and themes. (Please correct me if I'm missing something.)

This is all well and good for them, but it doesn't make me want to jump up
and say "yes lets rebuild ecommerce 3.0 to be awesome and give it away for
free too!" We'd have to run along and build lots of themes and add-ons
ourselves (the 30% we take is a lot different than the 100% they get on
their own stuff) and I've got to do that while I also maintain concrete5,
etc. It seems like we're in an open source race to the bottom here where
every time someone else with no responsibilities decides to release
something for free to drive sales of their secondary stuff, there's an
expectation that we'll release the same stuff for free. Simultaneously
there's a "gee why does stuff in the marketplace cost as much as it does,
or anything - i thought this was open source" vibe that isn't universal but
is consistently there.

Moreover, there's a real challenge between one time fee and SaaS here.

Our ecommerce add-on is $125 today, a number that strikes most folks I meet
in business as ridiculously low, and strikes most developers and small site
owners as kinda high. That's not a great sign.
Meanwhile services like Shopify or Bigcommerce happily offer plans that
look as low as $20/month and are frankly more fully featured and likely to
work well out of the gate than our add-on. They come with support, and
they're hosted with no access to the core code - so they can roll out fixes
and improvements easily in a fashion we simply can not. Meanwhile that
$20/month plan quickly becomes a $49/month plan when you start turning
features on, and if you imagine a website having even a 4 year life span -
you're now talking about an investment of $2,352. That's a much more
feasible number to build a software business around. With a customer life
time value of 2k you can start to have a development team focused on
improving the product over time, which is pretty key in my mind with
something like eCommerce. Tax laws change, a good ecommerce system should
just handle that for you, etc.

This is part of the reason why even on our own eCommerce listing page we
point out that if you're looking for something that just works without any
developer help, check out our Shopify add-on. They're focused on eCommerce,
we're focused on CMS, we get a recurring kickback if you signup through our
add-on, it's not my dream ideal, but it is probably setting customer
expectations more accurately and we still can make some money on it.

* The training wheels model...
All of this circles back to a deeper thought process about how open source
plays with SaaS as a whole. Historically there have been a lot of different
things going on with our open source strategy. If its simply the desire to
keep the tools for expressing one's self on the web free, I don't see why
we need a free eCommerce tool. Its one thing to say I firmly believe in
your right to use concrete5 on a webserver your buddy runs in his basement
to make a website about your political/spiritual cause at no cost. It's
quite another for me to fund your right to run an online store at no cost.
If you're selling stuff - you should be paying for that infrastructure.
Conversely is open source about having more developer eyes on the code base
making it more solid through some type of crowd sourced efforts? Not
creating barriers to entry and that type of thing... In that vein, some
type free ecommerce framework makes sense if one can think of a way to
monetize it enough to fund its core development.

These are the types of debates we've been wrestling with for the past year
as 5.7's strategy has matured, and we're starting to feel some consistent
clarity on it. Dig the fish diagram attachment.

The minnows are individuals that simply need a web presence that works.
They're building a small site for their brand new business and total
project cost is the only real factor. Open source doesn't always mean
cheaper if you're hiring people to keep all the parts working. Convenience
is king. Our plan has been to make 5.7 available as a single click install
through a new web presence at concrete5.com, and NOT give people access to
the file system or the ability to install anything but very well tested
themes from the marketplace. It's counter intuitive that you can charge
money for turning things off, but if you look at the support nightmares
that people can get themselves in by messing about on their own, it makes
sense. We're putting training wheels on the bike and adding an instructor
to keep them from falling off.

As their web presence grows, they get to hate the training wheels and the
instructor telling them they "shouldn't do that." Much like wordpress.com
vs. wordpress.org, they now find a PHP developer they like working with,
take a copy off of our "safety server" hosting and go stick it on a
traditional budget host where they can install all sorts of add-ons they
buy here and hack at it to their hearts content. They have effectively self
selected as a bit more crafty and DIY centric than just the average Joe who
needed a quick website at this point, so one would hope that their support
needs would be more thoughtful than some of the stuff all marketplace
developers field today.

At some point their site becomes super important and they come back to us
looking for enterprise SLA's and dedicated hosting.

I recently had a chat with a small agency about our new agency partner
hosting boxes, and the principle basically told me this exact strategy on
his own. They're using LiteCMS for their tiny sites because it just works.
It's all SaaS hosted so when a new version comes out its just automatically
hosted. Sure there's lots of stuff they can't do, but what they can do
always works. For sites that are bigger/more complex they're using
concrete5, but they're hosting it in half a dozen different places/ways,
they're all on unique versions, etc. As he told it to me, its a real
problem when you've started someone out on liteCMS because it was cheap
easy and safe, and now their business has taken off (in part because of
their sexy website) and they need some feature that lite doesn't offer. Now
they're rebuilding, retraining - effectively starting over as punishment
for doing well. Our vision for concrete5.com -> budget hosting ->
concrete5.org agency/enterprise services spoke directly to this fellows
need's and it was exciting. I've been preaching this for a while but its
great to hear someone effectively describe it back to me on their own.

I'm letting this post turn into a long strategic rant as I know some folks
don't quite get what we're doing yet, but perhaps this will help. Long
story short; yes if what we're attempting with 5.7 works well, I can easily
see us adding an ecommerce plan to our concrete5.com hosting where folks
get a newer sexier version of ecommerce, supported, at a monthly cost - but
can "upgrade" away from us without buying off some license. So ecommerce
would be free to developers who knew where to get it, install it, support
it on their own - but still generate revenue to fund the project off of the
folks who simply need stuff to work.

Whew! Hope that answered your question.


best wishes

Franz Maruna
CEO - PortlandLabs Inc
goldhat replied on at Permalink Reply
First thanks for weighing in on the discussion in a big way. I can't comment on everything you pointed out there but here are a few thoughts on what stood out for me.

I'll skip ahead to your mention of SaaS ecommerce. I realize Shopify and BigCommerce and others are an attractive option and those services have large user bases. There are still advantages to having a single site, single platform, being able to have a shop but also run a blog and a video section and everything else the site might require. WooCommerce has over 130,000 sites right now and growing. The demand for a CMS-based ecommerce system is still there, and it will grow in relation to the adoption of the overall system. And vice versa, to grow C5 adoption there has to be an open source ecommerce system.

I think some of what you wrote is about the philosophy of balancing open source with premium, the value of the business, and although I realize the philosophy (open source, premium, values) is an important aspect to consider I would urge you to crunch the numbers first and then see if the philosophy still applies. You seem to lament the realization that we have a world where people "expect free", but I'd reframe that by saying we have a world where "savvy sellers make things free and where sharing is more efficient". What I mean is WP+WooCommerce+WooThemes is free because it's the best way to drive revenue for sales of WooCommerce extensions and premium WooThemes. And yes WP is left out of the equation from WooThemes perspective because they are separate, but there is a natural coefficient relationship whereby WooCommerce drives a lot of revenue to WP through adoption leading to sales.

Will it not cost you similar amounts to build an OS Commerce instead of a premium commerce with 1-2 extensions to start? So which do you want to have in 2015, a shiny new premium commerce addon that will rarely get used or an OS commerce that gets adopted widely and drives adoption of C5 which in turn drives sales of premium themes, commerce extensions and all the other addons that ecommerce site owners may need.

To clarify the WooCommerce licenses, they sell a 1-year license for support/service/upgrade. If you let the license expire the extension still works but they won't give you support or service, or upgrades. The lack of upgrades is probably one big motivation, personally I might not need their support/service but I don't want the product falling years behind. I can renew those licenses at 50% off each year (that's motivating!) but if I let it lapse I have to pay full price later when I want to upgrade. Overall I'd say it's a fairly aggressive licensing approach, one that favors them making a lot of money... which is part of why I brought it to you in the first place. They have created that market position where their products are so good, so in demand, that they can create the licensing price and terms that maximizes their revenue.
frz replied on at Permalink Reply
frz
what's the license cost? I couldn't find it.

I'm totally into the idea of sharing and the idea that having a free (our
ecommerce add-on includes all its source and you're allowed to change it -
lets stop using "open source" as a catch all it just confuses people and
drive o'reilly sales. ) solution is generally appealing to developers - who
we want to appeal to.

What it doesn't do is pay the bills.

Spending weeks/months building a better ecommerce solution to what's out
there is something I believe my team and process is capable of.

Doing so and then just giving it away in the hopes of driving sales for
themes we have yet to make seems like it's actually quite a bit more work
than just making the ecommerce solution.

I guess what i'm trying to get across (and probably failing at) is the idea
that there's an opportunity to sell managed access with support for the
Average Joe, while still letting developers get at the brains under the
hood.. That's where my heads at for the moment.



best wishes

Franz Maruna
CEO - PortlandLabs Inc
iFX replied on at Permalink Reply
Thanks Goldhat, you've just made a painful decision a little bit easier for me.

I've been fighting against a move to WP for so long - but I'll just have to give in and dance with the devil (for a while at least).
Although, having now looked at it again, my previous dislikes of WP in general seem unwarranted, as it has improved in a big way since I last used it (admittedly that was a long long time ago now ;) ).

I still prefer C5 as a CMS, but the majority of sites I seem to be getting now are eCommerce, and struggling with C5.6 + eComm (as I have done with this recent site) seems silly when 5.7 is out with no real upgrade path for 5.6

Anyway, thanks for making me take another look - you've helped me come to the realization that what I've been doing these past few months was a bit stupid ;)
chris123uk replied on at Permalink Reply
chris123uk
end of the day you pick the cms that best supports the features that the client requires. if ecommerce is needed then currently your not going pick c5 unless you dont know any better... and after you the developer has made that choice you start thinking what if my old clients on c5 sites want ecommerce... if you manage to upsell them you dont want to force c5 ecommerce on them so you say ah you going to have to switch platform to wordpress and thats going to add to the price. just had a client on old c5 site that does car valeting. client want to have a booking system added to his site. the system needed a way of booking time slots and upsels. like car wax bronze wash silver wash gold all with prices that add to the final price. his budget is small but now we have to also charge him for moving to a platform that will support all the ecommerce addons that we need to make it work for him. if it was all in one platform it would keep me using c5 but for now wordpress is doing that better.