CPG Companies Have Every Reason to Love Magento


ExpandLab has a crush on Magento. That’s because it’s flexible enough to be applied to many different companies and we know how to push its buttons to make it work for us.

And that’s the genius of the platform: it has the capability to ensure websites are easy to navigate, organized in terms of stock content, and logical in terms of flow to the checkout for just about anyone.

More specifically, Magento is ideal for Consumer Packaged Goods (CPG) companies. Why? Because it allows them to cut out the middlemen. Traditionally, CPG companies sell to retailers who sell their products to consumers. But Magento allows CPG companies to build their own eCommerce platforms that are much more cost-effective in the long run. The software is also inexpensive enough that companies can test the service without breaking the bank, making it a low entry point to experiment.

While WordPress is the most popular Content Management System (CMS) with more than one-fifth of websites built on it, Magento is the most popular platform for eCommerce websites. Many big brands including Lenovo, Samsung, Vizio, Nestle and Nike use Magento. It holds the largest piece of the eCommerce market with 26 percent share due to its features.

The following three points explain our crush further and make clear why a range of businesses choose to use Magento, rather than industry “leaders” such as Oracle, IBM and SAP Hybris. Depending on your business needs, you can use Magento’s Free Community edition or a feature-reach Enterprise edition for an annual fee; both of which are open source. As our Director of Software Development, Eddie Spradley, says: “Open Source has become not only an acceptable answer to the world’s commercial marketing challenges, but its also become the strategic paradigm. In other words, open source is the new “black.”

1. The total cost of ownership of a website on Magento is cheaper than competitors. Depending on what level of customization you need in an eCommerce store, Magento can cost anywhere between $20,000 and $100,000 to build your eCommerce capability, in addition to maintenance down the line. This may sound like a lot, but the competitors mentioned above are much more expensive. SAP Hybris starts at $54,000 for the basic model. Oracle is over $500,000 for the first year with $110,000 for each following year, and IBM WebSphere runs into seven figures when you factor in design and implementation.

2. Magento has a faster deployment time than competitors. Building a house and making it home are two different things. It’s the same way building an eCommerce website. Beyond the initial setup, companies need to focus on areas to improve the user experience and interface to make it a revenue-generating website. That said, an eCommerce website can be completed in 8-12 weeks using Magento, while the other competitors mentioned can take many months.

3. Magento makes a website highly flexible to adapt to ongoing business needs. Since Magento is an open-source platform, it’s easy for website owners and developers to make changes in source code. Additionally, its powerful structure and user-friendly nature help improve store accessibility. Magento also provides good marketing, a participative community, as well as a genuine and innovative outlook. Beyond these features, the software has the ability to integrate with robust ERPs, has integrated Google Analytics, built-in SEO functionality, and integrated sales and store tracking.

One big CPG brand is already moving into this space: Nestlé. The world’s largest packaged food company has a new focus on direct-to-consumer, with eCommerce sales now accounting for 5 percent of total sales, up from 2.9 percent in 2012. The company has gotten the message that the consumer market is ripe for disruption and the vehicle to get yourself in the middle of it is eCommerce. Other entrants include Unilver, which recently bought Dollar Shave Club for $760 million, and Proctor & Gamble, which launched its own online subscription service.

Whatever size company you have, we believe Magento is the right choice for building and maintaining a successful eCommerce platform. It allows for the integration of additional functionality into its software by giving seasoned professional coders the ability to craft something more bespoke and tailored for the future.

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