A weekly podcast with the latest e-commerce news and events. In episode 270 is a deep dive into microservices and the future of e-commerce platforms, with Kelly Goetsch, Chairman of the MACH Alliance.
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Kelly Goetsch (@kellygoetsch) is Chief Product Officer at CommerceTools a leading MicroService based e-commerce platform, he is also the Chairman and co-founder of the MACH Alliance, a non-profit organization formed help enterprise organizations to take advantage of open tech ecosystems that are Microservices based, API-first, Cloud-native and Headless. Kelly is also the author of four books:
- GraphQL for Modern Commerce
- APIs for Modern Commerce
- Microservices for Modern Commerce
- eCommerce in the Cloud
Topics covered
- CommerceTools
- Mach Alliance
- State of Microservice based e-commerce platforms
- Amazon’s role in e-commerce platform ecosystem
- Shopify’s role in e-commerce platform ecosystem
- Future of e-commerce platforms
Episode 270 of the Jason & Scot show was recorded on Thursday July 15, 2021. We’re taking a summer break next week, so no show the week of July 19th.
Transcript
Jason:
[0:24] Welcome to the Jason and Scot show this is episode 270 being recorded on Thursday July 15th 2021 I’m your host Jason retailgeek Goldberg
and as usual I’m here with your co-host Scott Wingo.
Scot:
[0:41] Hey Jason and welcome back Jason and Scot show listeners
Jason one of our favorite topics that we have been tracking really closely on the show is the evolution of e-commerce platforms I know you’re super passionate about this in your clients ask you lots of
advice for this and you deliver tons of value when you talk to them
so one example is we had a facile from fabric talk about headless e-commerce back way back in episode 259
in this episode we are excited to welcome Kelly gates to the show
Kelly wears two hats he is both the chief product officer of Commerce tools and co-founder and chairman of the
Mac H Alliance pronounced mock Kelly welcome to the Jason Scott show.
Kelly:
[1:25] Thanks for having me I’ve been a longtime listener it’s great to be here.
Jason:
[1:29] Kelly we’re thrilled to have you this is a personal victory for me because Scott had his way every episode would be about Amazon and if I had my way every every episode would be about tech platforms so.
Scot:
[1:43] I will work Amazon don’t you worry.
Jason:
[1:46] Yeah well this is going to be the perfect Confluence of those too.
So but before we jump into all of that as always we like to start by getting a little background about our guests so can you tell us kind of about your your background in the Commerce platform space.
Kelly:
[2:05] Sure I actually started pretty young and I kind of fell into it
I’m being at the right place at the right time I was going to college and at 18 I was looking for summer job
and I done a little bit of web design and I stumbled across the job post for Foot Locker.com which thankfully was located in my town where I was going to University
and they were in the midst of the biggest 80g implementation at the time and atg was the leading Commerce platform back in the 90s and 2000’s it was later bought by Oracle
and I loved it my first job there was to convert Photoshop to HTML and I pretty quickly moved my way down the stack.
[2:48] I had a great mentor their game or Zane and he really coached me and mentored me and then atg hired me directly
so after a year of that I moved to Chicago and I continued my studies
and a TTG it was just the right place at the right time I architected and launched Ulta beauty.com ulta.com.
DSW shoes and Taylor a lot of those Mall brands that were big atg customers back then and I started getting involved with the different Walmart accounts there my first one actually was it was a combination between Blockbuster and Walmart.
And the website was movie downloads. Walmart.com and it was is kind of a cool concept you could print DVDs on demand so they had this giant catalog of back movies
and you could print them and that was kind of my intro to Walmart and Walmart grabbed me and I spent my last three and a half years at atg as the Chief Architect
at Walmart
and there again that was just such a great learning experience had some great mentors they’re working across 10 different Walmart subsidiaries we architected and launched u.s. grocery was the very first u.s. grocery platform for Walmart
Sam’s Club u.s. Sam’s China Walmart Chili so we really got to get to learn and.
[4:10] Deeply understand how large scale e-commerce worked at scale and after six years of atg I was just wrapping up my master’s program and I’ve been learning about product management
and I really was drawn to it it made a lot of intuitive sense to me
and also I just logistically couldn’t be traveling every week I mean I basically abandoned my girlfriend at the time and now wife and was traveling all the time you know I’d go to China or South America or I was somewhere different all the time
and I just I couldn’t do that to my family so I made the switch over to product management and I joined Oracle
and this is back in the early 2010’s Cloud was just getting going
and Oracle was a great place again to learn I had a great mentor there Mo off Shar whose no CEO of pipe 17 and I was product
manager for X illogic java Cloud service a bunch of those earlier cloud services
and it was a really great place to learn how to run a software business at scale I got involved in MMA there
and my last year there I was working with the then Oracle president and now gcp CEO Thomas Korean
and worked on microservices so Led Led those initiatives for Oracle also to Oracle I wrote e-commerce in the cloud for a Riley.
[5:34] And that was really a great way to marry my two passions which was Commerce and cloud and this was just back in the day when
e-commerce was still being deployed on premises
it was you know I spent my 20s troubleshooting failed production deployments at midnight you know like Cloud made so much intuitive sense to me and I thought
you know folks have to be doing this at scale but after five years my mentor left and I really wanted to get back into the Commerce space
and I thought that there had to be somebody doing Commerce cloud in micro services and I actually Googled it I Googled Commerce cloud of microservices and I found this small German company called Commerce tools
and the company really was only active in Germany.
Pretty small but I could really see the product and Dirk Oregon who is the co-founder and CEO and I got along really well
and I’ve been with Commerce tools now for five years and at Commerce tools
I wrote three more books for Riley so microservices for modern Commerce apis for modern Commerce.
And graphql for modern Commerce and at Commerce tools I look after product management product strategy Integrations design every day it’s a different hat.
Jason:
[6:50] Awesome and I just just to kind of fill in a couple of the the timeline details for me so you started at atg before they were acquired by Oracle is that do I have that right.
Kelly:
[7:03] Yeah long before so I actually joined.
Jason:
[7:05] Enter Then you joined Oracle before Oracle acquired atg.
Kelly:
[7:09] Actually I joined right after I joined a couple months after and I didn’t really want to go into the atg product management group but yeah it was it was very close.
Jason:
[7:20] Got your so did you have to pretend like you didn’t know anything about EG where you trying to keep it on the down low.
Kelly:
[7:24] Well it was funny because folks across Oracle is split between apps and Tech right in Tech was everything that wasn’t a nap.
It’s a lot of folks across the tech organization found out that there was an 80 g person who just joined so my first six months there so it was still all atg based it was you know everybody trying to get their hands on the latest X-15 isshin so I.
I spend some quality time working with atg and my first 6 months there.
Jason:
[7:50] Yeah and for listeners that haven’t lived through the.
The last 10 years of the platform Wars a congratulations on not but be.
For most of the last 10 years and I would argue and we’re definitely going to talk about this that it’s changed quite a bit more recently but for most of the last 10 years.
Enterprise Commerce there were three big platforms and they it was websphere Commerce which.
Like arguably was born and IBM or acquired very young and develop IB m–
Then there was this startup atg that later got acquired by Oracle and there was a startup called hybris that was later acquired by ASAP so for.
Cut the last like five years you had this big Oracle IBM.
Sap battle now you mentioned Commerce tools Commerce tools kind of has a.
I don’t know if it’s fair to call it a sheared lineage but a close coupling with the the origin of hybrids does it not.
Kelly:
[8:58] It’s an interesting story so Dirk who’s the co-founder and CEO of Commerce tools was actually roommates just after he graduated University with one of the hybrids co-founders
and hybrids had opened up this giant office in Munich.
And they had extra space and at the time Dirk founded an agency and the First Commerce was offices were actually in the hybris office so we did a lot of the very early implementations of hybris across Europe.
Jason:
[9:28] Got a very cool and side note Dirk has actually sent me an I am telling me the needle you because he says a good German that you actually don’t know how to pronounce your own last name.
Kelly:
[9:38] Yes I’m perpetually harassed by my German colleagues at the airport actually I
my very first trip over to Germany to interview with the whole team this baggage handler was harassing me he said you look so German he said you can’t even pronounce your own surname properly.
Jason:
[9:54] All right.
Kelly:
[9:57] So he took that one and that’s yeah that’s kind of stuck.
Jason:
[10:00] Yeah so we’ve got these big three Legacy platforms they all were like monolithic software they all were designed to run on Prem they’re all owned by these huge enterprise software companies
the Commerce tools had a.
Sort of a couple of unique ideas from its founding so.
Maybe we could talk about that like what what originally differentiated Commerce tools from the these.
Sort of in the traditional platforms of the day.
Kelly:
[10:33] Well you know like I mentioned Dirk started as an agency so he did front end development work and in the late 2000s the iPhone came out we started to see a big shift and Dirk
had the foresight to realize that these Legacy platforms that came with the you I mean basically bolted to the back end we’re not going to scale very well for this new world.
Right and he was right and in 2013 he launched he invented headless Commerce and launched Commerce tools so we’ve been a hundred percent product companies since roughly two Thousand Eleven or so.
Scot:
[11:10] Then on the business side I’m new to Commerce tools give us an idea of the scale we’re talking about here for example I might go to is
crunch pieces says you guys have raised about over a hundred and sixty seven million dollars so that must mean there’s more than five people involved in this.
Kelly:
[11:28] Yeah we’ve grown a lot in the past five years but especially just the past 18 months
so our we’re very different style of Commerce platform you know the
the world that we all came from at Commerce tools you had these these bigger monolithic platforms you release them to production once a month maybe once every two weeks if you’re really fast.
They were hosted and commerce tools was built
almost by first way veterans kind of looking to do it right the second time but with cloud and the company was founded at the right time and we were able to natively use
public Cloud right so we have a cloud native architecture so we’re API first you know as opposed to the Legacy platforms which put on apis later
and there’s a big difference there we’re multi-tenant so we don’t really have the concept of like an environment or anything of that sort instead you just create a project in the same way that you go to AWS and create a project for example.
And then behind the scenes were actually seven vertical teams so we have a team focused on checkout we have a team focused on product catalog.
And then any one of those teams can release to production at any point during the day so in many cases we’re releasing two production two three four times a day.
[12:43] So it’s it’s a different approach also another one is we’re very focused on just core Commerce
so our company name is Commerce tools which which is perfect name for what we do we offer Commerce tools.
As opposed to a package a sweet you know we’re definitely not a website in a box type offering and that’s great for some segments of the market.
[13:05] But our customers tend to be large Enterprises so we do all of the e-commerce for AT&T.com for Lego for Ulta Burberry John Lewis
so a lot of our customers are doing 500 million plus in gmv we do go lower you know maybe 50 million.
[13:25] And we have a whole new commercial team that’s that’s going after that segment but our bread-and-butter business is going after these really really large Enterprises and they’re using us.
Almost like building blocks
spread they’re not wanting to buy a website in a box instead what they’re doing is they’re consuming pieces of us incrementally and they’ll start by using us for product catalog and then they’ll chip away at their monolith.
Over the course of 6 12 18 months until that Legacy platform is gone and what’s nice about this is they can build around us
as opposed to having to work within our platform instead they’re building alongside us so a lot of folks will build out their own loyalty system or their own pricing engine or you know their own
you know product apis but they have a lot of flexibility so at the very very top end of our Market folks are choosing between building from scratch and buying us,
and most of the time what they do is they end up buying us for all the commoditized stuff the things that don’t really provide any business value to build you know there’s not a lot of business value and building a shopping cart
so we do all of those those back office those boring things and then our customers can then spend their time
actually innovating so that’s that’s our goal and that’s what we’ve been able to do so we’re at about 300 and something 310 employees give or take and we should be at about 400 by the end of this year.
Scot:
[14:54] That’s yeah so let me just kind of.
Restate this to make sure that I understand so used to be you would go and you get this big monolithic things these big Enterprise apps you’d have to host them and go through like a multi-year implementation and pay it integrator and all this Jazz and then
then we kind of had to other options which would be a SAS like platform like Shopify where I could go up and pay.
Couple hundred bucks a month all the way up to one of our Shopify plus is and now I get this whole application that’s pretty self service
but but you know not super extensible but there’s maybe an app store and I can add a little bit of functionality but I can’t get in there and kind of.
Totally change everything but then the alternative to that was open source but now I’ve got to like figure out this big John yet.
[15:45] You know depository of code and a lot of people extended that and then they couldn’t upgrade and they were kind of stuck with with a fork of code that they kind of had to live with and they got off the upgrade track
this this new way of doing it is essentially there’s collection of apis
and if you have your own developers you can sprinkle in element you can say well I’ve already got a Content system I want to want to pull a cart in there I want to pull in
you know a little e-commerce catalog that kind of thing and that’s that’s where Commerce tool sets come more on the Enterprise side for those Enterprises that already have some developers you couldn’t be a
one person SMB and use this most likely unless you happen to be a coder and sounds like you’re going for a bigger customer anyway.
Is that a fair characterization of everything.
Kelly:
[16:35] No that’s a really good summary I think you hit the nail on the head there
it’s very similar to Amazon web services or Google cloud or Azure you have this big collection of apis these big toolbox of things that you can do and AWS doesn’t say Hey you have to use these 50 services
instead you just pick and choose what you want and that’s what our customers want to do with us and that’s why we’ve had a lot of success recently.
Jason:
[17:01] Nice so Kelly I’ll tell you my metaphor for microservices versus sort of traditional monoliths and you tell me.
If I’m wildly misrepresenting thanks but I used to always talk about the this Legos metaphor that like.
Buying atg websphere or hybrids was essentially buying a preassembled.
Castle or a boat or a death star made out of Legos and and often the Legos.
Where most where were glued pretty firmly together are ready but the microservices is buying a kit of Legos right like it may come with a book with some inspiration about what you can build with the Legos but you you really get to snap the Legos together and in any.
Any configuration you want.
Kelly:
[17:49] Yeah no that’s a great way of putting it and just a quick Side Story Lego was one of our very biggest earliest customers so back in 2017 early 2017.
They bought us and I’ve been using the Lego analogy since I started in 2016 and when Lego closed I was so excited because you know they
they complete the analogy it’s perfect.
Jason:
[18:12] I love it.
Speaking of which like so Commerce tools is like I have been following you obviously for a while and and it does seem like you guys have gone a lot of good customer traction.
But one common denominator I have noted is a lot of your Marquee customers are former atg customer so I just don’t want to miss pointing out that you spent half your career.
Installing atg and now you’re spending the other half of your career uninstalling.
Kelly:
[18:40] No that’s a good way of putting it and I maybe it was a little bit deliberate
but yeah there is a definitely chunk of our customers that came from that world and you know what’s what happens with you know enterprise software is you’ll get 180g customer that will buy it and then the second and then the Third
and then pretty quickly if you have you know two three four of these folks signed up with Commerce tools and they’re happy and they’re successful then that becomes the default path
right and a lot of folks out there in the atg spacer.
Kind of hitting the end of the age of that platform and look it was a great platform you know I have nothing but respect for that that platform that team but you know at some point software.
Kind of Fades away and it’s the end of his life and a lot of those atg customers were
hitting the end of atg just as we were coming up and once we had a few of those up and
you know successful in speaking publicly about it they kind of followed in droves so it’s been a good business to be in but yeah I’ve you know Altar for example I watched I launched the very first ulta.com myself in a production
and I will be there when we launched the new Commerce tools based version of Alta.
Jason:
[19:53] Very exciting the I do want to put.
Touch on this this whole idea of microservices the just a little bit more because I so Dirk started Commerce Tools in 2013 with with the idea of micro services in mind.
I’m trying to remember like when were restful apis even invented like it wasn’t that much before then right.
Kelly:
[20:20] They were actually invented in 2001 so there’s a guy named Royal Roy was his name Roy Fielding.
And he put out a dissertation his PhD dissertation where he outlines restful apis.
But nobody really adopted them for quite a while it was really the rise of public cloud in 2008 2009 2010 that’s really what gave rise to the use of apis out there.
Jason:
[20:48] Okay so so part of the reason I ask is because obviously it none of those monoliths were based on apis but the.
The buzz around API started to build and I would argue it even like.
Got a head of actual implementations of headless Commerce platforms like for a long time before there were a ton of clients running headless Commerce platforms there are a lot of people put it writing headless Commerce in our piece.
Um and one of the things I noticed is it seemed like all the monoliths like quickly added headless to their marketing materials.
Kelly:
[21:22] Yes a hundred percent we face that every day at Commerce tools for a couple years there.
Jason:
[21:28] Yeah and the challenges like it’s it fundamentally is describing in architecture right so it’s not something you can bolt onto the top of everything you already have right like you sort of need.
Kelly:
[21:41] Yeah the code is written one way specifically right it’s written to function with a head on it
and yes you can put some apis on top but inevitably those apis are written around the underlying code which may or may not have been written in a way that can be exposed retroactively with an API
the other challenge you have is just the lack of coverage
you know we are very proud every single thing in our platform can be done through an API every config change every every everything.
And if you have a legacy platform and you put the apis on top later inevitably you still have figuration things that you can only do it through a UI
there’s functionality that’s not properly exposed and sometimes you have to call apis in very specific orders because that’s how the underlying code is written
and our apis are independently consumable their stateless right so you don’t have to worry about calling them in a specific order
it’s it’s a fundamentally different approach but look I mean twilio had been doing it for a couple of years you know the API economy was formally launched in.
I don’t know 2010 ish give or take and I’m honestly surprised nobody came up with headless Commerce before directed.
Jason:
[22:56] Yeah and one of the things that still surprises me to this day I’m curious if you have a theory about why so like.
You know the this notion largely got driven by everyone sort of you know interest in aspiration to migrate to the cloud I have perpetually been surprised by how long it is taken Enterprise.
Commerce practitioners to move to the cloud like it it still is true that like there’s an awful lot of Commerce running on.
Like on-prem Solutions and I mean obviously nobody’s doing a new one that way so certainly the cloud and and API first approaches like are winning all new implementations but like.
Are you guys surprised by how long it’s taken customers to just decide that there’s.
Too much too much cost of ownership and too much technical debt in those architectures and how slowly they have migrated off of them.
Kelly:
[23:54] Everyday I’m surprised
but if you look at the motivations of individuals making those decisions they’re not doing it maliciously in many cases folks have been with the same company for decades especially in retail
and change is hard because these Legacy platforms were basically welded to the order Management Systems the warehouse management systems the content Management Systems so in many cases you have billions of dollars flowing through
a platform that is I mean literally welded to the entire rest of the Enterprise and nobody wants to be the one to
undertake a large multi-year initiative to rip that all up and replace it
but I think they’re kind of getting to the point now where these platforms are falling out of support and they can’t hire Developers for them and
just the whole world around from a technology standpoint the whole world around these platforms is changed so much.
That they just have to and you also have competitive pressures from Amazon you know for example you know they’re really seem to production once a second.
[25:01] Right amazon.com once the second I mean and a lot of the folks I used to work with on the atg side they were happy to release once a month
and I’m a really firm believer that Innovation requires iteration you know a lot of times it takes 5 6 7 cycles of iteration to get a future correct and if you’re releasing once a month,
you just can’t keep up so for competitive reasons and just because technology has changed I think the change is accelerating now but it’s a it’s still surprising what I see out there everyday.
Jason:
[25:33] Once a month I used to have all these clients that had like quote-unquote holiday lockdown when they wouldn’t they would release anything for like 7 months around holiday.
Kelly:
[25:43] I won’t name and shame but there was one big retailer in the US that was an HCG customer they released to production once a year.
And it was an all-hands-on-deck thing and they because everything was so tightly coupled
they had to all get together in a gigantic war room and release all of their systems their middleware their Commerce platform I mean you name it all of them had to be released at once,
that was it and thankfully they modernized quite a bit since then but that was the style people were just happy to have a.com up.
Scot:
[26:15] But that was a fun day.
You are weak or whatever it is it’ll be okay so you your Chief product officer at a hot start up
with you know both in Europe and the US you’re writing books and you say to yourself wow I really I really have a lot of spare time let me start this Alliance tell us tell us how that came to be.
Kelly:
[26:38] Well you know we when Dirk founded Commerce tools and created headless Commerce there was no Market awareness for what headless
commerce was right at there wasn’t a thing people didn’t know about it and over time and a lot of that was thought leadership
you know from us but there are other folks out there as well you know doing a great job of publicizing this kind of crystallized around this term Mock and again talking about Germans making fun of me they still make fun of me that I can’t pronounce mock properly
but it stands for micro Services apis Cloud native and HUD list and it’s a term that we started using in 2018 and it really caught on because it crystallized this new style of architecture really really well
and at the time we didn’t want it to suffer the same fate as other architecture patterns out there so you know you remember when Cloud came out and then you know the next month all of the Legacy vendors that were definitively not cloud
I’m all of the sudden pretended to be Cloud you know Cloud washing right if you remember that term
you know things like rest apis you know things like devops these amorphous terms.
[27:52] Lost their meaning very quickly and mock actually meant something right and we wanted it to remain something
so we’re always working with our partners and our partners started to use the term as well it really started to get used up there and we thought how do we get together and educate the market
and you know really Define what what that standard is and prevent it from being washed out
and you know like all good things it started in a pub I wasn’t actually there I was in Germany at the time but it was a London Pub
and right after that
had Sonia from content stack who is now president of the alliance she messaged me and she called me later that day and she said
you know we’ve been discussing this you know we just got together we have this great idea what do you think I said oh this is perfect and I still can’t believe I didn’t think of it myself but anyway the idea for the alliance was
was not me I was I was not in that Pub but I think it really aligned with what we’ve been talking about over the six months prior to that.
Scot:
[29:00] So is it just it’s kind of always interesting to me when competitors kind of decide for the greater good to get involved as it is it mostly effectively competitors to what you guys are doing or have you been able to pull in other other kind of.
Near orbit kind of folks.
Kelly:
[29:17] Well we launched in June of last year with content stack implants vault-tec and
CPM and of course Commerce tools is being founding members and we had six other members join us at that point M now we’re at.
[29:34] I want to say we’re at 36 members and I’ve gone out of my way we’ve had people apply and Rose we’ve had a hundred and something apply ready
but I’ve gone out of my way to make sure that we get
representative companies from each segment so even just on the Commerce space Bigcommerce is a member of the alliance V Texas
and there are a bunch of folks who are joining in the next couple weeks here from Commerce platforms
there’s no value in this just being a you know a couple of vendors getting together we as an alliance R actually registered as a 501 C 6 which is,
you know like how
the milk producers come together under a 501 C 6 and they advocate for people drinking milk right we’re doing the same thing but for Makkah principles so we’re primarily there to educate folks on what mock is
and we educate anywhere from developers to CFOs
so we have a pretty broad Charter there and we produce a lot of really good educational vendor-neutral content we also maintain the purity of what it means to be mocked.
As I mentioned we had a hundred and something apply so weird about a thirty percent acceptance rate
and we really want folks who are in the alliance to be able to proudly say that indeed they are mocked based that they’re not just you know using this term and applying it to some old product.
[31:02] And then finally we have community so we have a set of 16 ambassadors so we have BCG partner for example we have the CTO of Sephora
lots of heads of architecture so they get together it’s a great group a lot of knowledge sharing there and they talked publicly about all the great things that they’re doing respectively
with hackathons we have an executive Advisory board made up of sea-level execs from across the industry
and the purpose of that is really to keep us vendor-neutral and open as an alliance but you know we’re really coming together as competitors because we believe fundamentally that.
The Way We Grow the market is by working together
and advocating for this new style and we firmly believe and have seen that this Market is big enough for all of us to succeed we just need to change we need to educate folks right this is all pretty new technology
and you know we need to educate folks on what this is and you know why it’s important.
Jason:
[32:07] And a side note there’s at least one analyst out there that tried to coin the term compostable Commerce and I’m just super grateful for mock because.
Compostable Commerce just sounds horrible like I don’t want to name any mission-critical system after the garbage.
Kelly:
[32:26] Well said hey you can say as an industry we’re not very good at naming things I mean look at headless Commerce for example you know we have a little morose names and some of these things but yeah we’re developers not not marketers.
Jason:
[32:38] Clearly clearly so let’s talk about the you know you mentioned you’re getting more members like that implies there’s more.
Platforms emerging and one of the things I’ve noticed for like a long time there’s two analyst firms out there for us during Gardner that publish these.
Kind of leaderboards of Commerce right so there’s the Forrester wave and they you know they have an annual wave that says like hey here’s.
Here’s the you know the the most established and the up-and-coming and the kind of losing ground Commerce platforms and Gardner has one called the magic quadrant.
For a long time those waves were pretty static at least in the upper right-hand Corners which was the best place to be you had those those big three and they’d maybe you know shuffle position or move around a little bit but like.
I would argue it was pretty hard to break in and something I’ve noticed in the last.
I’ll call it three or four years is there’s way more churn like people are like moving around a lot and also just a lot more companies are showing up on those things is that.
Um because there’s.
Is the industry getting less fragmented or people you know tending to pick different solutions more often like what like what am I seeing things right like what’s going on in the Commerce base.
Kelly:
[34:04] Well first I mean if you look at the cost it takes to get a company up and going off the ground it’s substantially less than it used to be.
If you were going to build a Commerce platform 20 years ago you’d have to go buy a bunch of Hardware build a big product build a team right you had to you had to put in a lot of capital.
Right and it wasn’t terribly clear that the market would be where it’s at today so it was a bit of a risky bet and with cloud cloud is
allowed folks out there to get started very quickly and very easily and we’re seeing folks out there
starting with a piece of granular functionality you know maybe a promotions for example and then expanding from that
right once they hit product-market fit they grow and they grow and they grow and eventually they become a Commerce platform you know so that’s that’s been really big also the market itself is growing.
[34:58] A lot of folks out there are buying Commerce platforms that never used to have Commerce platforms before we have a lot of media customers like nbcuniversal uses us for in show product placements for example
body and BMW use us for in car connected Commerce 20 years ago that those folks would never in a million years of bought a Commerce platform
and then finally there’s a rise in these more vertical specific
Commerce platforms and they might not place in a Forrester wave or Gartner magic quadrant but
there are a lot of solutions out there for grocery for example or online gaming
or retail or just B2B and again back in the day it was just those couple platforms and they try to do everything but now you know so many more folks out there buying Commerce platforms and they’re able to buy one that’s specific to their
their niche in the market.
Jason:
[35:54] Yeah does it feel like those vertical platform like so there have always been some of those vertical platforms and their there I would argue like there tended to be a few verticals.
Where where the verticalized platforms did really well and then other ones where they didn’t like is is that model getting more traction like are the.
And is that maybe even a layer on top of all of the the sort of mock things like other people that say hey we’re going to take a mock platform like Commerce tools and we’re going to invent a.
Grocery verticalized Solution on it or or Automotive verticalized solution or something like that.
Kelly:
[36:33] I see some of these platforms taking off but the majority of the more vertical Focus platforms have failed for various reasons.
My web brochure for example I really high hopes for them and they didn’t quite hit product Market fit and I think some of those are execution issues some of those are you know the total addressable market for some of these is pretty small
and it’s pretty easy to saturate your your town basically right.
And again a lot of it I think just comes down to execution we do have a lot of folks out there building industry-specific accelerators on us and our competitors do too and I think that’s a great thing because I think offering.
Customers more choices good for everyone ultimately right.
Jason:
[37:19] For sure and speaking of good for everyone like isn’t Amazon just going to jump into the space and wipe everyone out.
Kelly:
[37:31] I think that’s where the markets headed I don’t think it’s going to be Amazon necessarily but I do think that Commerce platforms are being very quickly commoditized
and I think that’s generally a very good thing so if I look at the Enterprise space even mid-market.
[37:49] You know there’s a lot of evidence for that so just generally if you look at what commoditize software is it software that’s widely used it’s easy to consume it’s low cost
and vendors generally offer the same Baseline of functionality
and we see that with with Commerce right we see a lot of folks now buying Commerce platforms that never used to buy Commerce platforms before it was just the
mul brand retailers basically that we’re buying Commerce platforms and now we see Shopify they’re claiming 500,000 plus live sites Bigcommerce
digitally native vertical Brands again it’s across the board this offer is also easier to consume now than ever back in the day you had to stand up.
You know what was it like early Magento for example and that was a pretty big lift for a lot of SMB folks out there now it takes you 10 minutes on Shopify.
Right it’s very easy to get started and you know we at Commerce tools and you know some of our competitors are starting to do this as well you can just go to our website and get a project immediately you know you don’t have to set up an environment
and then from a cost standpoint we see the cost for Commerce platforms coming down quite a bit and
even in 2020 Gartner predicted that the price for Commerce platforms will be 30% less than in in 2023 versus 2019 and they specifically call out feature commoditization because.
[39:18] If you look at it we it Commerce tools and you know folks in the mock Alliance we’re not really competing based on feature function we’re competing based on our architecture.
[39:28] Right we all roughly offer the same thing and this is a good thing for all involved except for the vendors that don’t quite make that cut.
And if I look at historical examples.
You know folks like intelligent remember those you know famous 90s commercials you know they branded the CPU and now overtime CPUs have become unbranded
nobody cares what their CPU is anymore well I guess unless you’re a Mac Fanboy and you know you care about your M1 processor like I do but.
Jason:
[39:59] Plus baby.
Kelly:
[40:00] And one plus but you know generally you don’t you don’t care
about that anymore and I think the same thing is happening in the Commerce space the key if you’re a vendor is to become one of those few
commoditized vendors even look at AWS in gcp and Azure right they’ve have hundreds of billions of dollars in Market count by selling basically commoditized
CPU cycles and if the markets expanding if you can drive that commoditization flywheel
if you’re one of those handful of vendors that come out on the other side that’s a great place to be and it’s a great thing for consumers because now it’s a lot easier and it’s a lot cheaper to buy Commerce platform software than it ever used to be.
Jason:
[40:42] That is for sure like the like it feels like this Evolution has dramatically D risked.
And shorten the timeline for all these implementations.
But I was only half joking when I said like is Amazon gonna wipe out this Market it does feel like.
You look at the big like Cloud infrastructure providers Microsoft Google and Amazon
and you know one of the things that like doesn’t get talked about so much is the voluminous amount of new apis they each roll out.
Every seemingly month right like major New pieces of functionality key.
Keep appearing in their you know having this horrible keeping up with the Joneses thing with each other like.
What would we expect to see sort of a full mock implementation like like why wouldn’t that just ultimately be offered by these guys and you know kind of finish the commoditization if you will.
Kelly:
[41:40] I think that will be the end State I do I completely believe that and it’s because you know as you mentioned these Cloud vendors all are starting to offer
I don’t know if I’d call them Commerce apis but you know they’re offering things like search.
[41:55] For example and some personalization apis they’re chipping away at it.
And it makes perfect sense for them to get in the space because ultimately Commerce apis are infrastructure apis
Raymond who could argue that Commerce is an infrastructure today I mean almost in the same way that you know it’s a load balancer right and load balancer is infrastructure.
And before load balancers used to be really really proprietary and expensive
and now it’s just a tick box in a public Cloud right you check the box it’s typically free or very low cost and it’s magically there and I think that makes sense for
Commerce platforms I think they should be part of that and that’s why we’ve gone really deep with our partnership with Google Cloud
you know we love their partnership and they’ve been great to work with and
you know we’re now even available in the marketplace so you can transact and by Commerce tools with gcp being the merchants to record so you know we’re already kind of moving in that direction through partnership
but I firmly believe that’s the end state of our Market is the public clouds will offer their own Commerce apis
and there might be a few other vendors you know larger publicly traded companies that will offer
you know similar functionality and then customers can pick and choose and it then comes down to features and implementation speed and cost which again it is a great thing if you’re one of those few vendors.
Jason:
[43:18] Yeah Bill ready of your listening you should acquire these guys.
Scot:
[43:23] If Amazon does come out with like let’s say a family of headless Commerce apis could they be in the alliance.
Kelly:
[43:34] Um
in theory they could so here’s the thing with the alliance you’re going to be thinking here we certify an entire company.
And that’s so it’s not it’s at the company level and all the products in the portfolio have to be compliant because the alliance is built.
Its members are smaller companies that tend to do one thing and one thing well
you know content stack and am plants for example do CMS they do content management exceptionally well there’s single product companies and not necessarily that they have to be single product companies but the companies in the portfolio all need to be mocked
based and the reason we did that and that was an explicit decision on our part was we didn’t want a company with an old Commerce platform and a new platform to then just slap the mock certified label on
all their marketing material and that would confuse,
folks out there in the market so it’s really important to us that if your mock certified as a company that all of your products are I don’t I can’t imagine why Amazon wouldn’t be I mean they invented microservices
they have the biggest cloud so I would assume they would they would be
members and actually having some discussions with them on this exact topic that’s funny you mentioned that but.
I don’t see why they wouldn’t you know qualify.
Scot:
[44:57] I’m sure there’s parts of amazon.com that are still written on some old non microservices or.
Kelly:
[45:03] We would have to put it through the evaluation process but yes.
Scot:
[45:07] I have a feeling they’re not going to share the source good so.
We’ll have to see how that conversation goes how about I noticed you mentioned Bigcommerce but not Shopify explained to me that differentiation.
Kelly:
[45:21] Shopify just doesn’t really play the Enterprise game you know they very famously have not participated in analyst evaluations,
you know they’re going very hard after this SMB segments they’re playing more downmarket and they just haven’t played in the larger economy.
Big Commerce is you know there s MB focused but they are adding Enterprise capabilities and their product is mock based so they applied in we were very happy to accept them into the alliance.
Jason:
[45:54] I do I want to poke at that for just a sec because like there are all these traditional.
Capabilities that you you sort of think of as Enterprise requirements and and there are a bunch of them that as far as I know are not in Shopify.
But the one thing that I have noticed is it’s it’s way more likely that Shopify is going to be in.
In the consideration set for Enterprise that shopping for a new solution than they ever did before like they’re almost certainly is going to be some board member.
For everyone that buys a solution from the mock Alliance that goes why don’t we just use Shopify it’s way cheaper and faster and low-risk like it.
Is that happening and and like do they do the evaluation and just discover the Shopify isn’t suitable or you know I I do feel like they’re there now like successful examples of clients that migrated from 80g to Shopify which is just mind-boggling to me.
Kelly:
[46:47] Yeah there have been a few but I mean we’ve had 17 atg migrations of this point anyway.
Shopify is is really great at the SP space that offer a website in a box and they do that exceptionally well and for maybe a country specific app or website
they do find there but our larger Enterprise customers they want to run.
Multiple Brands multiple countries multiple currencies they want to be able to completely build their own front-ends from scratch
they want to be able to add new capabilities outside of the platform and for all those reasons Shopify is not that.
Again it’s really a website in a box and have a lot of respect for what they’ve done
but in our Enterprise segment we might see them you know to your point that you know board member might say hey Shopify but they pretty quickly fall out
of evaluation after that first round.
Jason:
[47:48] Yeah I sometimes wonder like are we are we seeing a bifurcate so we’ve talked a lot about the benefits of microservices like 1 1.
Negative fact of microservices is they they do require more overhead on BART on behalf of the owner right like you.
Wait you know you could potentially have paid me to install 80g for you and never had any atg expertise in-house but.
To really leverage microservice based solution like you need some organic expertise in those platforms and you need some development chops right.
Kelly:
[48:27] Um
Not really so there’s a there’s a there’s a difference we internally use micro services and other vendors do as well we use them internally because it allows us to release a production very very quickly.
But to the world’s we and other members of the mock Alliance expose apis right nice clean apis in the same way that a WS exposes apis
right so you don’t have to deal with the implementation right there’s a clear line between what we as a vendor have to deal with and we deal with microservices
deploy them we scale them we monitor them we look at the logs you know we do all of that the running of them customers
only have to worry about how they can consume an API and I mean you can consume an API thousand different ways
Sprite so they’re concerned with how you consume the functionality over apis and in theory at least you could have a big nasty ugly monolithic application behind the scenes in theory the difference is that you wouldn’t be able to consume that functionality
you would have to be getting upgrades from the vendor whereas.
What we’re doing is a vendor is we’re offering functionality over apis so it’s a it’s a different approach so you don’t have to deal with microservices yourself.
Jason:
[49:54] Yep but I guess what I mean so so maybe like one level higher like going back to the Lego metaphor one downside about getting the kit of Legos is if you’re if you’re not very talented like me.
You can end up with some pretty ugly looking things by step snapping the box together.
Kelly:
[50:12] Hahaha.
Jason:
[50:12] In some non-intuitive or non aesthetic ways right so you know the cool thing is you have unlimited flexibility the bed thing is you know you also have.
There are no guide rails right like you could do whatever you want.
And so I guess I just mean like it feels to me like there’s a bifurcation there’s Enterprises that like see the advantage in that flexibility in their you know what looking to get rid of their technical debt and migrated to some sort of mock solution.
That that goes that way,
or their companies that just want to like not make any decisions and completely D risk everything and that’s where it feels like shopify’s doing pretty well like it’s like it’s hard to argue with the fact that like.
You know you can give a personal credit card and have a reasonably functioning website you know running that looks and feels just like everyone else’s you know over the weekend right and so it.
Like it almost to me feels like.
The that’s the bifurcation at the moment that there’s like you know if you feel like you you’re going to you have some opportunity to competitively differentiate yourself in some way then you’re gonna.
Embrace of platform and all the flexibility that that gives you or you’re just going to buy something you know relatively inflexible with with like limited but say functionality and.
Start there.
Kelly:
[51:37] Yeah and there’s a great Market of vendors that offer that functionality and that’s great you know it was just sorry I shouldn’t say that that’s.
That’s okay if you choose not to differentiate in this way
and want to buy an off-the-shelf solution and there are many organizations and sometimes for valid reasons they want a website a box you know they just acquired a business in Canada and they need an e-commerce presence and they want to go fast
that’s not our customer right and you know to your point there is this big bifurcation and.
It is closing right because a lot of organizations are developing these these capabilities either in-house or through a partner
but there is a bifurcation there there’s there’s definitely that you know that’s part of the market and it’s becoming pretty clear who is making the Investments
and who is doing something differentiated and interesting and who is not and who is stuck deploying to production once a month.
Jason:
[52:30] Yeah yeah and by the way like even if that’s what you want to offer to customers like there wouldn’t have been anything stopping Shopify from adopting more of these principles.
Internally for their own products and all the Shopify Fanboys get mad at me but you know I like firmly believe that at this point Shopify has a ton of technical debt and like I think they struggle.
Um to upgrade and keep current because like like that you know.
They have some inflexible systems that you know they’re they’re huge customer base is sitting on top of now.
Kelly:
[53:07] Yeah absolutely and we see that as well so I’m hoping that they make those Investments and I’m hoping that Toby’s able to recruit a good team underneath him after those those departures there but I’m sure he’ll figure it out.
Jason:
[53:21] He’s gotta operate yeah I mean they’ve got a ton of Market traction so there’s some they have some good endemic things to work with.
We are coming up on time so I do want to Pivot to one last last topic or maybe one and a half topics but.
Is there a good reason why all of this architecture seems to be primarily focused on.
Commerce platforms like I don’t hear people talking about head with CRM systems or micro service-based cdp’s or things like that and it seems like.
They like all these other Enterprise tools would benefit from a lot of the same.
Same benefits that Commerce platforms are starting to am I missing something there.
Kelly:
[54:06] Well we are seeing other Industries so if you look at financial services for example
there’s been billions of dollars put in funding startups in the fintech space that are only api-based so we’re definitely starting to see a lot of that out there telecommunication space we’ve seen that
with in the mock Alliance we’ve seen OMS vendors start to apply.
[54:29] Which is really great so we’re starting to see it but you know with Commerce specifically first we had that wave of Commerce platforms back in the 90s and 2000’s and folks just wanted to get online.
Right and back then you wanted a sweet a website in a box it worked just fine but now after 20 years.
You know the lifespan of that Legacy software is is coming to an end and at that point you know you have to look around and look at what’s modern and what’s current and this is what’s modern and current.
The other thing is you have a lot of competitive pressure from Amazon and digitally native vertical brands that are running circles around some of these larger Legacy retailers they’re releasing to production every hour,
and a lot of retailers just can’t keep up with that pace of change you know they can’t do a pop-up website they can’t do you know in-store Commerce there a lot of things that they’re missing out on because of their legacy technology
and I think that’s that’s natural right at this this is what always happens with software you know something new comes along and you know it’s the next wave it’s the Next Generation and folks adopted.
Scot:
[55:40] It’s a good segue into hopping in the little time time machine that only goes forward three to five years if we did that we’re do you see.
Things going I read a lot of articles about zero code and everyone’s really excited about that is that kind of do these microservices get us to this point where
Jason’s mom who’s one of our top listeners can kind of design her own website by pulling in these microservices dragging and dropping them dogs blinds good to go we’re ready set go.
Kelly:
[56:09] I think in the SMB space will see no Code and low code we’re starting to see it but at the Enterprise space it’s still very much of.
I do use the word manual because it’s not manual but it’s more bespoke right there very unique for every single Enterprise.
Just generally you know where things are headed like I said I think we’re going to be further commoditized and I think monetization is great
I’m also seeing there’s an unbundling happening as well and we’re starting to see these new vendors like bold and bolt you know one with the D and one with a tea fast
Talon 1 for example there are these newer vendors out there and by newer I mean you know the past couple of years year or two that are offering pieces you know some bold bolt and fast are offering one-click checkout
DUIs.
[57:03] Right in the functionality behind that Talon one is just offering promotions so I’m I’m expecting to see more of these vendors pop up
and again I think that’s fine you know if our promotion engine doesn’t meet customers needs you know we’re very happy to make a recommendation to a third party
you know same with check out you I we don’t do that so we’re always referring our
customers to these other these other Solutions but you know with SAS now it’s pretty easy to build these Point solutions that do one thing whether it’s pricing or inventory or whatever it happens to be they can go really really deep and do that.
And then I’m also seeing more Brands and retailers building their own Commerce platforms.
I wouldn’t quite say from scratch but they’re using somebody like us more as the foundation but they’re building more and more on top of and around us so it used to be 20 years ago
nobody had the technical chops to do that now you know if the top end of our Market.
We’re pretty uncontested their people are buying the commoditized Lego blocks
and they’re building on or around that and again I think that’s great because they’re able to offer their own differentiation and really build a personalized experience for Shoppers,
I’m rather than just take what’s in the box.
Jason:
[58:24] That is awesome hopefully all of that comes to pass really quickly and we get those last few websites off of Blue Martini before a holiday.
Kelly:
[58:32] Yes there’s still some Blue Martini out there yeah there are some 90s zombies still out there for sure.
Jason:
[58:40] Yeah but the the hundred-year-old COBOL programmers need a job so that works out great.
Kelly this has been fascinating you and I could go on for another hour but sadly we have used up all our allotted time so I really want to thank our listeners for
tuning in and if you have any further questions or comments feel free to hit us up on Twitter or our Facebook page and as always if you learn something that helps you in your your career the best way to repass is to jump onto iTunes and give us that five-star review.
Scot:
[59:16] Kelly really appreciate you taking the time to join us where can folks find you online.
Kelly:
[59:21] Thanks for having me you can find me on LinkedIn Twitter those are my two primary platforms or just Google me I’m I’m around let’s put it that way.
Scot:
[59:33] Google me how about so Commerce tools I’m going to assume is Commercetools.com and then for the mock Alliance how to folks find that learn more.
Kelly:
[59:42] That’s MachAlliance.org
Jason:
[59:44] For those of you driving I will put links in the show notes to all of those and no reason to write them down and also links to Kelly’s voluminous list of I think I’m my library for for books now so thanks again Kelly and until next time.
Happy commercing!
[…] I listened to the Jason & Scot Show Episode 270 – Microservice based commerce platforms with Kelly Goetsch, an insightful podcast on a topic that is near and dear to my […]