Online Retail Beginners: Beware of Falling into the Magento Money Pit

Welcome to online retail, newcomers! E-Commerce is exciting, fast paced and loaded with potential. It’s also fraught with pitfalls. The largest of which has a name you might recognize: IT; otherwise known (in our office) as “why is this costing so much and taking so long?”

At this moment in your business development, you are probably debating how to choose between various platform options. Are you small enough for Shopify – a safe and secure choice – or are you big enough to require a platform with more horse power? Do you have your sights set on this year’s popular e-commerce solution, Magento?

Magento; an open-source platform with third-party extensions and development partners that are years away from truly understanding how the software really works. Sounds fun right?

If you decide to partner with Magento your first order of business will be to pay $15,000 Australian per year for the enterprise license. To get your site moving beyond what’s provided by the out-of-the-box features – in other words: to actually function as an online retailer – you will need to purchase third party extensions from the partners of your partner. Unfortunately, your partner Magento did not put the same due diligence into choosing its third-party extension partners as it did in choosing its customers. As a result, you will be left with extensions that shut down your site the moment they’re installed and themes that slow your site down to a crawl.

At this point, you are not making the money you were promised in online retail. Rather, you are trying to pay your way out of the IT pitfall.

You will seek out other ‘partners’ – desperate for someone to live up to the title – and at first they seem to fit the bill. Sympathetic, they will commiserate over your IT issues and explain that your old ‘partners’ were as useless as they are capable. Relieved, you will hand over the keys to the Falcon only to realise that it has happened again. Your IT problems are still lurking, just waiting for you to try and conduct business with your online retail site. Reparation eludes you. No one is accountable. Everyone is looking beyond you to the next contender in the online retail revolution.

Bleak, isn’t it? And that’s just your e-commerce solution. Have you chosen a hosting ‘partner’ yet? You can look forward to different opinions, contrary advice, widely varying rates and un-kept promises. At this point your head should be spinning.

Where do you look for answers? When will Magento step up and stand with its customers? At $15,000 a year haven’t you bought the right to say “Please explain why these IT companies aren’t forced to be accountable for their costs and services?”

The truth is the only way Magento, with all its extension add-ons, hosting companies and web developers, will care enough to earn the title ‘partner’ is if you push back and say: “No, we will not pay $250 an hour for your best guess at what you ‘think’ the problem might be.” After all, you wouldn’t pay your mechanic if he couldn’t fix your car, would you?

As you consider this, you’ll be relieved to know this story has a happy ending.

We finally managed to crawl out of the IT pitfall, but only after we rolled up our sleeves and rebuilt the store ourselves, with our own staff who actually care about the longevity of our platform and doing things the right way the first time. I can assure you that there is no IT platform out there that is happy sailing from day one and I want this article to give people the reassurance that they are not the only ones out there hitting their heads against the technology brick wall.

Be it Magento or another platform, these are the challenges that come with technology and business, but in the end are overcome by real people and the level of passion they put in.

9 thoughts on “Online Retail Beginners: Beware of Falling into the Magento Money Pit

  1. Well said Bradley. A lot of new ecommerce stores seem to be built with Magento. I’m a big fan of Magento being a user myself but it’s definitely not for every store.

    Non-tech ecommerce owners tend to think that if Magento is used by every store then it should be right for them. Tech can be confusing and usually they’re looking for a simple, one size fits all answer.

    Unfortunately many don’t understand how resource heavy and clunky Magento can be. A lot of ecommerce stores could easily start with Shopify, BigCommerce, WooCommerce etc and grow into Magento when, and if, it’s absolutely necessary.

    Great to hear that you guys reached the bright light at the end of the tunnel 😉

  2. Australia has some great ecommerce solutions that are available right here, provided and hosted right here in Australia. You don’t have to go to a USA based solution and why those are always the first recommendations just gets me. Yes they spend more on marketing and yes they pay very nice affiliate fee to people that recommend them so maybe that is the answer. They are cheap but not when you take in the whole of life cost.

    But Australian solutions like Neto, Australia Post My Online Shop, iiNet, Uber Global and others are all as functional, pretty close in price (some cases cheaper) and keep the business here in Australia. They can even challenge Magento for flexibility and at a much cheaper implementation cost.

    If more people use local solutions then they will continue to improve and beat the overseas solutions. It will create a market here in Australia that will challenge the overseas offerings. The local support and localisation for payment and shipping will always be ahead of the overseas solutions.

    • James
    • 10th October

    Couldn’t this be said about any ecommerce platform? It all comes down to your business requirements. Control the scope, implement and then refine.

    There is also the option of using Magento Community which doesn’t have the 15k license fee attached, should this get a mention?

    • Tony
    • 10th October

    I guess so James. Bradley does wisely make mention of the fact that this situation is not restricted to one technology in isolation.
    My take on this piece is probably to ensure that your partners who are doing the build, integration and so on are up to the task, more than the platform or tech used.

    In any industry experiencing the growth that e-commerce is having, there will be sharks and charlatans, waiting to prey on the inexperienced.

    Do your due diligence and, as others have pointed out, if you are just starting out, a hosted solution may be better (and cheaper) to cut your teeth on and scale up when and if the time is right.

    Great cautionary tale Bradley. Sorry to hear of your experiences but glad to hear that it seems is looking up now

  3. Magento Community is definitely an option James, I wasn’t trying to be exhaustive with this article but rather wanted to write something that might help ecommerce newcomers with a bit of insight. I know 7 years ago when I started in the ecommerce space that advice and real stories from others was invaluable.

    Tony you hit the nail on the head, no matter the platform it comes down to the people you partner with. I cannot stress enough though that it doesn’t matter how great a portfolio, or clients that a web agency/developer has, whoever you choose you are rolling the dice – as it comes down to the actual staff that work for them and how passionate they are about the work they do.

    Great comments though from everyone, glad my article sparked some attention and I hope some newcomers get some value from it.


  4. As a startup online pureplay –, Magento has been the best decision we could of made for our ecommerce platform. The experience has been the opposite to a ‘money pit’, as it’s incredibly cost effective to add features by leveraging plug-ins already developed. Some core functionality changes for us have only took two hours of development $200 spent on a plugin. On other proprietary systems, this could have been 20 hours plus in development.

    Yes, plug-ins are normally required from day one, however the key for us was doing the due diligence in finding a web development partner who had experience & understands Magento. The great thing about this is you get a lot of the functionality you want from the start, because the developer can choose the plug-in that best suits the requirements without huge development hours.

    This article is slightly misleading in that it mentions the $15k / year fee for Magento Enterprise. For mid to small organisations, including EverMe, Magento Community is proven to be more than adequate. Take other online retailers such as StyleTread who are using Magento Community too with sizable traffic.

    The key advice I would give to others, is do your research upfront. Talk to others who have been through the journey & ensure your developer or agency has the necessary experience & background in deploying on whatever platform you are considering. For us it lead to Magento hosted on Amazon Web Services & we wouldn’t look back!

  5. Nice article and I couldn’t agree more. I used to be a Magento partner and resellar but have since moved on. Here are a few more items about Magento you won’t here in everyday chat.

    Magento was written using the PHP/Zend framework
    Pros – easy to learn, fast to implement
    Cons- it’s a dog on performance and ZEND is a very dated (think java 6) There are much stronger frameworks out there these days

    Magento is expensive to run operationally full stop.
    Due to its use of resources you will spend a alot of $$$ hosting. Optimizing performance is difficult as well. While you can use you typical tools like minify/ memcache, etc you will need to contact the Magento professional services group to really dig deep to optimize a solution. While most “partners” will claim to have the experience, most don’t particularly here in Australia (but that could have changed in the last year or so) and you could be stuck going through Magento in the US. Having been there and done that before their services are rigid, extremely expensive and just not an experience myself or my previous clients would want to involve ourselves in again.
    A lot of vendors will also recommend Varnish as a potential performance solution but again, getting this right involves some pretty specific skills and unless you are willing to cough up a few $$$$ for consultancy time, this is an expensive alternative
    Partner PlugIn
    These are a blessing and/or a nightmare depending. Some work really well, some don’t. Just be careful what you choose and again, with every plugin, expect a degradation to performance.

    From my own experience, we had hundreds of BOTs hitting our site looking for a way in when we went live using Magento. The site was a large well know brand in Australia and the market was expecting us. When we analysed these little evil BOT bastards, they were sniffing around security holes we only just closed because we used the services of a professional security firm to find them and subsequently close them. In other words, these bots knew the vulnerabilities of the platform and if we didn’t do this type of verification, then these bots would have been able to infiltrate our environment and in some cases without us knowing it. They were pretty sophisticated. Another item to remember every plugin is a security risk…

    Anyway, over all Magento does suit some business and don’t get me wrong, there are definitely better and worse out there but to me it about being honest with what you are trying to do, understanding your own requirements and then choosing a platform that incorporates a total cost of ownership and best fit for your organisation. . Magento is a functionality impressive platform but one I will never use again.

    • Alex
    • 13th November

    E-commerce implementation may be not easy exercise, thanks for sharing this story Bradley

    Few notes based in my experience (work in this area since 2001 and specifically with Magento over 6 years).

    1. $$$ While $15K per year licence fee is considered to be high, if you compare it with other Enterprise solutions (check Hybris or Oracle ATG Web) it is actually damn inexpensive.
    2. Performance. Maybe I am wrong, but based on the licence fee seems that when you’ve planned your solution you took only one production server (otherwise you would pay more than $15K), which may explain problems you had with performance. Nowadays in fact hosting is comparatively inexpensive component of overall cost structure (a dedicated server cost per month is equal to few work hrs of developer’s time), so often it makes sense to upgrade your hardware rather than spend bunch of expensive human resources on software optimization. Not a silver bullet of cause and depends on case of cause.
    3. Developers. Totally agree with all who write that the most important factor is people you selected to deliver you solution. Sub-par implementation partner can spoil even the best system.
    4. Merchants. True that Magento isn’t for everybody. If you are SMB and/or your requirements are simple you may better take SaaS solution like Shopify or BigCommerce, it may be good enough in many cases and much less expensive than Magento.
    5. Developers again. Do your homework (as e-commerce manager), especially when you work with agencies or external developers, prepare clear specifications and establish mutually beneficial business relationships.
    If your requirements are vague and you squeezed every single penny you could in hard negotiation for the cheapest possible fixed price contract, don’t be surprised that with any problem that can be considered as ‘out-of-specs’ you’ll be asked to pay.

    Just my 5 cents

    • Lyd
    • 21st November

    Yes I agree, Magento isn’t for everyone and the costs for setting up with the platform do add up. Sadly, some devs also try to leverage on your lack of knowledge to offer you more than you actually need.

    I got a quote for a friend who wanted to set up a website – purely informational, no e-commerce, and got quoted $5000 to have it set up WITH MAGENTO. sheesh – WordPress would have worked fine.


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