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What is Magento?

  • 12 min read

Updated 6/22/23

Magento is one of the most popular open-source eCommerce CMS platforms on the market. In case you’re not familiar with those terms, let's quickly break them down:

Magento = Open source + eCommerce + CMS Platform

Open source is when software is released with source code that users are allowed – even encouraged – to inspect, enhance, or completely change as they desire.

eCommerce software is software that allows commercial transactions to be conducted electronically. In other words, an application used to sell products and services online.

CMS stands for Content Management System. A CMS is an application used to manage all content related to a product or service in one central location.

As a CMS, Magento also comes with PHP (Hypertext Preprocessor) built in. PHP is an extremely popular general-purpose (and, of course, open source) scripting language that is commonly used for web development.

So, in simplest terms, the answer to “What is Magento?” is that it’s an eCommerce platform that is designed to manage all the content on your site in a way that is highly customizable.

But simplest terms don’t really do this software justice.

To answer the question posed in this post, let’s take a deep dive into all things Magento, so by the time you’re done reading, you’ll be able to decide if it’s the right eCommerce solution for your business.  

A Very Brief History of Magento

Back in 2004, a student at UCLA was looking for a way to make some extra cash on the side. Instead of waiting tables or pouring cocktails, though, Roy Rubin decided to start a company with his friend, Yoav Kutner. They called this passion project Varien.

Originally, the two didn’t have a huge master plan for Varien – not exactly what they teach at business school. Instead, it was just supposed to be a way Roy could keep his skills sharp while he continued his classroom education.

Despite their lack of an overarching plan, the two landed their first major contract for Varien in 2007, a windfall that would fund their next venture, Magento.

In 2008, they released Magento, which immediately took the eCommerce world by storm because it was so inanely customizable. Compared to other platforms, its potential seemed limitless.

In 2010, eBay came knocking, investing an amount that would give them 49% ownership in Magento. By the following year, eBay acquired the entire company and – as eBay owned PayPal – moved to integrate the premium processor into the popular platform. After eBay and PayPal split in 2015, Magento became an independent company once again.

That lasted until 2018, when Adobe acquired Magento for a whopping $1.68 billion.

Why Is Magento So Popular?

I’ll explain why Magento is so popular in just a moment.

Before I do, let’s establish just how popular this eCommerce platform is.

In 2019, Magento accounted for approximately 30% of the total market share. Magento-based websites were responsible for selling $155 billion worth of products.

In 2020, Magento was the third most-migrated-to eCommerce platform in the world. Again, that case study I just linked to will help you understand why, but I’ll quickly cover some of the reasons Magento is so popular here.

eCommerce Popularity Graph


Also, it’s worth noting when you look at the above graph that Shopify starts at $29/month and WooCommerce costs nothing. Magento costs SIGNIFICANTLY more and still ended up on the podium because of all it has to offer (I’ll cover its costs in just a moment).

It’s not just that so many companies migrate to Magento, either. It’s that companies stick with Magento, too.

Best eCommerce Platforms Comparison


Again, WooCommerce is free, so it’s popularity should come as no surprise. Otherwise, Magento is the second-most-popular eCommerce platform in the world if you’re only counting those with an actual price tag.

In case you’re curious about comparisons, check out these two posts.

As of today, the platform’s source code has been downloaded more than 2.5 million times and more than 100,000 online stores have been created using it. Don’t expect that to change anytime soon.

Why So Many Companies from So Many Industries Love Magento

Okay, we’ve established that Magento is popular, but WHY is it so popular?

As I touched on earlier, one of the biggest reasons is the unbelievable level of customization it supports. You can create almost any type of eCommerce website you want with this insanely powerful platform.

There are also countless customizations a qualified Magento developer can create for you. So, if you don’t get everything you want with your license and you can’t find an extension that will get the job done, don’t give up. A Magento developer will be able to do it for you.

In short, if you can imagine it, it’s probably possible with Magento.

What’s more, Magento is constantly being updated, so the future is bright for any company that decides to power their site with this platform. The team of experts behind it is constantly thinking up new ways they can build a better product and release updates quarterly.  

Even though it’s a huge advantage, customization is just the tip of the iceberg. Magento is also great for SEO, which is obviously extremely important when running an online store. In fact, I’d go so far as to say I think Magento is one of the best eCommerce platforms for SEO. Again, a big part of this is because you can customize your store based on what your customers want when they turn to Google for help.

Finally, you can manage multiple stores through just a single admin backend with Magento. If you’ve been trying to manage more than one storefront though separate backends, this might actually be the only reason you need to make the switch.

What Companies Use Magento?

Okay, so we’ve established that Magento is extremely popular, but what about the companies that actually rely on this platform?

The companies that use Magento represent a good mix of B2B and B2C businesses. Some of the more popular examples of these businesses include:

  • Bed, Bath, and Beyond
  • Canon
  • Christian Louboutin
  • Chrysler
  • Coca-Cola
  • Ford
  • HP
  • Jaguar
  • Land Rover
  • Nestle Nespresso
  • Nike
  • Oakley
  • Olympus
  • Omega
  • Rossignol
  • Vizio
  • Warby Parker

These are giant, market-dominating, multi-million and -billion-dollar companies that put their trust in Magento to run their eCommerce websites.

If Magento is capable of meeting these companies’ demands, you can imagine the extent of its many features, customization options, and potential for scalability.

From the ability to engage with content to managing your orders and inventory, to shipping and even providing customer service, Magento is a one-stop-shop that can meet just about any eCommerce business’s needs.

But here’s the thing: Magento isn’t just for Fortune 500 companies.

While those household names speak volumes about Magento’s capabilities, plenty of smaller businesses rely on this powerful platform, too.

I’ve profiled a handful of these in the past. If you’re interested, you can check out these posts below:

While Magento is often associated with big enterprise companies, it’s just as popular among small and medium-sized businesses. So, if you need a website with a wide range of functionality – especially if you have some unique customizations in mind – Magento is a great choice.

Magento Open Source vs. Magento Commerce

As I mentioned earlier, there are two versions of Magento: Open Source and Magento Commerce. That link will take you to a much more detailed breakdown of the two, but here are the big differences:

Magento Open Source is the free version and is perfect for most businesses no matter what their size. At IWD, we have helped small startups all the way up to large enterprises build fantastic sites using this free version. Don’t let the lack of a price tag fool you. Magento Open Source brings a lot to the table.

Again, check out that comparison, but here are just some of the many features you’ll get with a Magento Open Source license:

  • App Marketplace Access                                          
  • Architecture and Security                                        
  • Basic Analytics and Reporting                                
  • Basic Site Search                                          
  • Catalog Browsing                                        
  • Catalog Management                                
  • Customer Accounts                                    
  • Flexible Couponing and Promotions                                    
  • Full Page Caching System                                        
  • Instant Purchase                                        
  • Layout and Theming                                  
  • Mobile Optimized Shopping                                  
  • Support for Multiple Languages                                    
  • Multiple Store Views                                
  • Order Management
  • Product Configurations                            

Magento Commerce (recently renamed “Adobe Commerce”) is the paid version of the platform. It’s designed for larger eCommerce companies that need specific features in order to win over their unique markets. Typically, businesses that invest in Magento Commerce are doing more than a million dollars a year online.

  • Access to Quick Design-Build Express Packages
  • Adobe Sensei AI-Powered Product Recommendations
  • Advanced Content Management
  • Advanced Site Search
  • Gift Cards
  • Integrated B2B Features
  • Magento Account Manager
  • Magento Technical Support
  • Reward Points
  • Rules-Based Related Products                
  • Rules-based Upsells & Cross-sells
  • Visual Merchandising

This is really just the beginning, though. There’s a reason so many successful companies find room in their budgets for Magento Commerce.

If you want a comprehensive list, here are 40 of the Top Magento Commerce features.

Magento Commerce On-Premise vs. Magento Commerce Cloud

One last note on Magento Commerce before I move on to talking about the platform's price tag.

There are actually two versions of Magento Commerce, too.

Magento Commerce On-Premise

Magento Commerce On-Premise means you handle the cost of hosting on your own. That could end up saving you some overhead, but keep in mind this means you also need to handle all of your company’s hosting needs on premise.

There are some really great Magento hosting providers out there, but if your business doesn’t have experience with this arrangement, contact us so we can help you understand what it’s going to entail.

Magento Commerce Cloud

The other version is Magento Commerce Cloud (formerly “Magento Enterprise – Cloud Edition”). As you probably guessed, this version comes with hosting. Your site will be powered by AWS (Amazon Web Services) and you’ll have access to Magento’s dedicated developers.

That’s not all.

Among many other things, Magento Commerce Cloud will give you extra features like:

Once again, this breakdown of Magento Commerce will detail a whole lot more. Unless you’re completely comfortable with hosting your own site, I definitely recommend you look into the advantage of Magento Commerce Cloud.

How Much Does Magento Cost?

As I mentioned earlier, if you choose Magento Open Source, the price is pretty simple: it’s nonexistent.

Otherwise, there’s no single price tag for Magento Commerce. The cost depends on your company’s Gross Merchandise Value (GMV). Both Commerce versions – On-Premise and Cloud – cost a monthly flat rate, but you’ll pay more once your GMV exceeds $1,000,000.

For Magento On-Premise, the base rate is in the four figures, but remember: you’ll need to cover the cost of hosting, too. If you opt for Magento Commerce Cloud instead, your base rate will be in the five figures, but that will include the price of hosting, which means you’re also outsourcing the work that goes into managing servers.

For a full breakdown, check out our post on Magento pricing that will go into all the details about Magento Commerce On-Premise and Magento Commerce Cloud.

And if you’re interested in Magento, but you have a specific need that the platform doesn’t already offer, feel free to contact us to request a quote for any Magento services you might have in mind.

How Do You Use Magento?

As a Magento partner and a Magento web development agency that has been working with this amazing platform for more than a decade, we’re definitely very familiar with all the ins and outs of using this platform. .

Unfortunately, answering “How do you use Magento?” would mean making this blog post about 1,000x longer.

However, my team has put together numerous tutorials over the years, which you can find here:

If you don’t see what you’re looking for there, you can always contact us to speak to one of our experienced developers about any questions you have.

How Easy Is Magento to Use?

Magento isn’t one of those platforms that you’re going to be able to just pick up and start building a site with if you’ve never done any development work before. This eCommerce solution is simply too robust to be mastered quickly by someone who doesn’t have a background in website development.

Even among developers, Magento has a decent learning curve.

That being said, once you’ve learned the ropes, Magento is incredibly user-friendly. And as I’ve covered, there is no limit to the kinds of sites you can build with this incredible platform. The combination of Magento’s potential and user-friendliness are why this is one of the most popular platforms in the world.

So, Magento isn’t easy to use in the sense that there’s a tutorial to watch and then you’ll be building sites left and right. But it is easy insofar as an experienced developer won’t need a ton of workarounds to give you what you want.

If you’re not a developer, my advice is to hire one. I’ve created a post that will help you find a Magento developer who will know how to make the most of this powerful platform.

Oh, and I know a Magento agency that I can recommend, too (it’s IWD; we’re the agency – contact us and let’s talk).  

How Does Magento Compare to Other eCommerce Platforms?

Alright, so by now, you can probably see why Magento has become such a popular platform over the years across hundreds-of-thousands of companies and numerous industries.

Still, if you’re currently in the market for an eCommerce platform, Magento is far from your only option. There are dozens of others you may want to consider, too.

I briefly talked about two of the more popular alternatives to Magento earlier, but here are three posts I’ve done comparing this platform to other options:

What Is a Magento Agency?

I've included a link to our contact information below if you're looking for a Magento Agency, but before I do, I want to explain what a Magento agency like ours can do for your business.

First and foremost, a Magento agency is one that has a team of developers who can customize whatever version of the eCommerce platform you're using. This includes everything from the way your site looks to how you display your company's products.

But a Magento agency's developers should also be able to create custom solutions for your site, too. For example, we regularly create custom search elements unique to a client's inventory or checkout pages that help to reduce abandonment rates. These kinds of services - Magento CRO (Conversion Rate Optimization) - is about more than just improving your sites user experience (UX) but also your overall conversion rate.

That's the bare minimum a Magento agency should be able to do for your business.

However, you should also look for one that can handle Magento SEO to bring traffic to your site. I say "Magento SEO" because, while the same best practices apply across platforms, you need an experienced developer who knows how to make the kinds of changes in Magento that it takes to boost your rankings.

PPC services are usually important, too, but you don't need someone who understands the inner workings of Magento in order to leverage those tactics.

Is Magento the Right Choice for Your eCommerce Business?

Choosing an eCommerce platform to power your website is a big decision. It will impact every single aspect of your company’s online business – from how you display your inventory to what aspects you can customize to how successful you are at attracting traffic.

Fortunately, I think Magento makes this an easy decision for the vast majority of companies. It is simply one of the best eCommerce platforms on the market.

But like I said, this is still a very important decision, so if you want to speak to one of our eCommerce experts before moving forward, feel free to contact us.

Get Started with IWD Today!