Early in 2021, William Shatner migrated his merchandise and memorabilia store williamshatnerstore.com from Shopify to BigCommerce, rather than upgrade to the $2K-a-month Shopify Plus to resolve Brexit VAT issues. Kirk did not want to board Shopify’s Enterprise platform (pun intended). Instead, he chose an “emerging enterprise leader” at a reasonable cost. The term “emerging” was used by BigCommerce’s CEO Brent Belim in the last earnings call in August 2022.
Enterprise is at the heart of BigCommerce’s strategy. Unlike Shopify which relies more on its merchant solutions (payment fees and fulfillment) than subscriptions, BigCommerce’s primary revenue stream is subscriptions whose trajectory does not quite sync with the 60%+ drop in the company's stock since October last year. Its revenue these days is not coming from small sellers but from enterprises that make up 70% of BigCommerce's recurring revenue mix.
Halfway through 2022, BigCommerce saw its new website additions already touch 89% of its 2021 additions. BigCommerce always had at least 60% of its new additions coming from re-platforming merchants which is a conforming trend with all enterprise eCommerce platforms. While its enterprise focus provides the technology provider a relatively safe moat with recurring revenues via longer contracts against the current macro crunch, its entry to the existing enterprise platform club member may still be far from realization.
Unlike Shopify which has a top-of-the-funnel addressable market within its base plans clientele for Shopify Plus, BigCommerce’s enterprise merchant acquisition relies on merchants looking to re-platform to scale up. It had the smallest installed base of enterprise customers with USD 50M or more in annual GMV (BigCommerce considers accounts with more than USD 50M in annual GMV as enterprise accounts) and the lowest GMV per merchant compared to other enterprise platform providers. Shopify Plus may not have had the desired number of upgrades from Shopify plans base but it does have 8 times more enterprise customers than BigCommerce.
BigCommerce had disclosed that it has 5,418 enterprise accounts as of June 2022 which indicates a large B2B and non-US installed base. Of the substantial eCommerce businesses that were added in 2022, 44% were B2B domains. Besides, 68% of all the B2C domains added generate less than USD 1M in annual GMV while 30% belonged to the mid-market segment (USD 1M-USD 50M). Notwithstanding its enterprise focus, the numbers tell us that mid-market and B2B are the serviceable addressable markets for re-platforming as the types of companies that are most likely to have an in-house eCommerce ecosystem are B2B companies.
There is another explanation for the dichotomy of high enterprise focus and low enterprise penetration. A key objective of merchants' re-platforming is to leverage open SaaS and headless to scale up on sales and new markets but these incremental GMV do not come immediately. It takes time for an entire business to be fully integrated with BigCommerce with an optimized workflow. It took SkullCandy a year to complete its migration from Salesforce to BigCommerce. The existing annual contracts will enable residual GMV growth over time.
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