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March 7, 2022

The BigCommerce App Revolution

 

I think the BigCommerce app revolution is coming later this year. If not, early next year.

Last week we had the fourth quarter earnings call for BigCommerce for 2021. And there was some, some really juicy nuggets in there for what the company is planning and particularly how it affects the app marketplace that I wanted to kind of share. This is completely off the cuff, my personal take on what they shared, but you might find it interesting as well.

So in terms of, one of the levers that they are going to use to help continue to grow the business, they’ve been looking into cross-sells and upsells. So for, for their own business, their own set of products. Now we know they’ve gone through a process of acquisition whether it be Feedonomics, we’ve got Bundle B2B and more recently B2B Ninja, a further B2B product. We can really tell in their call that this is going to be a continued part of their strategy, whether that be through products that they acquire, products that they sort of license and resell. But also the actual app marketplace and third party sellers as well and better supporting those people and all of that kind of together being a bigger part of the, of the business going forward. Certainly in terms of net revenue retention. So i.e. people spending more on the platform going forwards.

Now, the thing I wanted to call out, obviously being very much wedded and in the app space. This, this is great news, both for people that are working in this space, as well as for merchants and the entire ecosystem in my opinion. The biggest part of this is going to be automated billing. So this is something that they said that they are going to be launching later in the year. First for their own products, naturally. And so this means that when you, as a store owner, choose to use a further app, say Bundle B2B that you do not need to go through the process of putting in card details yet again, and we know that’s going to be a cause for friction.

So automated billing will mean that when you use these apps if you kind of go through that trial period and you want to sign up it will go onto your BigCommerce bill. Now, this is great for you as the store owner, but also for the app developers. There’s now an entire area that is somewhat notorious of billing and subscription management that we now no longer need to worry about.

As far as I can tell, this is an optional part that you can kind of buy into. But certainly it’s going to kind of do wonders for the app ecosystem, which is already strong. One of the things that impressed me when coming to BigCommerce from other e-commerce platforms, is that, it is already very strong in terms of the tech partners that they had. Most of the best of breed tools that we would typically work with as an agency we’re already on the platform. But one of the kind of areas that I felt like there was an opportunity was in the more niche apps, those things that just need on the platform to kind of get projects over the line.

You don’t always need a best of breed tool for the particular job to be done. And that’s why I’m working in this space. I’m excited to be working in this space and I want to see other people kind of come into the space for validating my own decision. But I can certainly see this automated billing being part of bringing people to that space and encourage people to release their business value that they’ve created in an app to, to the wider market.

Understandably right now, they would need to worry about subscriptions. So if you take that out and just make it as easy as possible for that business value to be accessible to the wider BigCommerce ecosystem, I think that is going to do, do wonders for everybody involved. So I think this is a really exciting move and I will certainly be evaluating kind of how we would migrate and adopt that platform in time. So just something to look out for.

This is not financial advice, but my understanding of the commercial model for BigCommerce, I think this is very interesting for them as well. As they continue to report fantastic growth year, year on year, quarter on quarter.

But right now, when you report your revenues to BigCommerce to pay your commission. So you pay, I think the standard rate is 20% of all of your app revenues to BigCommerce and being on their platform. Now they will actually kind of own that and be able to report on that revenue.

So say my app is a $100 a month, and then I pay them $20 in commission for each subscription, right now the processes is fairly manual. So that’s kind of, you know, potential for errors, mis- representation. If they own all of that, obviously all those errors and just office and clerical errors go away.

But it also means they have much greater visibility on the subscriptions that are in play on the platform. And so I think that’s going to do wonders for the business as well. Being able to report on all of those revenues rather than just being sort of the commission/ rev share component.

So. Yeah, exciting times for BigCommerce for multiple reasons. I’m very excited to see how this is going to change the app store come 2023.

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