CNBC, citing Adobe, reported that Adobe is paying $1.68 billion for Magento, which is a cloud-based eCommerce platform that counts Coca-Cola, Warner Brothers Music, Canon and Nestle as customers. Companies hire Magento and Shopify to handle the eCommerce efforts for them. Magento is expected to be added to the suite of digital products Adobe offers its customers. “Adobe is the only company with leadership in content creation, marketing, advertising, analytics and now commerce — enabling real-time experiences across the entire customer journey,” Brad Rencher, digital experience executive at Adobe, said in a statement to CNBC.
Combined, it is seen as a competitive threat to Shopify, and thus the sell-off in its stock. Shares fell nearly 5 percent in trading after the announcement. Shopify, according to CNBC, is one of the highest-valued cloud software companies that is public, with a market capitalization of more than $15 billion. Adobe’s buy of Magento comes amid a flurry of deal-making going on in the eCommerce backend software market. CNBC pointed out in April that Square, the payments company, announced it was buying Weebly for $365 million. Square acquired Weebly so that it can enable small businesses to build websites and online stores more easily.
With competition fierce in the marketplace, Shopify has been rolling out new products to maintain its edge. Earlier this month it launched Fraud Protect by Shopify Payments. With Fraud Protect by Shopify Payments, if a customer issues a chargeback due to fraud on a protected order, Shopify will automatically issue a refund covering the full amount of the chargeback, as well as any associated fees. If the transaction is indeed fraudulent, Shopify will eat the loss. The firm receives disputes from Visa and Mastercard, and then fully handles them, freeing up the merchant to continue doing what he or she does best: creating, curating and selling great products, and just generally running and growing a business. Shopify told PYMNTS that this helps reduce the complexity for merchants who lack the experience of identifying fraud, while also eliminating the time merchants spend on processing and handling the chargeback dispute overall.