Automattic Buys WooCommerce for Over $30 Million

Wow. There was huge news this week that impacted both WordPress and e-commerce in general.

Automattic (the parent company of WordPress.com) purchased WooCommerce for over $30 million.

As Magento continues to struggle, there’s room for a new dominant player in e-commerce and Matt Mullenwegg seems determined that WordPress will become the new king.

Why did Automattic make this deal?

Automattic and WordPress.com had almost zero e-commerce presence. Until now, the only option for WordPress.com users was to use a fairly clunky integration with Ecwid, Shopify or Gumroad.

The addition of WooCommerce immediately means that Automattic can start to compete with it’s former partners.

It’s interesting to read Matt’s post on the deal. Yes, techincally they purchased WooThemes, which is the parent company of WooCommerce, but there’s not one single mention of themes or the WooThemes name. This deal was all about WooCommerce. Over 85% of WooTheme’s revenue came from WooCommerce.

Plus, even at over $30 million, Automattic probably got a bargain. Shopify runs about 4% of e-commerce stores is preparing for an IPO valuing it at $1 billion. WooCommerce is 8 times more popular than Shopify, with a 25% marketshare (click “The Entire Internet” tab).

Yes, there are some differences between Shopify and WooCommerce. Shopify customers may be more locked into their SaaS platform than WooCommerce customers are. And there may be a discount for WooCommerce being GPL (Automattic could have just forked WooCommerce), but this acquisition immediately appears to be good value.

Are there any potential downsides?

This is a large acquisition. Automattic is adding 20% more staff, with 55 members of WooTheme joining the company. That won’t be a quick or easy integration to make, as Automattic is also expending enormous effort to re-orientate the company to be more mobile-friendly.

Beyond that, there’s the possibility of developing a mono-culture around e-commerce in WordPress, although that’s not easy to imagine when there are very strong competitors such as Easy Digital Downloads.

What does this mean for WordPress and e-commerce?

The most obvious reading of this is that WordPress continues to grow and crush different sectors. This may prove to be a very strong blow against smaller rivals such as Magento, OpenCart and Prestashop. It also positions WordPress more effectively against SaaS rivals such as Shopify, Squarespace and Wix which have e-commerce already in their core offerings.

There was a really interesting quote on Hacker News about this acquisition:

I’m watching niche CMS industry after niche CMS industry crumble under the continual migration to WordPress. The latest victims are the small CMS vendors who have been selling proprietary CMS solutions to public school districts for the past 15 years, charging far too much money (your U.S. taxpayer dollars!) for barely functional CMS’s. The FCC voted recently to prohibit spending federal money on these solutions, a practice that basically created the market, so now every school district in the U.S. (14,000+) are looking around for cheaper and better solutions. A large percentage of them are migrating to WordPress.

In our predictions for 2015, we asked, “WordPress is enjoying an unparralled run of success. Can they possibly sustain growth for yet another year?”

Now that we’re reaching the middle of 2015, the answer so far is an unqualified, “Yes!”

Oh, and if you want to learn about WooCommerce, check out the WooCommerce Explained book!