BigCommerce, an e-commerce software provider, is accelerating its international rollout by targeting more markets in Europe and Latin America.
After launching in France, Italy and the Netherlands this summer, the Austin-based company is taking its service to Germany, Spain and Mexico in January 2022. It plans to swiftly follow up with more territories next July in its bid to become profitable next year. In the long-term, the company hopes to reach a 50-50 mix of U.S. to non-U.S. merchants, according to CFO Robert Alvarez.
But, BigCommerce can expect to face stiff competition along the way. International markets are a key battleground for e-commerce platforms, including industry leader Shopify. Both BigCommerce and its bigger rival have helped scores of retailers create online stores, and seen their sales skyrocket as businesses embraced online shopping during the pandemic. As the two mainly derive their revenue from the U.S., an international market ripe for disruption offers the chance to grab a competitive edge.
A region by region approach
BigCommerce is wasting little time in going global. The 12-year-old company has 60,000 customers in 150 countries. By comparison, Shopify, which was formed in 2006, serves almost 1.8 million merchants in 175 markets. Once BigCommerce launches in a region, it leans on its local insights and moves fast into adjacent markets.
“International expansion is a core strategic focus of ours,” Meghan Stabler, vice president of global marketing and communications at BigCommerce, said. “It’s not that we are just thinking about international, it’s that we are being intentional about international.”
A big part of its investment into international expansion includes establishing native teams. The goal is to provide a fully localized experience with an emphasis on language, Stabler noted. As part of its launch in France, BigCommerce translated all its information into French, despite a large English-speaking population in the country. That included local versions of its website, resource materials, onboarding and trial flow. It plans to apply the same approach when dealing with the different varieties of Spanish in Spain and Latin America.
“We want the merchants to see themselves in our platform when they are evaluating our platform,” Stabler said. “We want to have native salespeople, marketing people, business development people.”
In BigCommerce’s case, countries that aren’t the U.S. are witnessing the fastest growth. The company posted $49 million in total revenue in its most recent quarter, up 35% over the previous year, and a net loss of $12.2 million. BigCommerce saw 54% revenue growth from international operations, with EMEA and APAC increasing by 67% and 47% respectively. While Latin America has a massive total addressable market with a population of more than 650 million and e-commerce sales of $85 billion. BigCommerce also has a major local partner in the region in e-commerce giant Mercado Libre.
According to Stabler, the company is focusing on underserved markets and countries well-suited to its strengths. “We are going after regions that have a large addressable market and where we see existing e-commerce platforms have become stale,” she said. “Maybe, they were right [for merchants] at the time, but they don’t have the rich, enterprise-grade tech stack that can help businesses to expand further.”
BigCommerce has largely differentiated itself from Shopify by focusing purely on providing an open e-commerce software-as-a-service solution. It offers customization through a broad set of APIs and SDKs, and by working with multiple payment providers. Its rival, on the other hand, is branching out beyond software to offer loans, fulfillment and payments processing, which makes up the majority of its revenue.
On the surface, the two companies offer the same central service: access to software for a recurring fee that allows retailers to sell directly online. But, the distinctions matter, especially when it comes to customer bases and international strategies.
Shopify is increasingly associated with smaller businesses, though it has bigger clients like Heinz, Staples Canada and Netflix. While BigCommerce is carving out a niche among mid-market and larger enterprises. Its customers include Ben & Jerry’s ice cream, headphones brand Skullcandy, sportswear manufacturer Reebok, Japanese automaker Nissan and industrial and B2B customers like Avery Dennison.
The two rivals also have different reasons for targeting overseas markets. Shopify is looking to maintain its recent momentum by “making commerce as global as possible,” according to Ken Wong, a director who specializes in software companies at Guggenheim Partners, a global investment and advisory firm. “It has penetrated North America faster than people expected,” he said, adding “in order to add new customers at its current pace it will have to look beyond borders.”
Whereas BigCommerce has large, multinational customers that already have a global presence, Wong explained. Therefore, international diversification is extremely attractive to the company.
“BigCommerce had 55,000 customers five years ago. Today it has 60,000. It doesn’t add a lot of customers quickly because it caters to bigger customers,” he said.
Wong believes the two companies have a good chance of shaking up the global e-commerce software industry. “Overseas markets are fragmented,” he said. “So it is not as easy to force a single vendor across all regions.” He continued: “[Shopify and BigCommerce] will run into local incumbents. But, at least from a tech perspective, the bigger players can force their way in.”