BigCommerce is an interesting eCommerce case study on many levels. Shopify is #1 in so many market segments, but for “bigger” SMBs BigCommerce (and perhaps less-custom enterprise deployments) is arguably a smaller but competitive #2 to Shopify. At least, it’s the most similar and directly competitive in terms of feature set.
It’s much smaller than Shopify, at $170m ARR vs $3B+ ARR, but it’s still plenty big for us to learn a lot from this big but not #1 player in the market. How can you win vs. the bigger guys? How do you carve out a segment where you are #1, if you aren’t #1 overall? And how fast can you grow?
Even with a much bigger competitor, BigCommerce is growing an impressive 41% at $170m in ARR and a $4B market cap! It’s also marched a bit upmarket, with 10,000 customers paying more than $2k a year. It’s done it by going more upmarket, and better monetizing partners and services.
Also interesting is that BigCommerce lacks the full fintech / merchant services element of Shopify (it relies more on partners here), leading to much slower overall revenue growth than Shopify, even though its business is overall growing about as fast as Shopify’s SaaS business. A reminder that adding a bit of fintech to your SaaS can be a huge accelerant.
5 Interesting Learnings:
#1. NRR of 113% from customers with an ACV of $2k+, up from 106% a year ago. This is higher than many comparables and another good reminder you really can exceed 100% and even 110% from small businesses ($2k a year). Having said that, the average ACV here is $14,615 … so that’s at the high end of a traditional SMB spend, which probably accounts for the high NRR. BigCommerce intentionally leaves the tiniest customers to Shopify, Wix, WooCommerce, SquareSpace, and others.
#2. Driving existing customer revenue up more than new logos. BigCommerce, like many SaaS vendors at scale, is doing a better job at getting more revenue out of existing accounts than adding new ones. Its new $2k+ customer count only grew 10% year-over-year, but its revenue from them grew 31%. Average deal size has rapidly grown in the past year from $10k or so to $14k, accounting for a lot of growth.
So growth in the core new SMB and enterprise customers may be slowing, but BigCommerce is still growing 40%+ by going more upmarket, adding more value and services, and better monetizing its partners.
#3. Services and partners are also a big part of their growth story. Unlike some other leaders that outsource services and have limited partner revenue at this scale, BigCommerce leverages both. Its SaaS business in fact only grew at 17% year-over-year, but its partner and services revenue grew 38%. Payments partners are the biggest part of this. Shopify does payments itself, while BigCommerce has its partners handle payments and instead takes a rev share. BigCommerce gets much higher margins by partnering in payments, but less revenue from this approach.
#4. More than half their revenue is now from “enterprise”. Larger customers have grown to the majority of BigCommerce’s revenue in the past 24 months, and 81% of their revenue is from almost 10,000 $2k+ ACV accounts. BigCommerce is embracing more of the needs of bigger customers to compete.
#5. Not competing (directly) on price. While Shopify and BigCommerce pricing isn’t identical in the end, their SMB / published pricing is almost identical. While the market isn’t an oligopoly, it is interesting that BigCommerce isn’t competing on price. It’s not trying to be cheaper OR more expensive. It’s pricing identically to take pricing out of the core evaluation equation, at least with smaller customers. More on that strategy here.
BigCommerce will be a fascinating one to track. Will its march upmarket continue to carry the company to outsized growth? Can it continue to grow partner and services revenue faster than its SaaS revenue? Where will it continue to carve out its market leadership in a highly dynamic space?
A great one to follow and a huge congrats to the BigCommerce team on the big IPO and incredible post-Covid growth!
And take a look at 5 Interesting Learnings from Shopify here.