M2E Pro Interview: Multichannel, Magento and Community

Since 2009, M2E Pro has been connecting Magento, the world’s most popular ecommerce platform, with the world’s most popular marketplaces – eBay and Amazon.

It is a hugely popular system.

M2E Pro has been downloaded over 80,000 times from Magento’s app store, and in 2015 it handled nearly 57 million orders with a total value over $2.3 billion. Over 31,000 unique eBay accounts are connected to the system, along with more than 9,000 unique Amazon accounts.

Its massive user base makes M2E Pro one of the most popular marketplace management systems out there.

But that’s not all. There are three more factors that make M2E Pro even more remarkable:

  • M2E Pro was completely free until late 2015, when it stopped being funded by eBay.
  • The company has a very strong community-driven philosophy. They don’t see M2E Pro as a piece of software you just buy and use, it’s a cause that every user should support and believe in.
  • M2E Pro isn’t standalone software or cloud-based. It’s part of the Magento ecosystem, and is designed to do a very specific job alongside Magento and other apps. It can’t do anything on its own.

I spoke to M2E Pro co-founder Alex Podopryhora about this unusual company’s history, philosophy and future plans.

Andy: How did you get into the software business?

Alex: A long time ago we started a software development company based in Ukraine called Enterprise System Solutions, ESS-UA.

We were mostly doing warehouse assistance and foreign exchange trading software. Around 2005/2006 forex was becoming very popular, though it was extremely expensive. There were a number of start-ups operating in forex, allowing retail customers to sell or buy foreign currency in order to speculate on the market moves. About 11 years ago that was quite new.

We were one of the first companies who were developing software that was essentially a brokerage system, allowing a lot of customers to sell or buy currency simultaneously. We had an investor from Switzerland and we were doing a pretty good job, until this investor went bust. The problem with trading software was that it was quite expensive, so the investor kept putting money in, putting money in. At some point he just disappeared and we did not see or hear from him anymore.

We kept working on it for three or four months, hoping that he would come back, but he didn’t. So we had two choices: either let everyone go home, or try find another project. So we started looking for opportunities, and migrated from being specialists to generalists just to pay our bills.

But we did not want to be just another outsourcing company, because we were extremely specialized. We had a very good set of skills and our team was extremely professional. Normally to do outsourcing you need to be kind of average, because most of the time it’s just support for legacy systems or writing some extensions to existing systems. Whereas if you want to develop something new, then you need to have best-in-class software engineers to lead the market.

How did M2E Pro develop from your situation back then?

We started looking for various solutions and did a number of development projects where companies were asking us to integrate their systems with eBay. Before Magento was born we already had a little bit of experience with the eBay API. Then we also had a number of projects using Magento for website development. So when one of our customers asked whether we could do an integration between Magento and eBay, we already had experience. The first very early version of M2E was very simple just to satisfy the needs of one customer.

Then we thought we could improve it, and things developed from there. The first version of M2E was created around 2010. With that we had found our new focus. We stopped being generalists and became specialists again, because that is what we always wanted to do from day one. M2E became quite popular, and we were surprised when eBay approached us and invited us in for a chat. It was about the time that they purchased Magento in 2011, and they were developing a similar solution to M2E. So our product was a direct competitor to what eBay were trying to deliver themselves.

They had a choice, either to continue development and see us as a competitor or to reevaluate their own project and invest into us. They went for a partnership with us around autumn 2011, and that allowed us to make M2E a free piece of software.

When eBay approached us we were financially sound, with revenue coming in. For us, cooperation with eBay was about being able to focus on the product, rather than on the marketing. That is why we really liked the idea of being subsidized, because we had spent many years just focusing on the product. eBay was very happy because we drove a massive take-up of Magento by eBay sellers, who had heard a lot of good things about M2E. We were also driving existing Magento users to sell on eBay. Everyone was happy. We got to focus on software development, eBay was getting new customers for Magento, and M2E was driving sales to eBay.

The only problem we had was Amazon and Rakuten. Magento as an ecommerce platform has people with many differing requirements. We were getting a lot of requests to improve our Amazon and Rakuten integrations, and other marketplaces were contacting us, but we couldn’t do much for them while eBay was paying for the development. Our eBay functionality was like a Ferrari, but Amazon and Rakuten were lagging behind.

What you have now is the third generation of M2E. The first two generations went into the rubbish bin. We hit a ceiling with the second generation because we were struggling to scale up and support. M2E is very different to any other multichannel solution provider, because we don’t host our systems in the cloud. Every single customer has our software running on his or her own server, and we have thousands of customers, with every customer having a unique configuration.

So we killed our second version and delivered generation three to the market without re-using a single line of code. This is what allowed us to scale up even further.

What is M2E Pro and what does it do? How do people use it?

M2E helps Magento users to sell on various marketplaces from one page. We have a merchant, for example, who has over one million products. He sells very rare collectable products across probably all the marketplaces we support. He will list one unique product in Japan, in US, in Germany, in the UK. When that product is sold on any marketplace, M2E takes it off all the others so he doesn’t oversell.

The power of M2E comes not from just linking A to B, but from our end-customer implementing various listing or selling strategies. I think we have customers selling just about any type of product which is sold on eBay or Amazon.

M2E is mostly a data processing layer because we take data from Magento and we put results back in Magento. We do not do shipping, we do not do label printing, we do not build other fancy features, because there’s no need to do that. We believe in Magento as a very powerful ecommerce platform and we believe in the Magento community. There are hundreds of other talented companies who have created modules to do those other things that complement M2E Pro.

We have become one of the largest multichannel solution providers in the world, because we focused on a very specific part of the multichannel industry. We like it that way. We never tried to divert our focus by creating a cloud platform or developing a shipping module.

A lot of people use Magento just as a back office system – you don’t have to use the part of the Magento website which you can sell from. Then there are companies who offer M2E plus Magento as a software-as-a-service solution where you sign up for the hosting, get M2E pre-installed, and can start managing your eBay or Amazon business out of the system. The beauty of it is that you have all the inventory and data in one place, so there’s the flexibility to automate a lot of processes.

There are a lot of scenarios where M2E delivers value. When they start using us, a lot of people really like how powerful our solution is, because it’s built based on the feedback we are getting from our users.

Did you work on any other projects with eBay?

M2E was not the only focus when eBay asked us to join their Magento projects. eBay had a beautiful idea called Fabric or X.commerce. eBay invited four partners to join the X.commerce project in spring 2012, and we were one of those.

But that project didn’t pick up, because it was too early. It’s like Facebook; there were a lot of people trying to do what Facebook did but they failed because the market was not ready. Then Mark Zuckerberg started Facebook, and it was just the right time because everyone had fast internet and the technologies had become very, very affordable.

The same thing happened with eBay – they had a great idea of building a new industry-wide ecommerce platform and we were invited to participate. So back in 2012 we were focusing on X.commerce, but eBay liked us for our technical skill, not for the actual product which we developed. M2E was just a supplementary project which kept going for years because everyone was happy with it.

Starting with X.commerce was where we built our technical relationships with eBay. eBay was experimenting and the M2E team (ESS-UA at that time) was working with eBay to implement something which was going to be very big. We worked over a year on that project, but it didn’t work out.

I guess that is how life is, some projects pick up, some don’t. But for us it was an extremely good opportunity to work with various eBay teams across the world. We had very good technical contacts with the hardcore technical eBay teams in the US and UK, and we met people from Germany, Australia, Israel. It was a lot of fun for us to work with people of a very, very high technical level.

eBay also used M2E Pro for some pilot projects. We have a huge customer base that represents every single segment possible – we have very small customers and we have very big customers, and we have a lot of customers in the middle. If you have a new idea, it’s very easy to see if it’s going to work just by coming to us to test it out. We run similar work with Amazon teams in North America and Europe too.

Your eBay sponsorship ended following their split from PayPal in 2015. How did that affect you?

For a company like ours, money was never the target. We could have made more money by quitting our eBay sponsorship three years ago and accelerating our Amazon and Rakuten development, bringing investments in, and going after larger customers.

We did not do that because we saw a lot of intangible value coming from our technical cooperation with eBay. Working with eBay technical people, we were learning from the best-in-class. Profit was never a primary driver – interesting work, interesting projects were what motivated us, and eBay was giving us a lot of opportunity to try interesting things.

When the eBay subsidy stopped we had two choices – to start charging, or to find a new sponsor. We could have introduced our new pricing straight away in May, with 30 days’ notice, and we could have charged anything we wanted to because people wouldn’t have many alternatives. I believe we would have still retained a big part of the market.

Instead we started talking to Amazon and various other marketplaces, to see if we could bring in a new subsidy and keep our software free for all. M2E brings a lot of revenue and business to the marketplaces, so we thought they should pay for it rather than the merchants. It took us six months to realize we couldn’t find that funding.

So after six months, in October, we sent the first announcement about our new pricing structure. We could have started charging people from November, but people wouldn’t have had a choice in the busiest period of the year. I think many of them would have paid. What we did was allow everyone to use any plan until the 1st of February, then decide if they value our service and want to pay to stay with us. We gave them free service over October, November, December, January and February, then let them decide.

But when we put our pricing out on the 2nd of October, I had more than 2,000 emails in my inbox within 24 hours. I was clicking the refresh button on the browser and seeing 15 to 20 emails appearing every second. That is why we split our product into three different size brackets. We did not realize that customers used us in hundreds of different ways. We always had a strong connection with customers, in terms of them asking us for new features, but we never analyzed individual customer cases to understand how they were using us.

That is why our price plans were completely messed up. We were changing our pricing structure as we were getting more and more feedback from customers, and ended up changing our pricing three times. It’s different now because we have simplified it for new customers. Our existing customers have discounted prices, a completely different structure and a lot more options.

We have thousands of small and medium businesses who we do not charge anything at all. We see ourselves as a company which gives a lot back to the community, so businesses with under £10,000 of monthly sales through accounts connected to M2E Pro can use our solution completely free of charge but with limited support. We have thousands of paid users, ranging from a few thousand dollars a month to millions of dollars a month in revenues. We are one of the largest multichannel providers, in the western world at least.

How do you know how many users you have, when M2E Pro can be downloaded directly from Magento Connect and used without registering with you?

Our statistics come from the marketplace APIs. When more customers use our software, we have more API calls so we can estimate the volume of business going through our software in total.

We also know how many marketplace accounts are connected, through API tokens granted, but one user may have more than one marketplace account. While we were free we never bothered to collect data on our customers, because we do not need to store any of our customers’ data. We don’t use cloud computing, the software just takes data from Magento, processes it, and puts it back.

Here’s an example of how little we used to know about our customers. Some years ago I received an email from one of our software engineers in Ukraine, complaining about a company trying to use our product but not giving us enough information for us to provide support. The engineer said they were some small UK business without the internal IT resources to do things in the way they should be done. The name of the company turned out to be Argos, one of the largest retailers in the UK.

Argos was experimenting with M2E without us knowing at all. Because Argos is a big company, they needed M2E to be configured in a slightly different way. We as a company are very, very product focused, and we never paid attention to who our customers were.

Why should a multichannel business use a system made up of Magento, M2E Pro, and various other add-ons rather than one of the all-in-one systems available?

When you look for another system, you are limited. Some systems have developed some parts better; other systems have developed other parts better. Where we take the lead is that we are not developing anything but a multichannel module. If our customers want shipping or accounting, they have hundreds of choices on Magento Connect.

System integrators may charge $200 to $6,000 to implement M2E on Magento properly for most business, or up to $10,000 for enterprise-level customers, but you are in full control and keep your own data. Thousands of others implement it themselves using UnderstandingE. But if you go to a general multichannel provider you will have to adjust your business processes. You will have to use the shipping provider they have, and just follow whatever strategy they’ve set up.

It’s an ecosystem – it’s about choices and hundreds of providers. Don’t forget, there are as many as 200,000 Magento developers around the world. Over 150 system integrators and agencies have implemented M2E Pro for their customers. Many of them specialize in Magento with M2E Pro.

In our business, it’s very difficult to skill-up and support. That is why we’re uniquely positioned now. We are getting offers from other shopping carts, about integrating with Shopify, Bigcommerce, Volusion, Prestashop, and we don’t want to do that. There are dozens of other companies who have integrated with those carts, and we do not want to ruin our brand by going into an area where we cannot deliver exceptional value.

Here’s an example. Our integrator in Australia put the Co-op Bookshop on eBay in November with around 800,000 books. We are planning to put them on Amazon with over one million books. That is not possible with most well-known multichannel providers.

You offer free onboarding services now. What does that involve?

We have found that a lot of customers have very unique businesses. Generic IT professionals and system integrators are not very knowledgeable about marketplaces. They have a major lack of business knowledge, and cannot deliver value to our customers. So we had no choice but to start offering onboarding services using our own resources, because in the long run we save time for ourselves by getting customers set up professionally.

There are a lot of cowboys out there, and cases where customers come to us begging for help because the system integrator did “everything” but things are not working properly. When it comes to marketplaces, things can be different not only from eBay to Amazon or Rakuten, but from country to country. This is where years of experience makes a lot of difference.

We also offer data migration, for existing eBay sellers or Amazon sellers who have thousands, or tens of thousands of products – we can migrate all the data into Magento. They don’t have to go through the painful process of data entry. There are not that many software companies who will import existing marketplace listings, but with M2E you can change from another vendor and we will pick up those listings. We do not require customers to relist.

When customers come to us they see that our business strategy is completely opposite to what they expect. We try to find a way of helping customers for free. It takes a bit of time to teach customers where to look for information, and explain how to use it, but in the long run those customers will become very independent.

When we offer free onboarding we try to look at the business scenario and estimate how much work the customer will require. If it is a very complex case, we’d rather help the customer ourselves because we know they will be unlikely to find good help elsewhere. This is less about making money, but about helping the customer and saving us support time in the future.

How often do you update M2E Pro, and what are the latest enhancements?

We release nearly every month, as you can see from our Magento Connect page, because we’re a 100% development focused company. Everyone knows that our marketing and communication is not great, but when it comes to reliability and scalability of our product it’s very difficult to match us, especially given our pace.

Among the feedback we get from our customers, people ask us to slow down and not release so often – maybe once per every three months, so they don’t have to upgrade so much. But we are still going to continue doing monthly releases for one very simple reason – we support 23 eBay marketplaces, and more than 7 Amazon and Rakuten sites, making a total of over 30 different systems.

Even though the Rakuten or Amazon or eBay API model is the same from country to country, there can be huge differences and every single release has either new features or fixes or improvements to a particular geography. We cannot wait for three months to deliver a new feature for Australia or an improvement for Germany.

Starting from April 2015 we have made a lot of enhancements to our Amazon functionality. Since the eBay subsidy stopped, we’ve spent a lot of time bringing Amazon up to the same level. I would say our Amazon module is now very powerful.

From next month we are going to make our Amazon repricer public. It has already been implemented but we have not activated it for everyone, because we have so many customers and wanted to do a lot of tests before we make it 100% public. We’re going to have an eBay repricer and a lot of other interesting features coming on the market. What makes us different is that we do not copy anyone.

There are companies who copy us because M2E is open source, but we do not worry about them. Those guys can copy our past, but they cannot take ideas from our future. We have a lot of interesting features coming out on the market this year, and our customers will be pleasantly surprised. We listen to them, improve our existing solution, then make it available to thousands of other customers.

Will you be adding any new marketplaces?

We keep our marketplaces to a bare minimum, being eBay, Amazon and Rakuten. We have very good technical contact with those companies, and very often when we deliver our software we are working in cooperation with the marketplace.

If we think about adding a new marketplace, we need that marketplace to be interested in working with us. We are not going to have 20, 30, 100 marketplaces added to M2E, because we want to deliver a very good solution and we want to ensure that the quality of our work is supported by the marketplace as well.

For example, eBay are implementing some changes which we were advised of long in advance. We are changing M2E to support those changes, and eBay Italy will confirm that they’re happy that everything is working. M2E is not just about plugging one system into another, it’s about cooperation with marketplaces to deliver a cutting-edge solution to end users regardless of their size.

What support options do you provide? Is there phone support?

For our Enterprise product we have chat support and phone support as well. But phone support doesn’t help in most cases because we do not host the software ourselves. If your system isn’t working, we need your IT department to give us access to it. Then we need to find the right person from our team to connect to your system, and only after that can we start troubleshooting. We find the chat system to be much better for support, so we can get everything in place before we have a telephone conversation.

We fully support UnderstandingE and their project. They have a huge community of thousands of people using M2E, so we do not try to replicate what they are doing. When they started their project they had a conversation with us, and we said that what they were doing was absolutely fine, because by nature we want to be a community solution. Very often when customers come to us we send them to UnderstandingE and say, “They have a lot of video tutorials, they have a big community of people, just help yourself.”

The main objective is to show the customer where to find help. If a customer attempts to manage M2E themselves, they can get a lot of things done in the end. It’s not just a matter of connecting systems – it’s a matter of understanding what you need to do in order to be very, very successful selling on multiple channels.

Every customer of ours has individual requirements – we don’t know what kind of configuration they have, but we need to figure out how to help them. I don’t think there will ever be much competition to M2E, because no company would want to be in our shoes now, given the complexity of the system. When Magento issued a security update in October, we had thousands of customers updating in the space of one week… imagine the pressure to support them!

M2E is serving everyone in a very complex way. We don’t teach our customers how they should be using us. We listen to our customers and try to teach them how to configure our system so they can use it in the way that they want to.

Do a lot of people get put off by the complexity of the system?

You will be surprised by how loyal our customers are. It’s like driving – you need to take a lot of driving lessons, you need to do a lot of practice, and you need to earn your driving license. Only after that will you get the freedom and enjoyment of the journey. We’re trying to teach our new users how to drive. Then they come back to us saying, “You know what, I’m not going to go to any other solution. Other solutions have so many limitations that I will not be able to do what I’m doing with you.”

With the new pricing it actually gets a lot of new customers switching from our competition. There are companies who would not consider using us before, because they wouldn’t risk their business to a solution which they are not paying for. Now we get customers saying, “Hey, we’ve been using a competitor but we’ve been watching you all the way, and now you are charging we want to switch.”

We also have it the other way around, with customers going to our competition and saying to us, “You are too complex for me, I need something simple and this is it.” We’re absolutely fine with that. Other customers come to us saying, “Hey, your competitor is doing a special promotion just to undercut you, can you give me a discount so I stay?” We say, “No.” If a competitor is doing special pricing just to steal my customers, I will gladly let those customers leave my company. We want customers to stick with us because they value our time, and they value our product and quality of our work, not the price – the price we set is just to keep us going.

How many people work for M2E Pro, and what are their roles?

We have about 20 engineers, and those are hardcore technical people. A lot of people talk about our software as a connector, but people can only see about 10% of the system. It’s a client-server application and all the data gets pushed outside Magento into M2E, so we have a lot of highly qualified engineers working on the server application, data optimization, data processing. The amount of data our software processes per millisecond is huge! It’s not Magento connecting to the marketplaces, it is Magento connecting to our server and then our server does the data processing.

We also have support people but those people come and go very quickly. Our marketing team is non-existent. We don’t have one. If you go on Google and type “Magento eBay”, we’re number one. We get thousands of new visitors on our website every month. It’s not a problem bringing in customers, it’s a problem making sure customers succeed. That is why we have the free onboarding offer. Other companies plug in a new customer into their system, and because it’s in the cloud they can see them using it. All of that is hidden from us.

You can imagine how much it costs to run a company with 20 highly skilled IT professionals. That is another reason why we don’t waste money on marketing. I think marketing is what you do when you don’t have a good product. If you have a good product, people will talk about you anyway.

What is your culture and philosophy as a company?

Our team is quite young. The average age is about 27 years old, because the majority of IT professionals in Ukraine are very young energetic people. That is where we draw our energy from. We have our own football team and play in a small IT football league with other IT companies. This gives our company a kind of family spirit. People work for us because they enjoy the atmosphere.

We have three working schedules. Our engineers come to the office any time they like so we have people coming in the morning, in the evening, and that’s absolutely fine. We are a very unconventional company in terms of our vision and how we do our work, but we focus on quality and the end result.

We’ve had two attempts to purchase us that we declined. They offered a lot of financial opportunities but we declined both because we have a vision, and our vision is around community. We think long term. You can make money short-term, and you can make money medium-term, but long-term you can still lose. If you stick to community and if you stick to your values, long-term you will succeed.

Alex, thank you so much for talking to me about M2E Pro. It’s a fascinating and unusual company and I wish you all the best for the future.

M2E Pro can also be found in the Web Retailer directory.


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