The evolution of Miva Merchant continues. The shopping cart was launched in 1995 as “HTML Script.” It was then renamed Miva and quickly gained market share in the late 1990s, largely by selling licensed copies to hosting companies.
The company suffered from the first dot-com bust and ultimately sold to FindWhat.com, a publicly traded pay-per-click ad network, in 2004. FindWhat.com subsequently renamed itself Miva and then divested the shopping cart portion of its business to private investors, who named the newly acquired business “Miva Merchant.” This was in 2007.
Those private investors include Russ Carroll, a seasoned technology entrepreneur who is the company’s majority owner, and Rick Wilson, now the firm’s executive vice president. Wilson worked for Miva before it was sold to FindWhat.com, and he also worked for Carroll at Providence Systems, a training company.
Carroll and Wilson have worked to restore Miva Merchant’s standing among the developer community and improve the core product for ecommerce merchants. They’ve also refined the company’s business model, away from inexpensive, one-time-license sales into recurring revenue.
The first step occurred last spring when Miva Merchant launched its “distributed SaaS” model. Hosting companies that had previously purchased Miva Merchant licenses and were hosting the ecommerce sites from those licenses were required to pay recurring monthly payments to Miva Merchant for ongoing support and for upgrades to the core shopping cart product. According to Wilson, virtually all its participating hosts agreed to do this.
Miva Merchant is now hosting ecommerce sites itself. The company calls this new, hosted platform “Miva Merchant SaaS,” with monthly prices ranging from $59.95 to $129.95.
Rick Wilson and I recently discussed it all.
Kerry Murdock: Tell us about this new platform.
Rick Wilson: It’s the same product that our customers are used to getting, and it’s no different than what someone would get from any other high-quality hosts. But we found that the market has changed, and many merchants want to go to a single place to get service and support for their [shopping cart] products.
A lot of these merchants would explore our product and then leave. They didn’t want a host because they didn’t want a third party involved. They didn’t want three moving parts: themselves, a software provider, and a host. We have started offering a hosted version to serve that market.
Murdock: Are you abandoning the third-party hosts?
Wilson: No. We’re not abandoning our hosting partners at all. People who have relationships with hosts are often resellers — web designers and developers. That ecosystem works perfectly. We want to continue supporting that indefinitely.
The market has changed, though, since we entered this business years ago. Back then the idea of software as a service was conceptual. It didn’t exist. Nowadays, small merchants are coming online, and they don’t start with a web developer. They look at our competition, and virtually all offer a hosted version. That resonated with us.
If I were a merchant and I didn’t have a reason to pick a host, I’d be more inclined to go to one place. We felt that the market was evolving, and we needed to respond and serve our customers how they wanted.
Murdock: Miva Merchant launched “distributed SaaS” earlier this year. How has that gone?
Wilson: All things considered, very well. We effectively passed on a price increase to our hosting partners, so anytime you do that, there will be some resistance. However, the response to it was generally along the lines of, “No one likes a price increase, but we understand why you’re doing it and how it makes you a more stable and healthy company, so we support it.” Most of our hosting partners came over to the distributed SAAS solution, well over 90 percent.
Murdock: Will the distributed SAAS product stay in place?
Wilson: Yes. It’s definitely helped us. It helped ensure our profitability this year.
Murdock: Any concern that hosting companies will find another ecommerce provider to offer their customers?
Wilson: One of the things that helped solidify our decision was my conversation earlier this year with Roy Rubin, the CEO of Magento, the open-source shopping cart. Roy told me that Magento is preparing to launch its hosted version. I thought, “Wow. This is it. This is the final company we looked at as a competitor getting into the hosted space. We’ll be the last ones to this party.”
Murdock: Can you tell us your revenue this year?
Wilson: Sure. Russ Carroll had said in our last interview when we announced distributed SAAS that we would come in between $3 and $5 million. That range still holds true.
Murdock: What’s the new hosted version called, and how much does it cost?
Wilson: Internally, we call it Miva Merchant SaaS. It’s just Miva Merchant on our website. We are offering the same product that our hosts offer, so the benefit is convenience and having one source. A lot of people like to have only one place to call, one source of help, and one source of support.
The product is identical to what you would get from our hosting partners. Now, granted, we’re following the absolute best practices, and so this would be like any one of our web hosting providers, but if you come to our website, it’s just called Miva Merchant. It comes in three versions, with monthly prices of $59.95, $89.95, and $129.95.
Murdock: What’s the difference?
Wilson: The product is very similar on all levels. The difference is in data transfer, disk storage, and email boxes. If you have dozens of employees and email accounts at the high-end level, you are probably running on an exchange server anyway.
Murdock: What percentage of businesses using Miva Merchant would fit into that $59.95 version?
Wilson: About half of our active customer base fits on hosts that offer an equivalent service to what we offer. We have about 10 premier hosting partners. They do an excellent job, and that’s the model we looked at.
Murdock: Is the new Miva Merchant SaaS PA-DSS certified?
Wilson: It and our distributed SaaS product will be PA-DSS certified very soon.
Murdock: If a merchant asks you to recommend Miva Merchant on a distributed SaaS (with a third-party host) or host it directly with Miva Merchant, what will you tell her?
Wilson: It’s not going to make much difference unless she uses a low-quality host. If a merchant comes to me using our premier hosting partners and asks, “I’m at ABC host over here, and we know they’re one of the best Miva hosts. Should I switch to you?” The answer is no. Stay where you are.
If merchants are on a low-cost or low-caliber host, they should move to us or one of our premier hosting partners. But they must get to a high-quality host if they take their businesses seriously.
Murdock: Do you still sell a retail, licensed version of your cart?
Wilson: Yes. It hasn’t changed, and there’s never been many of those out there. It costs $995. That also switched to a recurring model, as well. So, it’s $995, including one year of updates, and at the end of that year, it’s $120 a year to maintain updates.
Murdock: How many companies run their stores on Miva Merchant carts?
Wilson: It’s just north of 50,000. That’s any company with a Miva admin panel.
Murdock: What’s your long-term goal for Miva Merchant?
Wilson: We want to provide the platform and the technology for small and medium-sized businesses to operate online. Now, that can expand in many ways; our next major update is coming at the end of this year or the beginning of 2010. This version will be PA-DSS certified. We’ve extended that to include a lot of order processing and back-end functionality.
We have now started extending the paradigm of what our product is designed to do, and ultimately, we want our merchants to offer their customers a best-in-breed, world-class shopping experience. There shouldn’t be a material difference between shopping at Amazon and one of our customers’ stores. The customer service, the speed of the site, the elegance of the site, all of that should be very similar. We need to provide the tools that allow merchants to run that business.
If you look at where we’re evolving, it comes to providing all the tools necessary for small and medium-sized businesses to keep growing. We see some amazing things. A pre-Internet multimillion-dollar-a-year business would have 20 or 30 employees, a warehouse, and head office space.
Now, it’s common for some of our bigger and more successful merchants who have broken the million-dollar-per-year barrier to have the owner, spouse, and one employee. It’s a small organization running very lean, and we want to provide the tools to let people be efficient, lean, and successful.