As marketplace sellers and brick-and-mortar retailers make the leap to launching their own online stores, many have turned to a shopping cart system from Magento to power the engine. In today's column, AuctionBytes Contributing Editor Greg Holden takes a look at this popular service as part of his summer-long series on shopping carts.

On the Internet, consumers love finding things for free. They want to get the biggest bang they can for no bucks at all. Open source software is often a good option because it's developed and continually refined by a community of users and developers. Last week, I wrote about an entry-level open source shopping cart solution called ZenCart. That program provides ecommerce store owners with basic features, many of which are available out of the box.

As I have said in my books, it pays to plan for success. When you're just starting out, it often makes sense to obtain software that will enable your business to grow. Many large, high-profile businesses use an open source shopping cart package called Magento, which is developed by Varien Software. Magento obviously has all the features businesses need to become highly successful. It's used by companies such as Homedics, British handmade clothier Gieves & Hawkes, and the publisher of city guides TimeOut, to name just a few of 60,000 merchants around the world who actively use the product. According to Varien's CEO Roy Rubin, those merchants have generated $25 billion in sales with Magento.

Magento comes in a freely downloadable Community version, which is probably the package small business owners will choose. Two other versions are available with high price tags: a Professional edition starting at $2,995 per year, and a top-of-the-line Enterprise edition which starts at $12,990 per year. But reviews of Magento I've found online have one frequent complaint, which sounds like a movie title: "It's complicated."

Rubin has a much different view of his software. He says it is a perfect tool for small business owners, who don't necessarily need to work directly with code unless they want to customize their storefronts.

"Magento was built with the small business in mind," says the 34-year-old Rubin, just returning from a tour of five Magento community events in Europe. "In most cases, the community edition is an adequate solution for those just starting out and willing to experiment, while a paid offering is available for merchants that would like a stronger, more robust offering and support."

Installation, he says, is quick and easy as long as the merchant's Web host has provided the right environment to support Magento. "As far as technical knowledge, it really depends on what you want to do. As I've said earlier, there are no limits or constraints with Magento - you can do anything and everything you imagine. Getting into the code can be tricky for those with no experience that wish to heavily customize. However, in most cases, our small business customers don't need to know any technologies and can simply get started with our product in no time."

Magento grew out of Rubin's previous work with Varien, a company he founded 2001 as an ecommerce consultancy. "In early 2007, we reached a tipping point in which we realized that the existing tools in the market (open source ecommerce software) simply did not match with our clients' expectations."

Rubin, a former engineer, worked directly with customers and online retailers early on in Varien's history. In particular, he says, other products couldn't scale and adapt to the needs of growing online merchants and provide all the rich features they wanted. Magento was launched in beta version in 2007 and the 1.0 release came out in March 2008. The software has been downloaded more than 2 million times since then. Based in Los Angeles, Varien has locations around the world and nearly 150 employees.

Cash Shurley, IT Director with the San Francisco-based TCHO chocolate company, says TCHO chose Magento for its website platform because, "When we chose Magento, it was cutting-edge, and it continues to deliver highly-valuable features and flexibility, with categories and attributes." He likes the software's flexible promotions engine, and the fact it provides shoppers with a streamlined, one-page checkout system. "One-page checkout processes have been shown to reduce cart-abandonment rates." Not only that, but it allows shoppers to ship to multiple locations - in the case of TCHO, this promotes more sales, as purchasers can buy gifts and send them to many recipients at once.

But the term "shopping cart" doesn't really describe what Magento does. As Shurley describes the software: "It is a full-featured content management system (CMS) as well as Web store and shopping cart."

"We've always found the needs of online retailers to be much more than just a shopping cart," says Rubin. "Our philosophy in building Magento was that our platform is a single piece of a much larger puzzle. We didn't attempt to solve everything, but wanted to create a platform that was strong enough to run an entire business, yet allowed flexibility and opportunity to easily integrate into 3rd party systems."

The ability for a business to grow and develop is the feature that is consistently emphasized when Rubin and others describe Magento. The product itself is highly scalable, and more than 2500 extensions are available in Magento Connect, the product marketplace.

With all these features, is Magento the right choice for mom-and-pop business owners who are only selling a limited number of products? That's up to you to decide; you can install the program for free and try it out. My sense is that Magento is best for a small business that plans to become a very big business, and that, if you or your employees are familiar with programming languages such as HTML, PHP, and XML, you'll have an easier time with the product.

There are plenty of entrepreneurs who fall into this description. Rubin says the economic downturn hasn't been felt at his company. "In fact, we have only seen continued growth," he comments. Along with this success, what drives him is the Magento community and what he describes as its "ecosystem." He concludes: "The level of passion, energy and commitment to Magento is inspiring."

Find more information on the Magento website.

For a look at Greg's ongoing shopping-cart series, see the following links:

Four Tips for Selecting an Ecommerce Shopping Cart (June 6, 2010) - Link to article

ZenCart Helps You Build Your Own Store Online (June 20, 2010) - Link to article