549 points by jonbaer 12 days ago
> Shopify is giving merchants an opportunity to differentiate themselves while bearing no risk if they fail.
In addition to this being a great position for Shopify, this is an amazing thing for merchants compared to Amazon's offering; it's the critical difference between "We'll sell your stuff" and "We'll empower you to easily sell your stuff" that leaves power and agency in the hands of individual companies.
Semi-related: For a really insightful conversation about Shopify, personal interactions, and running a good company, I highly recommended The Knowledge Project's interview with the company's CEO, Tobi Lütke: https://fs.blog/tobi-lutke/
The Knowledge Project podcast is awesome. Here are some snippets that I found very useful.
On starting his company in a secondary market:
I do think that there is an almost complete difference between how you build a company in a primary talent market and sort of secondary talent markets. For instance, one of the biggest differences in secondary places is, if I hired someone, the chance that we are going to still work together in a decade from now is super high.
Hiring for future potential
It means that it’s a much better idea to hire for future potential rather than for current skill. Once you do that, what you realize is, a dollar invested into helping to train people or even subtle things like making sure that next to any junior programmer, like for every five junior programmers in a team, you have one person who can become their mentor—these basic ideas all start having way more dividends
On building a hiring process for a learning organisation
..we have a hiring process that really, really finds people of high future potential. And then, we try to help them reach this potential 10, 20 years earlier in their career than they ever thought was possible, through coaching, through book clubs, through anything.
Fixed vs. Growth Mindsets
Everything in Shopify is built around this idea that if someone shows up with a fixed mindset, we convert them to a growth mindset quickly. And then once we have a growth mindset, we fill people with context (i.e. explain what their role is and what they are expected to do).
On the role of processes with an organisation
There are three kinds of process. There’s a kind of process that makes things that were previously impossible to do, possible. That’s good. Then there’s a kind of process that makes something that was previously possible significantly simpler, which is also good. However, 99.9% of all process that exists in corporate America is the third category, which is actually just telling people to behave slightly different from what common sense tells them to do.
So we have lots and lots and lots of examples where we just avoided having to create process by just changing the environment in which we all spend our time in.
> we have a hiring process that really, really finds people of high future potential
Did he elaborate on the details of this process?
I know it definitely sounds ageist. Is a 45 year old fresh-out-of-university-to-start-new-CS-career going to be considered and hired by Shopify on a regular basis (i.e. not just hiring one and being like "see, we're not ageist")?
That person is going to have a hard time anywhere. All the drawbacks of age and none of the professional benefits.
Just came here to say thanks, didn’t know of The Knowledge Project, and this episode was great. Cheers
What about traffic though? Amazon gives you traffic, user reviews, used confidence.
Sure, you have to work to target your own audience and build the trust with them yourself, but it's a tradeoff that benefits you in the long run. Your not beholden to the whims "the platform" as many media companies learned the hard way by putting so much of their focus on Facebooks platform in the past decade.
I think to some extent Amazon's commoditization of 3rd party vendors has hurt customer confidence, though surely not enough to make up for the increase in revenue.
Amazon has a HUGE fake products problem.
The brand is damaged and getting worse. People already avoid Az and it will only get worse.
Shopify is just the next closed-source iteration of WordPress and Magento. WordPress has one of the largest platforms and they've taken over (and open-sourced) blogging, content management, learning management systems, and ecommerce. They and Magento are better examples of a platform than Shopify.
In the long-term, "platforms" like Shopify lose because they don't have nearly enough developers. They have ~3000 "apps" listed in their app store: https://apps.shopify.com/browse/all?pricing=all&requirements...
WooCommerce has 285 plugins, and WordPress has 54,000+ plugins. Magento has ~5000 plugins.
It would be cool if Stratechery took a look at free/open source on the platform/aggregator spectrum.
I think a big difference is Shopify's core product has a bunch of really useful things to help sell things. You don't need plugins or third party apps written by other developers to get a superb selling experience (note: I don't work at Shopify but I used the platform a few years ago and even wrote some custom apps / templates for it).
The benefit is the core product is insanely battle hardened and you can depend on it having a high degree of reliability (both from an up-time and code quality level).
Where as with WP, are you really going to cobble together a bunch of plugins written by anyone and then hope everything works? Maybe, but you'll also have to host it yourself too and now suddenly you're on the hook for site reliability -- unless you use a closed source WP hosting platform and now you're in the same boat as Shopify except it's worse because you have no idea what you're getting when it comes to reliability.
I think Shopify is a good example of how a niched down product can be successful. If you want to sell things, you want a platform designed to sell things. Not a generic CMS where you need to assemble a custom solution. This is especially true if you're not technical.
You didn't mention Magneto, Prestashop ir WooCommerce in your comment.
Shopify's core product is much better than Magneto and WooCommerce. (I don't have experience with Prestashop.)
Example: Shopify sends abandoned cart emails by default. With Magento you can't even see what items are in carts in the core product.
I used all of them and it’s really no comparison. Shopify is leagues ahead of them - for non-tech-savvy users and developers alike in my opinion.
My wife had an Etsy store before moving to Shopify. I'm a developer, and we still moved to Shopify. We went with Shopify because out of the box, it had everything you needed, even things you don't think you need. ecommerce is more than just accepting payments and a shopping cart. Shopify is, in effect, a curated experience. Other options required a lot of effort to setup to run at least as easily as Shopify was out of the box.
And here is the thing you forget: no one with a store is interested in dealing with setting up and managing a web store. They are busy with their business. The web store is the side effect of that. SEO, taxes, shipping management, etc? All that needs to come out of the box, or a no brainer.
54,000 plugins doesn't help with that. With Shopify, we only installed a few, and they did exactly what we wanted them to.
So, if you are going to compare open-source options with Shopify, you need to actually compare it with a turn-key solution.
i.e. Where do I create a woocommerce store that is setup correctly from the beginning, which includes updates, SEO, shipping, taxes, payouts, billing, and everything else Shopify provides out the gate.
Because I'm busy running a business, and that business isn't running a web site.
Yes, and even if want to get your hands dirty or need custom features they offer extensive developer tools and great documentation - we use their API a lot and it’s a joy to work with.
Here's my hot take (with 2 years of running a #1 trending shopify app + multiple attempt in starting a store)
Shopify DOES NOT help you sell. Period.
Amazon will win in the long run because at the end of the day it's all about if the "platform" can move merchandize or not. Amazon captures top of the funnel all the way down to personalized targeting.
Shopify will never do that. they are just the tool to help you figure out all that yourself. Outsiders / beginners looking in would say Shopify is amazing because the ecosystem and how many "tools" there are to help you sell. but it's all load of horsesh*t. The merchant ultimately is the one responsible to run the ad campaigns, find the customers, run promotional pricing on BFCM.
I echo your sentiment as well (also from a background of having ran a Shopify app with thousands of installs).
There's a lot of misconception of how much hard work it is amongst beginner Shopify merchants in order to generate sufficient traffic. Amazon, at the very least, provides an audience -- which solves a very major problem for any business (to get traffic).
There's a lot of success stories running on Shopify, but these companies would have pretty done well creating their own custom solution.
At the end of the day, it's a piece of software (ie. shovel) to sell to people who want to try and make money online (ie. the gold rush).
Why not do both? Amazon gets you your first orders. You ship with a note saying visit mystore.com for the full range, and sign up for discounts at mystore.com/discounts.
This would get you quickly banned on Amazon.
Really. I’m not a seller so I didn’t know. But that’s almost serfdom.
How is not being able to freeload off a platform for free advertising even close to serfdom?
You set up a successful business on Amazon having done a lot of marketing yourself and now you are forced to use them to sell everything. You are now working for Amazon, or lose your business.
So it's the difference between setting up a store (Shopify) and selling to a store (Amazon)
That's a great take that others miss. Marketing is 100X harder than setting up a platform.
Devil's advocate: go make a listing on Amazon for a product that already has other competitors selling. How are you going to "market" yours to the top?
The answer is to pay even more money to Amazon to place yourself as a "sponsored" listing that goes right to the top of search results. Partly why Amazon is rapidly becoming a dumpster fire of an e-shop. It looks more like the search results page on Google these days.
Exactly why having a simple to set up platform is valuable. It allows you to focus on the things that create the product or visibility of the product.
And this is the difference between building a brand and trying your fate blindly to a platform's whims. One of these is impossibly hard, but if you win, you control your destiny. The other means your business dies when someone over there decides the "pivot to video" is over, as we have seen repeatedly with Facebook. I know I wouldn't want to be in the latter boat.
The problem for sellers on Amazon is that buyers there have little loyalty, and it is easy for people to come in and cut their customers out from under them with lower-priced clone products. Shopify at least gives you the opportunity to create some kind of customer loyalty to the merchant brand, and with the right kind of marketing you can get repeat business depending on what you sell.
I agree that most small companies aren't up to the challenge of managing an online business. The 3PL integration will help a little bit, and I imagine that Shopify will continue to chip away at the problem by integrating other services.
Is there a good example of someone being successful doing both?
Seems like if Shopify is a way to create your own venue, and Amazon is a venue in-and-of itself, there might be a case for doing both.
Amazon while solving a lot of problems comes with massive risks for a business, Amazon can and will send you out of business on a whim. You will be trying to convince lowly paid people in India going down a checklist that you should be allowed back on the platform.
At varying degrees of "success", I know a couple sellers who make a great living by combining multiple platforms; Selling on Amazon, eBay, Etsy and their own custom site (on Shopify and other customizable platforms).
I have a theory Shopify does sell - however only from their own stores and with access to the data goldmine deciding what to sell, who to target in advertising, etc.
I don't think "number of plugins" is a good comparison metric here.
The Shopify app store is regulated + tested by Shopify before getting the approval to go live.
WordPress plugins are the wild west, many of them incompatible with each other.
Wait until you see what Magento plugins are like
Regulated meaning a tightly controlled and closed "market"?
Number of plugins isn't the greatest metric but it's a good leading indicator. It's kinda hard to estimate how many merchants and customers and volume of transactions have been processed when they aren't being tracked by a central entity ;)
What was meant was moderation. Shopify works with developers to ensure the plugin's code will be compatible/quality more similar to how Apple does moderation.
If only Shopify was some sort of publicly traded company that publicly reported these numbers. If only...
It is publicly traded on the NYSE. Ticker symbol: SHOP.
The OP was being sarcastic.
The WordPress plugin ecosystem is so fragmented, and most of the 54,000+ plugins are really low quality and good luck getting support for them when something breaks.
Magento/Magento2 is dying, if not dead. I work in the e-commerce space and have seen more businesses move off Magento into Shopify, or BigCommerce.
Shopify's app store has only ~3000 apps for a reason - Most of the functionality of a core shopping / merchant experience is already built into Shopify so you don't need to go through 50,000 apps to do what you need to do to sell. The apps on the Shopify app store also go through a review process that ensures the quality of the apps.
To add to this, Shopify is the equivalent of Medium for blogging vs WordPress.
Sure, it's easy to get started, but once you're locked into their platform and you need a more custom solution, it's going to be hard to move out of it.
That analogy only works partially. Medium has a more attractive front-end than Wordpress, as does Shopify vs. WordPress/WooCommerce.
But people post on Medium primarily for visibility. Same with people who sell via Amazon; that's where the people are. In that respect, Shopify is more like Wordpress; as the article says, you can't buy anything on shopify.com, just like you can't find any content to read on Wordpress.com
It's funny as a previous dev that worked with Magento, they said that Shopify did not pose any threat to their business. But I think it's getting clear now that Magneto/Adobe's positioning in the market (enterprise/large-ish medium businesses) is still a good niche but seems like their losing a lot of the SMB customers that made the Magento community what it was.
WordPress (Automattic) acquired WooCommerce a few years ago.
As someone who was running tech at an e-commerce/hardware startup with $xxM+ in annual online sales, and ran on top of Magento 2, it is an unmitigated disaster that will sink any business that doesn't have endless money to throw at it.
We had great Magento developers working on it and could barely keep it stable under even moderate load. To scale up, if you're a heavily trafficked store, you need to pay a six figure annual license fee, or you can't shard/load balance your database. Without the Enterprise plan, your site can't easily do zero-downtime deploys, and deploys take about 30 minutes of full outages to get out the door. Editing anything took about 36 clicks, which carried the risk of corrupting a language you weren't editing. Deploying a language pack requires an outage. Deploying new CSS requires an outage. There were ways around this, which we used, but the extensions and ecosystem are so poor that I wouldn't encourage anyone to use them—we ran into one instance where installing an extension would bring the site to it's knees, at random, because the developer had hand-rolled an image-resizer for some reason to build thumbnails.
I'm an infrastructure engineer/developer originally, and I figure, how bad can it be? We'll ignore the snake oil and scale up with good developers and cloud hosting, along with best practices.
I can list how incredibly poorly built Magento 2 is for hours, but I've never seen anything like it. We made it work, but it cost us hundreds of thousands of dollars to get it to "doesn't break" level of stability.
It's outrageous particularly because the entire ecosystem is designed to shunt you toward expensive licensing that requires NDAs to be signed, certified developers to be used, and ever-escalatingly ridiculous hosting fees (at one point, I was quoted a $1500/month virtual machine to properly handle our environment).
Meanwhile, when we wanted to do a flash sale, Magento was so complicated and slow to deal with, we made the call to literally create a second store, using Shopify, to run our limited time sale. Not only did it take maybe 1-2 days to get it set up and working, we ran 1M in sales through it within the first 8 hours of it being online, without any outages, stability issues or anything else, without ever needing to do a payment gateway's time consuming PCI compliance security audit, either. We got paid out within a few days of even first signing up.
I think people underestimate, often, how expensive open source can be, and one red flag, in the case of Magento should be that anyone that isn't a "Magento developer" is terrified of touching it. (I have stories about how hard it is to even develop on your own machine, and how literally all roads lead to their Enterprise plan, with no way out, but that's for another day)
How many plugins does a site need?
It depends on the complexity of your business, although every Shopify site is going to need a handful of plugins to do the basics. Things like the email signup modal aren't base features, but require a plugin.
If you've got even a moderately complex business, plugins add up pretty quickly, and each Shopify app you add to your site slows down your pageload. When Shopify pitches you, they show you some really great looking sites, but after you've bought in, you find out that they're not only operating with 35 apps (at an additional cost of thousands a month), that some of them are hacky custom workarounds, and even though status.shopify.com is all green lights, the servers these third party apps are running on aren't on the same infrastructure, and you're dealing with dozens of points of failure on black Friday...
But thousands of shops are on the Shopify platform, and the "Just Grow Bro" Sales Lead told me they do B2B and international, so how bad could it be?
Here are some excerpts from my recent conversation with Shopify support:
Q: noticed that sockfancy.com is using shopify? is there a way to set things up like they do: user checks off the options they want and then they go directly to a single-page checkout for their subscription?
A: A subscription is a recurring order. For recurring orders they are using Recurring Orders & Subscription Box App by Bold, and Recurring Orders Enterprise, which is only available to Shopify Plus merchants.
Q: how about the single page checkout?
A: The single page checkout is also a feature of Shopify Plus plan, which starts at $2000 per month. They are also using cashier by Bold.
Q: It looks like those Bold plugins add commission costs of about 3% or more per sale?
A: I don't know the details of that, but again they are available only for Shopify Plus.
Yes it's true that you can set up a generic site cheaply, but for a site that actually works well and has single page checkout, etc. you get into some very big bucks, and also some very large sales commissions.
Another point about hosted platforms: if they run slowly, there's not that much you can do to fix it. Here's a GTMetrix report for the aforementioned site:
Fully Loaded Time - 7.8s
Not sure anyone would think this is an acceptable amount of time to wait for a page to load.
Shopify as a platform isn't that slow. Much of what caused the performance issue on their site is due to scripts and apps that they install that slow down the storefront and don't adhere to best practices when it comes to page speed and loading assets/JS.
Taking a quick glance, it looks like Privy and Zendesk/Zopim are the main culprits. That can be easily fixed - just don't use those apps or find alternatives that don't slow down your site.
It's not like you could also do anything about slow page loads if selling via amazon or wallmart.
Yes, but Amazon brings traffic and a customer base to the picture. Shopify doesn't.
Shopify is competing with any other shopping cart software, and for companies concerned with performance there may be a case for hosting your own.
>Shopify is competing with any other shopping cart software
How many of them have better performance? Might just be a "all of you have to do is be faster than the slowest."
It seems like it's a stone soup model.
Actually, I would look into their Storefront API. You can build any application or customization that does anything you want and calls back to Shopify for product data. You can even create a checkout and link directly to it.
Rather than downvoting my information-sharing, please post something in response.
It seems to me like Aggregators vs Platforms is related to Products as Commodities vs Products as Brands.
Aggregators win when products are anonymous commodities. Brands win when products are beloved.
It seems like the trend (for many reasons: over-marketing, dis-satisfaction, dis-trust, a race toward the barely-legal) is toward products as brands: brands which are authentic and relational and participants themselves in the experience (that "get it").
I think this trend will prove to be great for platforms, and bad for aggregators. https://medium.com/@thecraigmartin/the-greatest-threat-to-re...
I predict that Shopify will eventually create an Amazon-like system where products from its merchants can be listed in a unified e-commerce frontend site all together.
Not sure if I will be correct about this but I might as well try for a third correct prediction about Shopify:
* Fulfilled by Shopify (https://news.ycombinator.com/item?id=18524131)
* Shopify POS (https://news.ycombinator.com/item?id=6289827).
I don't think this makes sense to do. Shopify is great at developing software to help merchants sell online. They have successfully built a relationship with the merchant side of the market...but what is there advantage on the creating a business on the retail customer side? At the moment, Shopify only services the merchants. This being said, it is still possible to build a business on customer side, but the question is...would it make sense?
I'd say it wouldn't make sense to do this. Shopify has no relationship with the retail customer. To build it, they'd have to build traffic from scratch. They'd have to not only build a unique customer brand, but also have to figure out a way to drive traffic, which would likely be through aggressive marketing (Facebook / Google ads), which wouldn't be economical. Secondly, what would Shopify build a brand around for customers?
Amazon's brand is built on the promise of not only providing the cheapest prices, but also the convenience of 2 day shipping (achievable only through scale), amazing customer service (and lenient refunds, again achievable only through scale). This being said, what would Shopify's "brand" promise be?
Curation of their favorite products? Who says that Shopify is qualified to curate?
All of these factors make it hard for me to believe that they'd enter and create a serious business from a unified e-commerce site that'd compete with Amazon.
The issue is that Shopify will run out of growth in their current sector. Thus they need to seek out some way to grow their market by redefining it to be bigger than it currently.
One large issue that I see is that Amazon wins 40%+ of ecommerce because shoppers searches start on Amazon. Shopify stores lose by default 40% of the time because of that.
Shopify with its huge number of merchants and pre-populated product listings and its centralized cloud-hosted platform is uniquely positioned to compete here in a way that Magento and WooCommerce can't with their distributed install base.
Shopify has to have an angle that is unique to them for sure. I am not sure what that is in terms of marketing. But they have generally done well in marketing, so I trust they will find an angle.
I think the centralized store will be an adjunct to the main offering, thus it will be an option, but because it leads to more sales opportunities, because it helps to solve the search issue, most will opt-in.
I think that they can also somehow tie in the existing stores, of which there are 700,000 into solving the need to introduce people to the centralized search. Maybe if these stores act as a funnel to Shopify's central storefront, they will get click through advertising revenue. Thus the centralization is in effect another revenue stream for stores that refer traffic to the central store. E.g. "If you do not get a sale yourself, at least get the referral revenue on the eventual sale."
I wouldn't be surprised as well (another prediction) that Shopify wants to further own the customer relationship between their merchants and their merchant's customers so that Shopify can market on Shopify's behalf to these customers. I see suggestions of this from the breakdown of the Shopify-Mailchimp relationship. Shopify is working to maintain control of its relationships with merchant's customers.
Fun fact: The startup Storenvy  tried that model, and I'm not sure how well they are doing these days. Each store on their platform goes into a unified site, but then they also have unique url's websites for each of the brands on the platform.
This is basically the story of wayfair too
Interesting. Do you have a timeline for your prediction?
It would likely happen by May 2021. Thus within 2 years?
If anyone is interested in a 'Shopify for SaaS' I am in private beta with one, my platform is an open source app store for web applications with developer registration and payouts through Stripe Connect. Developers can code single page apps on the website or import their servers by URL. Users can install the creations for personal or organization use, imported or freely subscribed or paid subscriptions.
My email is in my profile if anyone is interested in participating in my beta.
Example of a web app on my platform -
Case study for how that app, hastebin, was ported -
It's easy to think platforms are difficult to build. With some of the "platform infrastructure" mentioned, it's very possible to assemble a large majority of a new platform out of large chunks rather than building from scratch. One of the infrastructure components of Shopify missed in the article is Stripe. Stripe makes it possible for them to scale to serve clients in many countries and offer an e-commerce capability. Then there is AWS. I think the article misses some of the depth of platform building capabilities that are out there and available for use.
The main differentiator between Amazon and everyone else continues to be Prime. Having people paying $120/year to come back and shop on their site is an advantage that nobody can compete with. Shopify could try and compete by creating a similar membership service, and perhaps they will, but at this point I'm skeptical it would gain much traction. The main reason people use Prime is to buy commodity goods with fast free shipping. In this case I'm defining commodity goods as those where the supplier isn't that important and the alternative is driving to a local store and buying the same thing.
Shopify is almost at the other extreme: the sites that sell goods on its platform must differentiate themselves with niche offerings and consequently, I'd bet that the average Shopify customer makes purchases a lot less frequently than the average Amazon customer. People shop on those sites because the local stores don't have what they are looking for.
Another reason I'm a bit skeptical about the "Shopify is a threat to Amazon" narrative is that at a certain scale it seems that stores would leave Shopify and just manage their own websites and inventory. So Shopify is sort of a business incubator that is extremely valuable when a business' scale is limited. But the few that become huge hits would likely leave to save transaction costs, so Shopify would lose that business.
Totally agree with the Wal-Mart analysis though. They seem to be all over the place. I sometimes wonder why Wal-Mart doesn't at least try to start a subscription service. They would definitely have to undercut Amazon on price and eat losses for a while, but I don't understand the idea of advertising a no-subscription required model when that model clearly works so well for so many other businesses. The most obvious issue is that they are at a huge disadvantage in distribution center build-out, but why couldn't they start regionally in a couple of densely-populated areas and expand from there? Price the service aggressively and maybe give members discounts on groceries or other in-store products, an area where Wal-Mart has a massive advantage over Amazon.
As Amazon gobbles up more product categories, there may be less viable categories that potential e-commerce startups might venture into on their own.
This could mean over time, more Shopify merchants would be selling overlapping product categories (the ones Amazon has not yet gobbled up yet).
Which would mean that as a Shopify merchant, you would competing with other Shopify merchants (not Amazon).
How do you differentiate, when the Shopify platform makes the same set of selling advantages available to everyone?
You leave Shopify ...
"when the Shopify platform makes the same set of selling advantages available to everyone?"
Shopify doesn't make advantages like branding, brand awareness, marketing, market research, etc available. It simply makes setting up an online store more convenient for people do. Convenience != competitive advantage. You can extend this argument to cloud platforms. AWS, and Azure make setting up and scaling a SaaS easier, but it doesn't give you any secret sauce that you need to succeed, like the ability to know what your customer want.
Isn't the point of the article that the Shopify Fulfillment Network will be available to all merchants (that pay for it)?
Most of the Shopify plugins exist to give a store owner an advantage in sales, conversion or marketing. Sure execution counts, external branding counts, but Shopify is a closed platform. You use their plugins and approved apps. And most store owners rely on these plugins to some degree, to help them build brand awareness etc.
Shopify levels the playing field which is great. But if everyone selling Bananas is on the same field, using the same plugins, switching fields could be a great way to differentiate and possibly optimize beyond what Shopify can help you with.
I’d just like to point out that Shopify isn’t a closed platform. Shopify has the concept of a private app that is not in the app store and not approved by Shopify. So a store can either build/hire an agency to build their own unapproved app using a wide variety and growing set of shopify apis. I’ve made a lot of money doing exactly that.
There also are a number of apps who choose not to be in the app store and not give up 20% of their revenue and instead market on their own.
Just a personal anecdote: I've been using Amazon less and less. Most of the goods I buy from them are things that I would otherwise get from a supermarket. Bulk goods mostly, and almost entirely things I'd otherwise get at my local supermarket or Walgreens.
My other purchases are from shopify sites. I trust that what I'm buying is what is advertised far more than I do with Amazon. The influx of crummy knock-off products, poorly made junk, and a lack of quality around product listings on Amazon has completely driven me away from them for things like clothing, shoes, fitness products (equipment, supplements), and anything else that I wouldn't see myself purchasing regularly or that I require a high standard of quality for.
I've been using Amazon more and more, due to bad experiences using smaller sites (not sure how secure they are, my cc got swiped on one of them). And shipping with Amazon is much faster.
But there's definitely some gems out there!
If you're buying from Shopify powered sites (which is not always transparent) or platforms like Etsy, the sellers never get your credit card number.
I think the ideal use case for Shopify is if you are an existing physical store (i.e. a popular restaurant or tourist attraction) and want to sell branded merchandise (i.e. T-shirts or keychains for Harry's Hotdog Shop) or an existing organization with existing awareness (popular open source software) and want to dabble in merchandising (i.e. sell some branded T-shirts and other schwag).
This assumes a trend toward product commoditization. However, I believe the opposite trend is actually taking place: toward product brands. https://medium.com/@thecraigmartin/the-greatest-threat-to-re...
Some products will always remain predominantly in the category of a commodity. And probably all products will have a commodity category. But I think overall the trend is toward beloved brands for more and more things which were once commodities, like mattresses or reading glasses. And when Brands are sought, retailers/aggregators are just more expensive middlemen.
My beloved brands keep getting eaten up by big brand knock offs like Amazon Basics, or, keep getting bought out by the big brands.
I would love to see this happen with mattresses actually. Buying a mattress is currently ridiculous. Why do I need a guy in a suit showing me around like I'm buying a car?! What's the difference between these mattress brands that I have never heard of. I'm not loyal, because it's a one time purchase every ten years. The brand I purchased last will probably no longer the exist next time.
My latest eye glasses were purchased at the grocery store optical centre, not a mom and pop shop or specialized brand. Much cheaper that way, and good quality. I wouldn't be surprised to see Amazon take over this category as well. Hasn't Walmart already?
You can buy bed bug supplies on Amazon. Yet, https://www.domyown.com/ probably does $10m-$50m/yr revenue.
Right, but that site is not using Shopify (which was my point). To differentiate and get a competitive advantage - build a better bed bug website, better than the thousands probably already on Shopify, you may need to leave Shopify.
Hmm... what shopping cart does DoMyOwn use? The point I was trying to make is: you can bring in $10m/yr revenue with any shopping cart software. It just depends on marketing/SEO/traffic/conversion...
I just want to plug the Stratechery newsletter, which whether you agree with the author's conclusions or not is consistently excellent, and a spur to thinking about our industry,
I just took a look at it thanks to this comment and wow, that is some terrific content. Thanks for sharing!
Tobi is like a younger Jeff Bezos :) I binge listened quite a few his podcast interviews https://lnns.co/aECRtZ2fNn9
He's also much generous, and technically adept (he created a bunch of popular early Ruby gems).
It's an interesting article, but the most interesting part to me was the Bill Gates Line article the author also wrote. 
The distinction between a platform and an aggregator was not one that I ever considered. I'm convinced by this article that it's a useful one.
Does anyone know why it is that Shopify's stock has risen by 100% over the last year? I looked it over and couldn't figure out why -- is it the 3PL Fulfillment Network this article mentions?
Shopify reported 50% yearly revenue growth which helped the stock price, and gov of Canada/provinces used shopify exclusively for their online marijuana ordering starting last year too. That said their lack of net income is a problem https://www.fool.ca/2019/05/07/where-will-shopify-tsxshop-st... and their hiring process is ridiculous even by modern meme hiring standards meaning it's going to get harder to hire people when they can just work for FAANG which are all opening offices, or already have offices in Canada and don't have the same very long process starting with telling a recruiter 'your life story' for over an hour.
On the How I Built This podcast, they mentioned AllBirds uses Shopify as their platform.
I just checked their site, and it looks like it's still the case.
They do, but I think they are considering moving off of Shopify. The reality is that shopify has a ridiculous amount of down time, and any high traffic store will actually be losing real revenue as a result. Just scroll their status page, they consistently have several outages a month.
Sorry was typing on my phone and didn't clarify. I have a friend who works at Allbirds and told me they are strongly looking at migrating because of the down time issues.
Can you elaborate on the ridiculous hiring process?
They're beating earning expectations consistently: https://finance.yahoo.com/quote/SHOP/
They're also growing and hiring more which always looks good in the books.
Unfortunately, while their revenue is growing their earnings are in the negatives: 1B revenue in 2018 up from 673M in 2017, however they're -64M in earnings and -40M in earnings previous to that.
Not to mention the hype stories like this: "Shopify's market share could triple within five years rivaling Amazon", https://finance.yahoo.com/news/shopify-apos-market-share-cou...
It's not uncommon for people to be selling artisian products on shopify, which a trend that's been increasing over time. There's a large boost towards 'natural/homemade' products towards daily consumeables, accessories, clothing, indie perfumes, beauty products, etc. At least this is my experience in several hobbyist circles I lurk in.
The main reason I don't use Shopify is the merchant fees. I can do better paying a developer to WooCommerce. and we have a pretty good system for doing all the patches and everything and haven't had any security problems or anything like that. and if I'm not happy with my hosting or with some feature I can just change myself. I don't depend on this other company which has already done a few things that were kind of heavy-handed in my view.
I am Shopify app developer and I earn my living from 3 published apps in the Shopify marketplace.
I can answer any question you may have.
1. Do you see the Market for shopify apps growing? Any indications would be helpful from your experience.
2. Best way to get started on Shopify apps for developers?
New stores open every minute but at the same time some others close, if you have a good placement in the marketplace listings then new people use the app and if you can keep them, you will grow a decent monthly revenue.
Shopify is missing many things and the apps are there to fill those gaps, Shopify doesn't replicate the apps functionality to drag them out of the game so yea, there is much space left for new apps.
Shopify has a great resource of information on how to get started here: https://developers.shopify.com/app-development
You may find an API library for your preferred language in this list: https://help.shopify.com/en/api/tools/supported-libraries
Do you have any ideas for Shopify apps you'd like to share?
If you need inspiration you can navigate through the marketplace.
I have released such a 'borrowed idea' app before 4 months and i barely have 15 users on it. It's not much but it's more than nothing, it took me less than two months to develop it and about 6 months to release it (slow app verification procedures and stupid bugs).
> "To that end, I would argue that for Shopify a high churn rate is just as much a positive signal as it is a negative one: the easier it is to start an e-commerce business on the platform, the more failures there will be. And, at the same time, the greater likelihood there will be of capturing and supporting successes."
Yes and no. The excessive lowering of the barrier to entry is self defeating. That is, more stores === more noise. Throwing still more at the wall isn't going to increase success. That friction will increase
but Shoppify's model doesn't involve marketing, they leave all that up to the merchants. so shoppify itself isn't directly affected by this.
The supply of customers is not endless. It's in Shopify's best interest to optimize the churn to success ratio - not simply have more success stories. We all know the metric. Happy customer tell three people. Unhappy customer tell 10 or more.
That is, as the number of failed store owners grows so does the fiction and reputation debt for the Shopify brand.
But is the Shopify brand featured prominently during the shopping experience?
I would assume no, given the article's assertion that Shopify is just a facilitator, which lets the shop's owner shine instead.
On my first job ever, when I was an exchange student in Singapore in between 2007-2009, I did API integration for a trade company with Alibaba's APIs or whatever you can call them back then.
You was making a CVS file with product description, putting it on a web server, and directed Alibaba's product feed downloader on it.
Alibaba also had "hosted frontpage" back then. The same thing you get now with a store in *.alibaba.com subdomain. It was actually much more feature rich back then. They were allowing upload of more or less fully featured HTML pages, but around 2010 they discontinued both.
If Alibaba guys ever knew what a gold mine they were sitting on all that time...
I love this tweet from Tobi :
"I'd rather buy @amazon in 2029"
Amazon is a good cash business, but hard to build a brand on.
Shopify is easier to build a brand on, but harder to make actual money on initially.
If Shopify turned us off tomorrow (they can), we’d be able to continue. If Amazon did, it’s game over on that platform.
This is ultimately the most important distinction between platforms and Aggregators: platforms are powerful because they facilitate a relationship between 3rd-party suppliers and end users; Aggregators, on the other hand, intermediate and control it.
Would YouTube count as an Aggregator? Are they becoming less about the task to "facilitate a relationship between 3rd-party suppliers and end users" and more about seeking to "intermediate and control?"
Considering about working on an open source with turnkey SaaS hosting modern alternative. Drawback: MVP is quite big.
Would you see such a need, or is everyone happy with Shopify?
Some questions, if you can spare a few minutes:
What are top 3-5 issues with the platform that you're currently using?
What do you like most about the current platform?
What would be the must-haves of another store platform in order for you to switch to it?
Appreciate your insights!
I don't really understand who an "open source turnkey ecommerce solution" serves.
The last thing you need when trying to sell product is to now deal with running software and a server. Kinda reminds me of when I thought I could build a webshop for my father with Rails and Stripe. Thank god I realized sooner than later that there's basically zero upside to running this software and I switched my father to Shopify where he's happily been since.
I think this kind of solution only seems good to HN nerds who don't realize what Shopify brings to the table, or that technology is somehow the hardest part of running a webshop. It seems naive.
Since you're asking these questions, it sounds like you don't have much domain experience. I encourage you to create a simple Shopify shop and try selling something, if only to see what it gives you out of the box that your turnkey solution can't. That would be essential experience to have before you even make your initial commit.
This service might be interesting to look at: https://www.liquidweb.com/products/managed-woocommerce-hosti...
Fills a space somewhere between full self hosting/ developing from a base open source cart and Shopify.
I guess downvoting means Happy with Shopify :) Good to know!
"We'll empower you to easily sell your stuff" that leaves power and agency in the hands of individual companies.
WordPress + WooCommerce, PrestaShop and Magento already do that. Drop $10 to $20/month on hosting on DigitalOcean, install Wordpress, install WooCommerce, buy a cheap theme, buy whatever extra plugins you need, setup your payment system (PayPal and Stripe are supported), and you're off to the races.
And it's better than that, there's people with years and years of experience in modifying and creating plugins and themes so once you have enough $$$ from the basic setup, re-invest into the business and get better developer support for all the GPL'd plugins and themes you're using.
> WordPress + WooCommerce, PrestaShop and Magento already do that. Drop $10 to $20/month on hosting on DigitalOcean, install Wordpress, install WooCommerce, buy a cheap theme, buy whatever extra plugins you need, setup your payment system (PayPal and Stripe are supported), and you're off to the races.
So all the average person needs to set up shop is design skills, software engineering skills, understanding of servers and PII, and the time to do complete all technical tasks while also building up their actual product catalogue.
That's a lot, and goes a long way in explaining why Shopify has a justified usecase.
And manage patches, worry about security, PCI compliance, data loss, etc.
And HA, site monitoring... the list is long.
Can't forget about performance.
I am plenty technical to do this and it still sucks. We moved to shopify from a plumbed-together solution like that and it's a world of difference.
First, shopify is like $30 for a month. I'm $30 for a few minutes. The cost savings are laughably huge. And shopify's better anyway! Their plugin ecosystem is great, the admin tools are built specifically for merchant admin types (as opposed to boil-the-ocean blog admin UI with merchant UI hacked on top of it), so my cofounder/brother, who handled listing and fulfillment and that sort of thing, had a much easier time with it.
Shopify could literally 10x their price and it would still be a great deal. And this is for a lifestyle-sized biz. few $k/mo in transactions. For anyone doing this "for real", it's a rounding error.
Their plugin and theming is a joy on the dev side as well. Great docs, easy to get a sandbox account, theming in Liquid is a joy for anyone who's done jinja/handlebars/etc, their default themes have beautifully documented CSS.
I would, as the developer, literally pay my own money for shopify to be part of the stack just to abstract all that crap away from me. The time savings for me alone justify it.
I wish I had 100 upvotes to give you.
I'm currently converting a homegrown multi-million dollar eccommerce platform to Shopify and it's been a dream. Most of the significant lifting was done in less than 2 weeks.
Their graphql api has just been amazing, not to mention all the other developer services they provide.
OFC, I do feel like I'm coding myself out of a job, as I've spent the last 7 years building and maintaining that system.
Can you talk more about the home grown multimillion part?
Well I'm not in marketing, and I attribute tons of our growth to good marketing - but I was responsible for the development and deployment of our tech stack. Basically rewrote a legacy platform I inherited (.NET 1.0 WebForms yall on a single Windows server with SQL 2003) from scratch. (2 devs and me as lead). Added a headless CMS (they were literally FTPing .ASPX pages up every night to update the home page). Deployed the whole thing with containers on azure and increase site speed and reliability by a few orders of magnitude.
And now I'm switching it all to shopify plus with no regrets. I learned a hell of a lot coding my own ecommerce platform, and would love to work for a company like Shopify.
Have you decided which software you'll be using for fulfilling your orders? Or will you be outsourcing fulfillment?
In the interim we are using our legacy system. I wrote a connector that uses the Shopify admin api to fetch unfullfilled orders and fulfill them.
Long term we are thinking Ship Station or maybe ZenDesks ecommerce offering.
O nice. If you're doing a lot of volume (1k+ orders/month) you might want to take a look at ShipHero. You'll begin running into inventory issues with ShipStation at that volume.
Disclaimer: I work for ShipHero.
you seem to forget about the credit card rates, which are the 2.9% of your sales. I don't know in other countries, but where I live you can get the same conditions than for a physical pos terminal from a bank with around 1% rate. a 2% of your sales can easily grow to something that you can optimize.
I did almost mention those. Negotiating POS rates is in the realm of much bigger shops than I've run. At the 100k/mo mark, that's $2k/mo, which... I'd honestly still take shopify, but yeah, it starts to be worth asking about.
Shopify is a hair more expensive than some competing processors, but when I last dealt with it, they were in league of paypal, stripe, square, etc, so it wasn't a differentiating factor for us, and I suspect that's true for most businesses of our size.
Of course it's not perfect and would eventually be re-engineered, but I'd happily pay $3K/mo to make $100K/mo.
if you take in account that when selling physical items the selling margins are between 15% and 25%, you are paying 3k to make 15K profits, thats a 20% of your benefits. In much cases those 3k could be the difference between a profitable business and one that isn't profitable.
Yeah, that is the issue we have. Something like Stripe at 2.9% you don't think twice with a high margin SASS product, on 15% margins and enough volume though it makes sense to go through some pain to setup with a cheaper processor.
This isn't necessarily a fair comparison - card not present transactions have always had a much higher rate than point of sale transactions due to the increased risk of fraud. There's an open-ended question of if new entrants like Apple Pay can bring down those card not present fees thanks to their integration into your apple id, but tbd.
at least in europe with 3d secure authentication, it's easy to get rates under 1% for a new business. If you have big volume is easy to go downwards from that.
I get that using stripe or paypal it's easier sometimes, but for woocoomerce and alikes you usually have plugins already developed to use other payment platforms.
For 40 hrs/wk at $60/hr, is $10,000/mo.
If Shopify means they hire this guy for a tenth of the time, they save $9000.
They would have to be moving 300k/mo for hiring a full time to even break even.
In any case you can do what everyone else does, bake the fee into your prices and call it a day - it's not like you can compete with Amazon on the low-prices front anyways.
2.9% is the rate for their $30 a month plan, their $300 plan is 2.4% which leaves you within 1% from most of the cheapest payment processors while getting a ton more 'value' IMO.
In europe it’s even 1.8% on their $300 plan.
They let you choose among a wide range of processors
It`s important to note that they add a 2%/1%/0.5% transaction fee on top of your processor fee with Basic Shopify / Shopify / Advanced Shopify plans, respectively.
I'm always curious to see Shopify compared to something like Square's ecosystem.
"Just combine these 6 things and it's just as easy as a single tool that does it all for you."
Is this satire?
No, it's the standard response from some open source people for any proprietary end-to-end solution. The most famous example was this response to the launch of Dropbox:
some open source people
Hey now, stop with the name-calling :P I work on and use proprietary end to end solutions for ecommerce (but not Shopify).
Woocommerce wins for me because it lowers development costs and costs are lower overall. My perspective is definitely someone who has developed ecommerce sites, not solely as a non-technical user, and for me it's very advantageous to lower costs by using and modifying GPL'd plugins and themes.
I guess Shopify has 4000 employees and enough cash and enough direction to come out of box with a good UX and good defaults and that's good enough for nontechnical users.
I'm a technical user, and good UX and good defaults are something I often spend money on.
I’m a technical user, and if I needed to sell goods online I’d use Shopify. It’s precisely because I’m a technical user: I know all the things you you have to worry about, and I’d rather not. There surely a scale where it makes sense to roll your own e-commerce platform, but it’s substantially higher than people seem to think.
Yup. I've taken some MBA classes, and one (in retrospect obvious) thing I latched onto is the idea of opportunity cost: you can never do everything you are capable of doing, and each thing you do comes at the expense of something else. So, focus on doing the things that (depending on your goal) are most fulfilling and/or most profitable.
Amusingly, grasping that concept was a big factor in my decision to put my MBA degree on hold...
There is one other reason to do things: you cannot trust anyone else to do it. Fullfilling and/or profitable are hopefully the only ones that apply, but sometimes you have to do something because the risk is too high...
I’m not sure that applies to the Shopify argument here, but maybe you didn’t intend it to.
Hopefully - for Shopifys sake - it doesn't apply.
An example of how it could apply is if shopify were to "go down" often thus driving your customers to your competitors that roll their own solution that has good uptime.
What a gem, thx.
Do this, and this, and this, and that, and this, and that and this, and in a few days, you're halfway to this readymade offering that would have you up and running in minutes. I don't understand how anyone can type that out and not realise halfway through how ridiculous they're being.
Even for technical users / developers, their time is better spent than fiddling around with 10 different tools.
> Even for technical users / developers, their time is better spent than fiddling around with 10 different tools.
This might or might not be true. Fiddling with 10 different tools often gives you are much larger level of control. If you need some control that you get with 10 different tools that the single source doesn't do then you are stuck with 10 tools. The downside of course if you now need to fiddle with 10 different tools.
Make the correct decision for your situation.
I've set up ecommerce sites quite a few times and it was honestly 1 to 2 days of "work", install + configure and then the rest was customization which clients pay for and are patient for. We were ready to sell product within a day basically and then iterate from there based on client needs.
I guess I wasn't clear enough in making my point: Wordpress + Woocommerce can be setup very quickly and with minimal fuss and they can be as heavily customized as you want and rival whatever plugin-heavy Shopify sites are out there.
Someone who knows how to do all of those things, already knows that they know how to do all of those things. Nobody who uses a one-stop-shop like Shopify is duped into thinking it's something revolutionary. Either it's not something they know how to do on their own, not something they think is worth the trouble to do on their own, or not something they could afford to pay someone like you to do.
It's not revolutionary, but even with the stated two days of work in the original comment, you probably are spending a couple years worth of dollars compared to just using Shopify ignoring the time to find said developer, maintain the relationship if something goes wrong, etc. if you are just trying to get an idea off the ground.
So someone could avoid paying you for setup and maintenance by paying an extra $15 bucks a month to Shopify?
Seems like a pretty obvious choice for a small business.
There's also a %tage of sales where the 'build vs buy' argument makes sense in the other direction. Obviously, most sellers of physical goods have better reason to focus on growing revenue and promotional activity, not cutting costs. That break-even point (I think) is some where around $250K/yr revenue, but that calculation depends on margins and the relevant industry matters (from a future planning perspective).
I'm not a huge fan of Shopify. Their default setup and theme requirements are abysmal.
But it's light-years ahead of WordPress+Woocom.
Neither of these are well set to run a proper ecommerce without heavy customizations though.
My wife is starting a fashion business. This is a hill too high to climb for a non-technical user. She was up and running in 30 minutes with my credit card and Shopify earlier this week. We don't have time to maintain an instance, troubleshoot Wordpress theme and plugin incompatibilities, etc. That's time better spent on sales funnel optimizations, manufacturing product, and customer support.
Would we consider more advanced ecommerce systems? Sure, when she hits $1MM/year in annual revenue. Until then, Shopify earns their keep (and margin) by taking care of the mundane. Make dollars, don't pinch pennies.
See: "Dropbox is just ftp + git" 
I don't know, these options look just as much as "swipe credit card, get started" as Shopify's options: https://www.siteground.com/woocommerce-hosting.htm?afcode=d5...
* Until then, Shopify earns their keep (and margin)*
That's fair. For business stuff I've swiped the credit card and paid for support as well. If the Shopify experience is easier than WooCommerce, etc. then I get it.
I already had a $5 DigitalOcean droplet running for experimentation and stuff but really wasn't doing much with. When my wife wanted a e-commerce store for her craft/jewelry business, I figured why pay $20+ per month for Shopify or Weebly when I can just install WordPress and WooCommerce and be good to go. So I spent an hour or two getting it set up and had the basics going.
But she hated the web-based admin interface and it was way too cumbersome to get anything customized, products added, etc. In the end it just wasn't worth it and she's now on Weebly. Shopify and Weebly have their own faults and can definitely be a pain if you want to do anything off the beaten path, but for the non-technical user who just wants to sell things I see the value over a self-hosted Wordpress install.
That's fair, the UX for Woocommerce does need a bit of technical hand-holding. Could be improved on, though it seems like the pressure from Shopify will force some improvement on that front.
And who needs Shopify fulfillment?
Just set up 10-20 warehouses, hire a few hundred workers, train them, get an HR rep, IT, finance, and support, and you're off to the races!
Kids are so lazy these days, with their long hair and their rock'n'roll music.
I don't think it's worth a downvote but what you list out is one of the worst examples of "why use SaaS? this convoluted self-assembled mish mash of randomness already exists" I've seen.
former Magento employee here...what you're describing is a TON of upfront technical investment for an e-commerce merchant who is just getting started. The platforms you've mentioned are ideal for merchants who are starting to hit $5M to $10M in annual revenue and need to innovate on their storefronts in order to continue achieving growth.
For someone at the beginning of their ecommerce journey, Shopify is the BEST way to start making money almost immediately.
Which of those does the logistics and fulfilment part, which is really the heart of the article and the killer strategic step for Shopify?
This comment should be preserved in amber for when future generations ask, "What was HN?"
Maybe if you have a dev at hand who’s willing to help. You really can't expect a non technical user to follow all of that. Shopify really simplifies all of that into an hour and a credit card. Without Shopify you'll be saving at best 10-15$ per month which is not worth it when you take into account maintenance, basic security, programmers charges etc. Not to mention if something borks you'll have to wait for your developer to have time to tend to it.
I'm sure if you surveyed Shopify customers, many of them couldn't handle any of that, nor could they afford to pay for bespoke services to handle that.
And there may be a split between the most successful and least successful customers of Shopify, but Shopify gets to make money off both.
Shopify is only $30/month for its basic plan. I can't imagine a situation where somebody with a successful online store would be sweating that $10. I also can't imagine a store that would be successful at $20/mo on WooCommerce, but not at $30/mo on Shopify. I say this as somebody with several past and current Shopify stores.