Shopify is turning itself into an interface between merchants and service providers.
Editor’s note: This article is from WeChat public account “Geek Park” (ID: Geekpark), author biu, editor Song Desheng.
In March of this year, Kylie Jenner of the Kardashian family was on the cover of Forbes magazine for the simple reason that Mark Zuckerberg’s 23-year-old billionaire record was broken by Jenner, she was only 21 years old. . According to Forbes, her online beauty brand Kylie Cosmetics is valued at $900 million. But little is known, the youngest billionaire online store is cooperating with Shopify, which is responsible for the brand’s support and after-sales service.
The youngest billionaire online store is partnered with Shopify | Shopify
Shopify, which was officially launched in 2006, is a SaaS-mode e-commerce service platform. Simply put, Shopify provides e-commerce sellers with the technology and templates for building online stores, charging monthly fees and commissions. You can think of Shopify as an iPhone, but because the marketing needs of the business are different, the built-in applications of the system can’t fully satisfy them, so Shopify launched the “App Store” in 2009. After that, merchants can use the tools of third-party developers to further customize their online store. Last year, 800,000 businesses supported by Shopify generated more than $40 billion in turnover, but since Shopify is doing the work behind the brand, most buyers don’t know that they and this account for about online sales worldwide. 1.5% of the platforms are connected.
Shopify market value goes beyond eBay | FT
“What we still want to do is to get more general logistics support like Jenner.” Recently, Shopify founder and CEO Tobi Lütke also announced the launch of a smart warehouse for merchants. And the logistics system of the distributor. Shopify, which was listed on the NYSE in 2015, has increased its share price by 150% since the beginning of this year. It has already surpassed eBay, the originator of e-commerce, and currently has a market capitalization of US$40 billion.
“We are not Amazon’s competitors”
In 2004, Tobi Lütke launched its own ski equipment store Snowdevil (predecessor of Shopify). But during the development process, he found that the Miva, OsCommerce, and Yahoo Store frameworks used to build online stores were terrible in terms of functionality and customizability. Lütke, a programmer, turned to “self-reliance” to transform the company into a service provider that provides site-building support for small e-commerce.
Reducing the technical threshold for small businesses to operate in online stores is Shopify’s most basic business. Merchants register their accounts, choose website templates, upload products and add descriptions, set prices and logistics options, add payment methods, and generate a beautiful and reliable stand-alone station in a short time. Shopify offers a 14-day trial period ranging from $29 to $299 per month, as well as a more personalized Shopify Plus solution for larger merchants.
< p class="img-desc">rich extensions | Shopify
The main difference between Shopify and Amazon in providing site-building support for merchants is that it has more freedom to expand, while the latter only provides limited templates. In addition to the official free theme templates, merchants can also pay to buy hundreds of themes designed by third-party developers. But since the standalone itself doesn’t have the same traffic as Amazon, merchants often need to spend more time on marketing, and Shopify’s app store offers a lot of apps to help promote, such as Facebook to promote to social media.Channel, Mailchimp for email marketing, etc.
In addition to monthly and app fees, Shopify will charge merchants a transaction fee of 0.5% to 2%. In contrast, more than 2 million third-party merchants on Amazon are required to pay a high commission ranging from 6% to 50%. Small merchants who want to open a store on Amazon will face very intense homogenization competition, but under the control of the big platform, they can only carry out limited marketing, and thus the profit margin is reduced. Small merchants also face the rule of a big platform, such as the risk of being “closed” if they are diverted to the outside. In addition, the big platform will also restrict the direct communication between merchants and consumers, and small businesses will not be able to obtain more complete user data for further marketing.
< p class="img-desc">Online store management background | Shopify
“We are not Amazon’s competitors,” Lütke said. “When you buy all the necessities on Amazon, you’ll look forward to seeing the products that make you shine. This is why you came to Shopify.” On, Shopify and Amazon have also worked together. In 2015, after announcing the closure of the web hosting platform Webstore, Amazon chose Shopify as its preferred partner for service migration. In 2017, merchants can also sync Shopify online stores with Amazon online stores, including product information and inventory. “The factory opened for Amazon’s competitors,” Lütke described Shopify.
Connecting merchants and service providers
In addition to building a website, Shopify also wants to solve the problem of collecting money from merchants. In 2013, Shopify launched a collection channel called Shopify Payments (similar to Alipay). With Shopify Payments, merchants rarely need to open other payment channels, no transaction fees, and no hidden fees. For buyers, there is no need for a third-party payment gateway to complete the payment directly with a credit card. At the same time, it also started the “offline” business, launched an iPad-centric POS system, and synchronized the inventory of merchants online and physical stores in real time.
Shopify Fulfillment Network | FashionNetwork
In June of this year, Shopify also launched the AI-driven distribution network (Shopify Fulfillment Network) because they believe that most of the current third-party logistics providers (3PL) are not able to meet the needs of small businesses. First, the service cost is higher, and second, the delivery time is lower. The target merchants of this network are small merchants who want to move from 10-10,000 packages per day to 3-30000. “The Shopify Logistics Network is a geographically decentralized logistics network that uses intelligent inventory allocation technology. We use machine learning technology to predict how best to store and transport your products so that they can be delivered to your customers faster. We have partnered with more and more warehousing and logistics providers, and support multiple channels, as well as custom packaging, return and transaction services.”
It can be said that in the earliest platform to connect merchants and third-party app developers, and then developed a unified collection channel, and now also launched a network connecting merchants and third-party logistics providers, Shopify has always played It is a bridged role, it is an interface. Today, with mobile Internet, cloud and AI as the mainstream, merchants can build websites with one click, because the theme template can adapt to PC and mobile, they can focus more on analyzing data, retaining users and precision marketing. The data generated by the merchants can also “go to the cloud”, and Shopify even provides a powerful data analysis, reporting and financing channel for merchants.
“Platform” cares about mutual benefit
Can Shopify subvert Amazon? Ben Thompson, a well-known Internet analyst, believes that “this is the only way to deal with Aggregator like Amazon.” In his view, Amazon is an intermediary with control. And Shopify is a platform. “The platform is powerful because they promote the relationship between third-party vendors and end users.” The platform cares for mutual benefit.
Connecting merchants and service providers | Ben Thompson
Amazon has built more than 300 logistics centers and more distribution and sorting centers than this. In addition to self-employment, this home appliance giant has been letting third-party sellers flood into Amazon’s website since 2006. However, when these sites use Amazon’s logistics center, they are also put on the box with the smile symbol. This means that the brand’s own image is not completely clear, they are just a member of the Amazon shelf, and the price of the competition in the station. What Shopify is doing is to motivate the best part of each link and actively coordinate. Merchants, developers, designers, and third-party logistics providers have also been mobilized. Like Shopify, they are slowly making their own cakes. Thompson believes that Wal-Mart spends billions of dollars to build 20 logistics centers. “It’s hard to please.” Copying Amazon’s model is not a way to go.
At Shopify’s Unite conference for partners and developers, company COO Harley Finkelstein revealed that the company generated approximately $1 billion in revenue in 2018, “and our partners earned more than $1.2 billion.” Interestingly, in November last year, some netizens predicted on Twitter that Amazon would acquire Shopify in 2019, and Lütke subsequently sent a tweet “Counterattack”: “I prefer to buy Amazon in 2029.”
