Shopify Adds Features to Its Toolkit to Help Small Businesses Grow

Why it matters:

• Shopify handles more than 10% of all U.S. e-commerce sales and is second in e-commerce market share to Amazon. Merchants, most of them small business owners, sold $175.4 billion worth of goods on Shopify last year.
• Shopify has been expanding beyond e-commerce websites to address the offline as well as the online needs of merchants, including shipping, payment processing, and startup financing.
• Shopify is betting that the future of shopping will include social shopping and NFTs, and the investments it’s making today are likely to change the way many retailers do business, sources say.

Shopify, the e-commerce platform used by millions of small businesses and entrepreneurs to sell goods online, has an ambitious goal for its future: It wants to be the primary retail partner for small businesses no matter where they sell – online, in stores, or even in the metaverse.

It recently released more than 100 product updates to its platform and says those updates contain tools with the potential to have as much impact as when Shopify, in 2007, began making it easier for small businesses to create online stores.

Within three years of Shopify’s launch, more than 6,000 merchants had used the platform to sell $100 million worth of goods online. Those numbers have since grown to millions of merchants (Shopify doesn’t reveal the exact figure) and just under $500 billion in sales to date.

Among the Shopify updates likely to have an immediate impact on small- to-medium sized businesses are a new Twitter shopping feature, a B2B feature, a Pay by iPhone tool, and a way to use NFTs (non-fungible tokens) to reward top customers.

The goal of those, and other new product launches, is to enable merchants to respond to the rapidly changing retail landscape, Glen Coates, Shopify Vice President of Product, told CO—.

“Shopify’s job is to help entrepreneurs succeed. And whatever the shape of planet Earth happens to be at any given point in time, we need to help merchants fit into that shape and succeed in it,” Coates said.

“Just like it’s not enough anymore to open a store on Main Street and think that’s going to be enough, it’s not enough anymore to just put up a website,” Coates said. “We’ve got to help them be wherever they need to be.”

Coates outlined for CO— how four of the product launches will affect SMBs.

Twitter shopping: Enabling Shopify merchants to showcase goods and drive sales via tweets

Shopify and Twitter have partnered to let Shopify merchants showcase products and drive sales from their Twitter profiles.

Merchants now can feature products in a display that scrolls under their business profile on Twitter. Clicking on a product links potential customers to the merchant’s Shopify page.

Merchants can also link to additional products in the Twitter Shops tab.

Shopify sees Twitter as a way for merchants to connect with millions of new customers. Shopping-related tweets on Twitter saw 40 billion impressions last year, according to Twitter data shared by Shopify.

Shopify previously had tested the feature with a small group of stores and began offering it to all merchants on June 22.

Shopify already had been enabling merchants to post shopping links on Facebook, Instagram, TikTok, Pinterest and other social platforms, and it has seen social commerce grow rapidly, with social commerce orders quadrupling in the first quarter of this year.

B2B on Shopify: Addressing a growing need for DTC brands’ expansion into physical stores

The B2B on Shopify feature makes it easy for merchants to use the same online store for individual, direct-to-consumer sales as well as wholesale orders.

The feature lets merchants add tools to their online store that allow business accounts to buy in bulk and automatically set wholesale prices or credit terms required for large orders.

It addresses a growing need for direct-to-consumer brands that are expanding into physical stores and selling to large retail accounts or multiple independent retailers.

“There’s been a lot of demand for B2B for many years,” Coates said, but the complications of setting up B2B software created a barrier for many small merchants.

Now Shopify has made it possible to integrate B2B tools into the Shopify ecosystem. “All of the core logic in Shopify understands all of these B2B concepts like wholesale pricing, business accounts, and net terms,” Coates said.

“The feedback from the first merchants who’ve been in our beta program has mainly been, ‘Oh my God, you’ve made it so easy.’ They’re used to the nightmare of spreadsheets and fax machines,” he said.

NFT-enabled commerce: Granting select customers access to exclusive merchandise and events

Shopify is predicting that the chief retail value in NFTs – shorthand for the digital assets known as non-fungible tokens – will lie in activating the tokens, not in selling them.

It has added a tool to prepare for an NFT-enabled future that will let merchants use NFTs to give select customers access to special merchandise collections or VIP events. NFT owners will be able to connect their crypto wallets to a Shopify store to activate special offers. NFTs also could become the loyalty rewards of the future using this feature.

“Tokengating falls into the category of, ‘We think this is going to be really important for merchants in the near future, and how can we help them get ready to be on the forefront of that future,’” Coates said.

“Not every merchant on Shopify has minted an NFT, but what merchants ultimately need to do is connect to the consumer, connect to their customer base, and build those loyal fans,” he said.

“Anything that helps a merchant build a strong community around their store is something that feels good but is also driving an important bottom line of the business.”

Tap to Pay: Tapping into the big comeback of in-store shopping

Shopify, through its point-of-sale systems for physical stores, has seen that in-person shopping is making a big comeback after the online spike that occurred during the first year of the pandemic.

Offline, or in-person, sales grew by close to 80% in the first quarter of this year. That trend prompted Shopify to add a way for online merchants to try in-person sales without having to invest in a traditional retail point-of-sale system.

Shopify, in partnership with payments processor Stripe, is rolling out Tap to Pay on iPhone to U.S. merchants. This will allow Shopify merchants to use an iPhone to accept in-person payments from another iPhone without a point-of-sale system, if, for example, they want to try selling goods at a farmer’s market or test out physical retail with a pop-up store.

“Tap to Pay opens up a pretty meaningful new space of opportunity because it removes the necessity to buy dedicated hardware in order to try out physical selling,” Coates said.

“It might help you figure out [if] that little pop-up thing you want to do this weekend will work without having to buy a cash register,” he said.

Shopify’s challenges and opportunities

The new products announcement came as Shopify was preparing for a 10-1 stock split designed to make the stock more attractive to investors. Shopify’s stock surged during the start of the pandemic, but it has fallen recently despite continued sales growth, over fears that its pandemic-fueled gains are in the past.

By including more than 100 product updates in one announcement, Shopify may have made it challenging for small merchants to know which features they need to add.

“While it is exciting to have the variety, it is going to be important for Shopify to really distill this down into what it’s worth to merchants and keep it simple to drive [adoption],” Katherine Black, partner in the consumer practice of Kearney, a global strategy and management consulting firm, told CO—.

Twitter Shopping and Tap to Pay on iPhone are two features that could be attractive to SMBs, Black said.

“Two big pain points for SMBs are generating leads and providing ease of the experience,” she said. “Twitter Shopping and Tap to Pay with iPhone are two options that really speak to those pain points.”

And the returns interface that is now part of Shopify will help third-party providers like Loop Returns, which helps Shopify merchants automate product returns, give merchants greater insights into returns data so they can better serve customers and retain revenue, Aaron Schwartz, President of Loop, which partnered with Shopify to beta test the new application interface, told CO—.

One of the secrets of Shopify’s success has been getting merchants to use the platform when they are just starting their businesses, and keeping them as clients as they grow, Fran Quilty, Co-Founder and CEO of Conjura, told CO—.

Older clients, as they get bigger, will add on additional tech tools to manage their growing sales, but even as they scale, “they will stay with Shopify forever,” Quilty said.

The updates announced by Shopify reflect the ways retail is shifting to more social and influencer driven shopping, and personalized, community-based marketing using tools like NFTs, Quilty said.

“To me it is a real statement by Shopify that they want to be involved in every type of commerce, and this is a really fast, up-and-coming commerce,” he said. “They’re obviously betting big on this.”

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