Shopify is one of the largest e-commerce platforms in the world, ostensibly one of the best-positioned companies to compete with Amazon. While their annual conference, Shopify Unite, was cancelled this year due to COVID-19, they instead held an abbreviated webstream version called Reunite, which they used as an opportunity to announce new products that can help small businesses grow and prosper.
It's easy to get caught up in Shopify's hype train, and that's why we are going to analyze the most important announcements with a critical and impartial eye to see how much they can actually help your small business.
One of the most significant products to be announced is called Shopify Balance. With this product, Shopify moves into the world of financial technology (“fintech”), and can no longer merely facilitate transactions but also actually hold cash for merchants as well. Shopify showed off a nice dashboard interface; the lack of monthly fees, sign-up fees, or minimum balance fees; and cashback perks. The account also comes with a debit card with the merchant’s branding.
Although this product is highly hyped, it should actually have limited appeal to most business owners when it launches later this year. First, the account only works with Shopify for deposits. Unless your business runs entirely through the Shopify ecosystem, you won’t be able to actually add money to the account. Second, there are other fintech companies that offer a better overall value proposition for small business cash management. One particularly outstanding option is Brex, which offers a business credit card with significantly better rewards than Shopify’s debit card and no traditional credit card barriers such as a personal guarantee or personal credit check. Another great option is Divvy, which allows businesses to set up individual debit card/spending accounts for each employee.
Shopify Email actually launched last month, but it was shown off for the first time at Reunite. Shopify Email makes it easy to send marketing emails to your customers and prospective customers. It’s like MailChimp, but more tightly integrated with the Shopify’s e-commerce platform.
Shopify Email’s point that email marketing is important to “nurture ongoing customer relationships and encourage repeat purchases” is sound. And Shopify Email supports some very powerful targeting tools. Additionally, Shopify Email is free for all Shopify merchants until October. But there are some major caveats with this program as well.
First, don’t make a decision to use Shopify Email based on the extended free trial. While it’s relatively easy to move contacts between email service providers, other parts, such as templates, are more complicated to port and it’s better to do that set up just one time in the platform you’d like to use long-term. If you’re already using another service, we don’t recommend moving to Shopify unless you plan to stay with it past October.
The issue is that there isn’t much here to differentiate Shopify Email from its competitors. It’s a fine application for creating simple, static campaigns and sending to your list of contacts. But compared to other programs, you’re likely to feel “stuck” pretty quickly. For instance, although Shopify Email supports segmenting-based automations, those segments don’t update in real time as contact status changes. Additionally, automations and integrations with other programs are more simplistic.
We typically recommend either Klaviyo or ActiveCampaign for email management to our clients. There is one use case for whom Shopify Email could be particularly compelling, though. That use case is stores that are still relying on MailChimp. Over a year ago, MailChimp was removed from the Shopify App Store and its integration significantly decreased. At that point, store owners had to rely on buggy or expensive third-party tools to maintain the connection between Shopify and their email. If you are still using MailChimp, we highly recommend migrating away from it due to these considerable limitations and, if for any reason you don’t find Klaviyo or ActiveCampaign (or other tools) to be suitable, then Shopify Email is at least worth a look. Its featureset is actually fairly comparable to MailChimp, which has always lagged behind some of those other competitors, so those limitations may be less frustrating to folks accustomed to working with MailChimp.
Shop App and Shop Pay
Also announced last month and explored in greater detail at Reunite was Shopify’s new Shop app. This app was actually a rebranded version of Shopify’s existing Arrive package tracking app, with extra functionality added. Now, customers can actually browse and checkout from any Shopify store within the app. Additionally, Shop Pay, the new name for Shopify Pay, is supported in the app and has been shown to increase conversions by 18%, according to Shopify. In addition to improving conversion, Shop Pay supports key customer-friendly features such as real-time tracking and built-in recommendations.
These are great, if evolutionary, improvements for storeowners on Shopify. If you’re already using Shop Pay, there’s nothing more you need to do to take advantage of these benefits right away. The biggest drawback of these updates for merchants is that the Shopify brand itself is becoming customer-facing, which could dilute the brand of individual storeowners. After all, the Shop app is Shopify-branded rather than branded for any individual store. These features might be very valuable for very small companies that are ok with that, but for the largest stores already on Shopify Plus, these updates may be less appealing. You’ll need to decide if the benefits of increased conversion are worth the potential cost of brand dilution.
In Shopify’s effort to continue supporting small businesses during COVID-19 lockdowns, they developed a small update called Local Delivery, which is optimized for businesses that self-fulfill deliveries within their metro. Shopify has positioned this as a groundbreaking new feature, but in reality it’s always been possible to set up such an option in the Shopify Administrator. You can define the delivery area based on zip code or radius and send notifications when the order is out for delivery.
The significant new feature for local delivery is the currently-unreleased Shopify Local Delivery app. This app will generate an optimized route for a business’ delivery team to follow during fulfillment. That could be very useful for businesses with high volumes of local delivery.
Shop Pay Installments
Perhaps the biggest and most important announcement of all from Reunite was that of Shop Pay Installments. This feature was announced during the stream for the first time and it’s a big deal. The idea is that customers can place an order now, then pay for it in four equal installments over time, interest-free and at no additional cost to them. Furthermore, merchants still receive their income (less fees) upfront.
This program is a major hit at Quadpay as well as other payment financing platforms such as Klarna, Affirm, and Bread.
We don’t have pricing info yet, but presumably Shopify understands this is a competitive space and will price their product accordingly. This gives a faster and easier way to integrate financing options for customers, and if it’s cheaper than these other competitors as well, it could prove to be a significant dagger in their revenue.
Shopify Reunite was a significant event for small Shopify businesses. It’s easy to get caught up in the hype and excitement. These features are important and, for some merchants, could be key to driving additional growth. However, it’s important to approach these features with a sense of caution and skepticism. While there is value in a single company controlling the entire ecosystem from an integration standpoint, the drawback is that Shopify might not be “the best” at everything. The decision comes down to a single application that offers banking, buying, email, and financing under one roof, but with limited features for any given component; or multiple applications that are best in class for each component. Pricing is a key part of that value proposition that isn’t entirely clear yet, but based on what we know right now, we recommend approaching these new features carefully.