Shopify is one of the most popular CMS (or Content Management System, in Spanish) globally. Its platform allows you to create and manage online stores, as well as sell physical and digital products or services, and integrates multiple functions, templates, offers monthly reports and analysis, etc. All of this may already sound familiar to you, you may already know what it is and how it works, but what you may not be so clear about is its history. And that’s why we are here
What is Shopify: the origin
This CMS was founded in 2004 by Tobias Lütke, Daniel Weinand and Scott Lago after an attempt to open an online Snowboard store called Snowdevil. And we say “try” because in the first instance they were not able to find any e-commerce product that covered the needs that their store demanded.
Maybe it would be easier to build your own software? No sooner said than done! Luke, a computer programmer, built his own online product sales software to launch Snowdevil’s online store after a couple of months of development.
Shopify was founded in 2004 but the launch of the platform took place two years later, in 2006.
In June 2009, Shopify launched an API for the platform and the App Store. From here, the growth was unstoppable.
In 2007 it was a finalist in the CNET Webware Awards and, from 2010 to 2012, it expanded its staff from 40 people to 140 and then continued expanding to 300 in 2013. In 2020 it reached 5,000 and currently has 10,000 employees. Likewise, Shopify powers the businesses of two million sellers in more than 175 countries.
2020, the year of Shopify’s boom
According to the information offered by the company, its total income during 2020 was $2,929.5 million, around 2,422 million euros, which represents a year-on-year growth of 86%. This growth is broken down into an increase in revenue from subscriptions of 41%, and 116% from commercial solutions.
Another aspect that showed incredible growth was its GMV, or gross sales value: this indicator refers to the value of all products sold on the platform, without taking discounts into account. For example: if 10 pairs of shoes are sold for €25, the sales value will be €250, even though some of the shoes have been sold for less due to the incorporation of discounts or promotions in the purchase.
That said, the increase in Shopify’s GMV was 96% compared to 2019. This represents a net sales value of $119.6 billion, approximately €98.887 million. Of this, 45% was processed through Shopify’s own payment platform.
On the other hand, the annual gross profit registered an increase of 78%, along with a net profit of $319.5 million, around 263 million euros. With this, it also presented an operating income of 3%, compared to a 9% loss presented in 2019.
During 2020, Shopify surpassed eBay in revenue, so in its continued growth it is already beginning to approach Jeff Bezos’ giant. By 2018, Shopify’s sales value accounted for only 25% of the results of the Amazon marketplace. By 2019 this proportion became 30%, finally reaching 40% of Amazon’s GMV in 2020.
2022: Shopify takes over Deliverr
$2.1 billion (or 2 billion euros) was the amount for which Shopify bought Deliverr, the e-commerce fulfillment provider whose intelligent system could predict where consumers might be interested in purchase products. This technology makes it possible to previously “position” items in your warehouses according to this demand estimate.
This has become the highest value purchase made by Shopify to date, an operation with which they hope to obtain great results and enhance the activity of their users. As Tobi Lütke, founder and CEO of Shopify, said, “With Deliverr, Shopify’s fulfillment service will give millions of growing businesses access to a simple and powerful logistics platform, allowing them to make their customers happy again and again. ».
Strengthen the last mile strategy, an obligatory step to confront Amazon
The importance of speed in order management and shipping is increasingly increasing, and in 2021, 41% of consumers were willing to pay more money for a shipment if it was delivered on the same day, according to a PwC survey. Several companies, including Amazon, have quickly started offering express shipping services, and Shopify has not wanted to be left behind.
Thanks to the Deliverr integration, Shopify was able to enhance its last mile strategy and complement the tools for its sellers.
Shopify’s revenue increases 22% in the quarter after the purchase of Deliverr and its alliance with Google and Twitter
Shopify’s third quarter 2022 results were very positive, the company recorded a 22% growth in its total revenue compared to the same period in 2021, reaching €1.4 billion. As for the GMV, this also increased, by 11% specifically, reaching 46.6 billion euros.
These results came a few months after not only the purchase of Deliverr, but one of Shopify’s most important moves: its partnership with Google and Twitter. An agreement whose purpose is to expand local eCommerce on social networks and physical channels, making it easier for users to find and buy what they need and want more efficiently.
In the case of Google, this was promoted by synchronizing local inventory on Google, available for Shopify stores in Spain and around the world with retail operations. In this way, merchants on the platform can automatically inform nearby customers of which products are available in a physical store.
And, on Twitter, the alliance materialized through Twitter Shopping. The “Shop Spotlight” showcase is available in the tool, in which up to five products can be displayed on a business’s profile, and also “Twitter Shops”, a shopping tab in which sellers can show up to 50 products from his catalog on his Twitter account.
New layoffs and advances in AI mark 2023
At the beginning of May 2023, the company announced through a letter signed by its CEO, Tobias Lütke, the dismissal of 20% of its staff and the purchase of Shopify Logistics by Flexport. These 2,000 new layoffs were thus added to the cut of 1,000 employees announced in July 2022.
This fact was justified under the premise of focusing on the company’s main mission: simplifying commerce. This implies big changes in the way Shopify works in the following months to improve and optimize results.
In the letter, the CMS’s intention to continue advancing in artificial intelligence was also mentioned. Something that this 2023 has fulfilled, since in July, Sidekick, Shopify’s AI assistant, was presented. It combines data from the Shopify platform with AI technology, offering new features that allow sellers to scale their businesses while saving time and streamlining operations.
Shortly after, Shopify Magic was announced, a set of free features powered by artificial intelligence that offer personalized support in various tasks: store creation, marketing, customer service and administrative management.
A Black Friday with great results
During this year’s Black Friday, Shopify merchants reached $9.3 billion in sales worldwide. Likewise, more than 61 million consumers bought from Shopify stores, with clothing and accessories being the most in-demand categories and the average cart price was $108.12.
Focusing only on the data from Spain, the number of consumers who purchased in Shopify stores in the country increased by 36% compared to Black Friday in 2022. Although this percentage was 5 points lower than the growth presented between 2021 and 2022 (+41 .7%).
On the other hand, the average cart ticket was €81.8, 5.7% more than the previous year, when it was €77.37. And, as worldwide, the most in-demand categories were clothing and accessories. These were followed by health and beauty; home and garden; electronics; and food and beverages.
But… how does Shopify work?
Shopify is a CMS for eCommerce that allows you to design your online store to your liking without having to have programming knowledge, it’s that simple. You can make your own online store in a few minutes with complete ease. The interface it presents is very flexible and the store construction process is very intuitive and efficient without you wasting time browsing. It is a CMS that will make your management tasks easier from the beginning.
The only thing you will need is to access their website and add an email to start creating your online store. Next, cover all the information requested (this step is very simple), choose a payment plan and finally a template that you are going to use.
Shopify has over 100 templates, so you’ll have plenty to choose from. There are both free and paid and, in addition, organized by business sectors (fashion, art, technology, etc.). On the other hand, if you have basic knowledge of HTML and CSS, you will have the option to customize the design of the template you choose, but this is the next level.
Some Featured Features of Shopify
Throughout its history, Shopify has launched multiple features and tools to improve its platform and provide better services to its merchants. Among these we can give an honorable mention to Shop, Shopify’s marketplace for products and merchants, which works through app and web (Shop AI). We can also mention Linkpop, the free functionality based on the “link in bio”, or Sidekick, its AI assistant, or Shopify Markets, a tool launched at the end of 2021 that seeks to support and promote the internationalization of small online businesses.
Likewise, Shopify has teamed up with other platforms to expand the horizons of online sales. This is the case of TikTok with the purchase tabs in profiles, Spotify with the linking of Shopify online stores with Spotify for Artist accounts, or YouTube Shopping.
How much does it cost
Below we show you the different Shopify plans and prices:
- Basic Plan (€36/month with monthly subscription and €27/month in the annual subscription). The simplest plan to create unlimited products and categories, with 2 employee accounts.
- Shopify Plan (€105/month with monthly subscription and €79/month with annual subscription), which reaches 5 accounts and includes the possibility of creating performance reports.
- Advanced Plan (€384/month with monthly subscription and €289/month with annual subscription) for medium and large businesses, with the possibility that up to 15 employees can access your control panel.
Keep in mind that in addition to these prices, you will have to add the fee (between 1.4% and 2.1%, depending on the plan you have chosen) for each payment you receive by credit card in the case of using Shopify Payments, Shopify’s native payment processor. If you do not use Shopify Payments and use third-party payment providers, third-party transaction fees will apply.
Other alternatives: Shopify Starter, Shopify Retail and Shopify Plus
Shopify expands its pricing offering with Starter, Retail and Plus plans, each located at one end of the price spectrum.
- Shopify Starter (€5/month). An interesting solution to test the reception of your products in the market, this plan allows you to share and sell products on social networks such as Instagram or WhatsApp, offering your customers agile and secure transactions thanks to the Shopify payment screen. You can also manage orders and access reports.
- Shopify Retail (€79/month). This plan is aimed at those retail businesses that sell in a physical store and also want to have a simple online presence. It offers all the features of the Starter plan, along with several features of the Shopify Point of Sale app.
Shpify Plus ($2,000/month, around 1,830 euros per month). This option is designed for large companies with high sales volumes, capable of handling the large traffic generated on their platforms and offering a fast browsing experience to their customers. Additionally, in Shopify Plus sellers have access to added services such as:
- Priority Support: these professionals will be on hand to provide solutions to any technical problems that your store may present. With 24/7 availability via phone, chat and email.
- Shopify Plus Partners: Available to exclusively selected partners after achieving a premium level of experience and quality in the development of Plus projects. This program helps create world-class custom services and solutions to scale your business.
- Shopify Plus Academy: You will be able to access lessons and educational content that will help you boost your business.
- Beta programs: priority access and preview of new products developed by the CMS.
Advantages and disadvantages of Shopify
Pros
- Simplicity in the creation and management of your online store. It will be very easy for you to create, customize and prepare your online store to start selling in a short time, and you can also design a blog to promote your store with it.
- Hosting included so you won’t have to worry about the loading speed of your store.
- Good customer service. Assistance through forums, email or even chat.
- Customer statistics (on higher payment plans), which will help you guide your sales strategy.
- Payment facilities, since they have 133 international payment currencies that allow you to sell locally and in other countries.
- You can sell even without having the product itself since it integrates with Dropshipping sites with apps like Ordoro or Inventory Source.
- Automatic tax system, so you don’t have to worry about anything as Shopify automatically takes care of state and country taxes based on location.
- Unlimited products that can be varied according to characteristics, with the possibility of importing or exporting products with csv files or one of the store’s importer/exporter apps.
- Accept and manage orders in a matter of seconds, since you will receive an email or mobile notifications every time you receive a new sale. Customers like the immediacy of the service.
Cons
- It is not open source. Oops. So, if you opt for this platform, you will have to pay to access its plans.
- You will not have great modification options in the “Check Out” processes and they could be considered “limited”.
- It has a cost that you must face every month.
- Finally, keep in mind that there are some features such as paid subscriptions that, if you want to have them, you will have to pay a commission to use them.
