Shopify promotes the best eCommerce and stationary solution for merchants who are aiming for an omni-channel approach. But what is behind all this?
Running an online shop is nowadays connected with a high effort. There are many technical issues to consider.
It is important not to forget the connections to shipping partners and payment service providers.
Products and services should be presented as beautifully as possible and preferably optimized for mobile use and with a simple checkout.
The expectations of an online customer are very high.
They expect fast processes, easy navigation, a good mobile experience, automatic tracking of packages and much more. These are many issues retailers shy away from. They already run one or more stationary shops in the city centre and do not have the time or the necessary resources to invest in a high-quality online shop.
Retailers who still want to sell online, often choose a solution like Fulfillment at Amazon. Here Amazon takes care of the shipping and also the customer support. Products can be easily connected to the marketplace and the retailer only has to deal with a few issues.
However, this solution also has its limitations:
It is not possible to establish real brand worlds; there is no possible connection to the local store; and retailers cannot attract new existing customers – because the customer belongs 100% to Amazon.
Shopify offers the solution
This is where Shopify comes in. What started as a small online shop for snowboarders has grown into the largest solution for retailers.
An online shop is set up by selecting a template and the integration with the stationary trade is relatively easy to implement.
The choice of tools is wide: From payment terminals, to light technical integrations such as viewing locally and shopping online, or vice versa – all work without problems.
Shopify also monitors inventory across all locations. They go so far as to provide their dealers with automated reports that forecast when a certain product will be sold out, in order to never run out of stock.
What few people know, however, is that Shopify’s and Tobias Lütke’s vision is much bigger: “Always by your side from the first sale to the global business”.
This is Shopify’s website slogan.
At the same time, they offer all the functions that a company needs to operate eCommerce and stationary trade at the same time.
But what significance does Shopify have for stationary trade and eCommerce?
Online trade as a competition to stationary trade
Again and again, we read articles that online trade is destroying stationary trade. More and more retailers are closing with the claim that they cannot compete against Amazon.
Also in a Hubspot article it is written:
“Even if the developments in online trade represent a serious competition for stationary trade, the battle is by no means lost.”
Online trade is a serious competition.
These types of articles keep popping up and many studies point to the development of eCommerce.
Nasdaq published a report in 2017 on the development of online trading in the UK.
They pointed to a study that predicts that by 2040, e-Commerce will account for 95% of all orders.
But it is forgotten that the user journey is highly complex. Many orders are placed online, but the majority of customers have also previously visited a stationary store.
We believe that eCommerce should not be presented as the competition.
Rather, we see this as an opportunity for retailers to come to the fore again.
Based on this idea, Shopify also develops solutions for retailers to easily enter the eCommerce business and scale their business (or vice versa).
As a retailer there should no longer be a decision for or against online or offline. If one decides to open a stationary trade, the eCommerce business should also be built up simultaneously.
Omni-channel is still the future
Shopify comes from a pure online shop world and recognized early on that the trend is towards omni-channel.
Such an approach can only be implemented if the technical solutions are already built with exactly this basic idea in mind. This system is offered on a large scale by Shopify.
The merchant chooses a template from Shopify’s extensive library and can then edit it individually.
He can overview the stock across several locations and reserve a part for the eCommerce area.
If a buyer has a customer account, he or she will also be immediately recognized in the stationary store and his or her purchase will be part of the loyalty program.
Customers can decide directly to have the product delivered to their home. Returns can be accepted at all locations, whether purchased online or in another country.
These are all solutions that are otherwise only known from wholesalers, which have been elaborately integrated.
However, the functions of wholesalers often do not run smoothly either, as they usually had to be integrated into old systems at great expense.
Smaller merchants can now take advantage of the best features from a single platform, without technical problems.
An example of the quality of the Shopify omni-channel solution could be seen during the COVID-19 pandemic.
In a launch video (33:34m) of new products, Shopify announced recent figures on how its stationary retailers have bridged the time.
After the shops had to close, 71% of total sales collapsed – retailers lost a large part of their sales overnight.
But thanks to the online shop, which also ran via Shopify, retailers were able to recoup up to 94% of lost sales.
Customers were offered to pick up products from the shop or the goods were sent by post.
Shopify is the biggest competition for Amazon
Shopify has been doing everything right in recent years. Everyone who has ever ordered something online has already ordered from a store that was technically implemented by Shopify.
Shopify provides the functionality to implement an omni-channel approach as a retailer.
Shopify has already optimized all areas of direct customer contact, using a 100% omni-channel approach.
They know that there are still many processes in the backend that have to be operated elaborately.
This includes, above all, the warehouse-, shipping- and return-management.
Even if it is technically possible to scale, you also need the goods and the implementation in the warehouse to implement the new orders. For this reason, Shopify will in future also rely on fulfillment the “Shopify Fulfillment Network”.
Similar to Amazon, Shopify is also planning a full-service offer and thus the takeover of the necessary processes.
The big difference is that Shopify wants to automate the process almost completely while remaining in the background.
Merchants can use their portals to select the products they want to submit to Shopify.
Based on retail sales history, Shopify will automatically decide which warehouse the products will end up in and how to distribute them.
The products always remain close to the customers and delivery times should be kept short. The packaging will also remain in the style of the brand and all customer data will remain with the dealer.
Shopify thus makes a clear statement to the current solution from Amazon. They want dealers to maintain their customer contact and to be able to bind customers to their brand.
That is because they themselves know how important the existing customer area is.
So far this solution is only available in the USA and for a small number of dealers. Shopify is continuing to expand and will internationalize these solutions over the next few years.
Is Shopify the solution for every merchant?
Are major brands like Nike, Adidas, H&M or Tiffany & Co. now switching to Shopify?
Most likely not.
Over the last 10 years, international brands have invested a lot of money in their own eCommerce systems and thus built their own platforms.
These are also based on current IT solutions and therefore the effort to change their entire system to Shopify would go beyond the scope.
But what about small local traders who have not yet dared to enter the eCommerce business?
Or merchants who have several locations in one or more countries, but who have been hesitant to enter the eCommerce business until now?
For just such companies, Shopify is the best omni-channel solution on the market today.
They can build a data-driven platform with little IT effort while serving their existing customers even better across all locations.
The same principle also applies to brands that have focused solely on e-commerce in recent years.
Many of them have relied on Shopify from the beginning. With the expansion of the stationary functions, these dealers can now also enter the local business without great technical effort.
This is also the difference for a sustainable and long-term strategy.
It is not a question of whether e-commerce or stationary trade wins. It’s more about how retailers can synchronize these two platforms to provide a seamless shopping experience for customers.
Are you also thinking about entering the eCommerce business and do you still have doubts about how to master the challenges?
Simply arrange a non-binding appointment with one of our eCommerce experts.
Shopify in our GANDT Fireside Chats #009 and #023
In our daily Fireside Chats we discuss trends in online marketing and digital retail.
During our Fireside Chats #009 and #023 we talk about the relevance of Shopify, among other things.
If you are interested in the topic, just have a look! The video is in German, we are working on English captions. If you are fine with Google’s auto-translation, or speak German of course, you’re all set.
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