December 1, Shopify said brands using its platform sold $ 5.1 billion Black friday at Cyber monday, marking an increase of 76% from 2019. This follows its Q2 and Q3 results, which were up 97% and 96% respectively.
Since its inception in 2006, Shopify has made a name for itself as an out-of-the-box solution for over a million brands selling products online, including Direct to Consumer (DTC) darlings such as Allbirds, Brooklinen and Rothy. After conquering the world of DTC, Shopify set its sights on bigger brands like Heinz and Molson Coors after launching its enterprise platform, Shopify Plus, in 2014.
But it was in 2020 that Shopify became more and more important for an even wider range of businesses, like the WC spray. Poo-Pouri and the Hint Water beverage brand, which has traditionally reached customers through retail stores and online marketplaces. Kevin Simonson, vice president of social media at digital marketing agency Wpromote, noted that this is a “major trend” in 2020 for brands to expand their online presence on Shopify to offset the decrease in-person discovery opportunities in stores – and they’re hardly alone.
However, ecommerce pundits predict that Shopify’s biggest challenges may yet be ahead, including how to defend this field against a host of big-name competitors like Adobe, Salesforce, and Oracle.
The empire and the rebels
As Shopify grows, comparisons to Amazon are inevitable. However, there is a fundamental difference in the way the two work. As CEO Tobi Lutke said a question-and-answer session on Twitter 2019: “If anything, Amazon is trying to build an empire and Shopify is trying to arm the rebels.”
These rebels have a key advantage: data, which they can use to communicate directly with consumers and meet their needs. Amazon, on the other hand, does not share comparable data on consumer behavior with the brands that sell on its platform. But according to figures from Emily Pfeiffer, senior analyst at Forrester, brands typically only see a single-digit percentage of sales through their own websites, so they need online marketplaces and traditional retailers to make up for the rest. .
Pfeiffer also highlighted research that shows more consumers use Amazon as a product search engine than Google. So the brands that want to be discovered by Amazon’s 2.9 billion monthly visitors must endure challenges like imitations and sometimes direct competition from Amazon itself.
Insiders say brands are adjusting their Amazon strategies to strike the right balance between discovery on one platform and data on the other. In some cases, that means only selling their most popular SKUs on Amazon so that brands always show up in search, Simonson said.
“The smartest will have a very low inventory, so they just leave their dregs,” he added. Then these brands hope consumers will make the jump to their own e-commerce sites. (Pfeiffer disagrees that this is an effective strategy, but said it’s common to only release part of a catalog in certain channels to maintain visibility while mitigating channel conflicts and comparison issues.)
Another strategy is to send excess inventory to Amazon instead of hosting flash sales. This way, brands benefit from additional purchases without looking like discount brands, Simonson said.
Former Amazon employee Faisal Masud, who is now CEO of the Fabric commerce platform, agreed that brands trying to carve out a foothold in the market shouldn’t just rely on Amazon. Although, at the same time, he concedes that big brands have the luxury of potentially moving away from Amazon – think Nike and Birkenstock– while small brands still need Amazon to develop their speed.