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Shopify goes after the very biggest businesses with new retail offering

OTTAWA — Shopify made its name as online-selling software for independent, direct-to-consumer (DTC) merchants, helping incipient celebrity cosmetics lines and young gymwear labels grow into well-known brands. But the Canadian commerce company has also won many large, established clients over the years, and on Tuesday launched a new offering for the very biggest businesses. Here’s what you need to know.

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Shopify goes after the very biggest businesses with new retail offering

Commerce Components unbundles tech giant’s tools for enterprise clients

By Murad Hemmadi
Barbies at Toy Fair New York in February 2020. Shopify has landed brand owner Mattel as a client for its new Commerce Components offering for very big businesses. Photo: AP Photo/Richard Drew
Jan 3, 2023
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Barbies at Toy Fair New York in February 2020. Shopify has landed brand owner Mattel as a client for its new Commerce Components offering for very big businesses. Photo: AP Photo/Richard Drew

OTTAWA — Shopify made its name as online-selling software for independent, direct-to-consumer (DTC) merchants, helping incipient celebrity cosmetics lines and young gymwear labels grow into well-known brands. But the Canadian commerce company has also won many large, established clients over the years, and on Tuesday launched a new offering for the very biggest businesses. Here’s what you need to know.

What’s new: Retailers signing up to Commerce Components can use Shopify’s range of tools “in an à la carte way,” said Arpan Podduturi, vice-president of product. For example, they might stack its checkout system atop existing inventory and customer-data tools. Shopify is also touting its network infrastructure, which delivers store pages quickly so brands aren’t leaving would-be shoppers hanging.

The tech will all integrate via a set of APIs, and clients will pay based on what they use. They’ll have access to the many apps that third-party developers have built to work with Shopify’s platform, as well as in-house add-ons like its lucrative payments processing service and one-click checkout offering Shop Pay.

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The backstory: Shopify started out selling small businesses software to launch webstores. The company has continued to tack new services onto its core platform, but it’s also expanded up-market.

In February 2014, the firm launched Shopify Plus, a package for larger merchants who needed to process more transactions and wanted more dedicated support. As of the end of September, the offering accounted for 32.8 per cent of the firm’s US$107-million in monthly recurring revenue.

Sales for those bigger businesses have long grown faster than the rest of Shopify’s clientele; since the firm makes a significant share of its revenues from fees linked to services like payment processing and shipping, more orders mean more money. And while most features are available to all of its customers, the company has recently added some that are Plus-exclusive. They include Audiences, an ad-targeting tool unveiled last May, and a B2B wholesaling system launched the following month.

In addition to the DTC merchants that have graduated to Plus, the division has won business from consumer packaged-goods giants and other large corporations launching online stores for some of their brands. It now hosts the Japanese licensee for Converse, a Nike property; Tetley Tea, owned by the Indian conglomerate Tata Group; and Pond’s, a Unilever skin-care line.

But unbundling its technology via Commerce Components may let Shopify sell parts of it into a mega-customer’s entire retail infrastructure. On Tuesday, it unveiled toymaker Mattel as the new service’s marquee client; the firm has already used Shopify for drops of special-edition products in its Hot Wheels and Barbie brands.

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Podduturi pitched Commerce Components as a way to provide tools to big businesses “that no retailer should build themselves,” sparing them the cost and challenges of “building a custom solution in-house only to become a tech company.” Unlike frequent comparator Amazon, Shopify isn’t looking to build a shopper-facing Everything Store. It would rather be the Everything Store for people who run stores, no matter their size.

#e-commerce #Shopify

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