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During the eCommerce Gold Rush, Shopify was the man selling shovels...

It's been a while since I looked at Shopify. One of the darlings of lockdown, Shopify promised to make every Joe Schmo the next Jeff Bezos with an easy-to-use and powerful eCommerce platform at a rock-bottom price. No inventory? No problem! YouTube was awash with adverts from self-made millionaires who had made their fortunes drop-shipping products in from China and who now wanted nothing more than to share "their secrets" with you... for a price.

Running an eCommerce consultancy, Shopify was constantly on our radar. Not because it was really a competitor in our space, but because it was a question we always had to answer. It became pretty common for someone to bring up Shopify, a new variation on the classic "I've got a mate down the pub who builds websites" that dogged many a consultant in the early days of professional web building.

I've always thought Shopify was a little bit of a grift - the subscription costs you money whether you make a profit from your store or not and I'd been in the eCommerce space long enough to know that even the most technically advanced and inherently powerful website would need constant attention to content, marketing, customer service, and a myriad of other business functions in order to be successful.

To put it another way...

During a Gold Rush, be the man selling the picks and shovels.

When people were looking for a way to get into eCommerce, or even just a way to make some (extra) money, Shopify was ready to sell them the picks and shovels they needed because "there's gold in them thar hills". Shopify was riding the crest of a very particular wave so, when they popped up on my news feed a few weeks back I wasn't completely surprised to see that Shopify's share price had tumbled by 75% or that the vast majority of Shopify stores fail.

What's wrong with Shopify?

The fundamental problem with Shopify, once touted as the "Anti Amazon", is that it needs you to bring your own customers. It doesn't matter how good the technology under the hood might be for Shopify, you're still going to be competing with the entire Internet including Amazon from the minute you launch your store.

Amazon, by comparison, does not need its merchants to do any marketing outside of merchandising and advertising within Amazon's platform - Amazon brings the customers to you. However, this is a caveat to this. Those lovely, lovely customers are never yours. They belong to Amazon, and always will.

Shopify has an estimated 1.75 million merchants on its platform, 18,000 of them on the premium Shopify Plus, dwarfed by the estimated 9.7 million sellers worldwide on Amazon.

I've previously written about the dangers of building your brand on a technology platform you don't own and this is a very serious risk for Amazon vendors. If Amazon decides to move into your niche then you are going to find it extremely hard to compete. Over the years, Amazon have launched an ever-growing portfolio of its own brands and private labels.. Back in 2020, the Wall Street Journal carried an explosive report indicating that Amazon uses data from third-party sellers to develop its own products, an allegation that would eventually lead to Amazon facing investigation by the US government and being forced into a major pivot in how it operates its marketplace.

Even if the playing field is equal between you and Amazon, if your product is not unique then there is always the risk that another merchant might come on to the platform and steal your position as the preferred seller for a product. The marketplace, by design, is extremely cutthroat.

So, is

Should you launch your store on Shopify?

Launch your store on Shopify if you have a strong product, simple eCommerce needs, and are prepared to have your store be a "me too" experience. If your product is more generic you will need an exceptionally strong brand with excellent marketing to rise above the pack.

Be advised that as your needs grow more complex you are likely to find yourself delving into Shopify's internal app marketplace to find solutions to your needs and the costs of these various apps can quickly mount up into a hefty monthly price tag. A point in time may come when, if your store is successful, it will be time to leave Shopify.

So, is there a good option? Are both Shopify and Amazon bad options for brands? Read on...

Should you launch your store on Amazon?

Launch your store on Amazon if you have a unique product or brand that you can protect with copyright/patents or you are prepared to be a commodity selling, racing to the bottom on price/margin with other sellers.

Even if your product is non-replicable, I would still advise having a secondary site that is your own where you can build your audience and sell direct without having to jump through Amazon's hoops.

Should you build or buy an eCommerce site?

If you have complex needs, it's likely you will need a bespoke site. You may find a consultant, developer or agency recommending that you use Shopify under the hood (Shopify Premium being the more customisable, but more expensive version), or perhaps Wordpress and WooCommerce, or one of the other eCommerce platforms. My personal recommendation here is to go with an agency that has built its own platform - that will go a long way to guaranteeing their understanding of the true complexities of eCommerce and should give you some assurance that they aren't just piggy-backing on an existing platform, with all the strengths and weaknesses that come with it.

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