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What Will Shopify Do Next?

“What will Shopify do next,” is a question commonly fielded by our strategy and project management teams in mid-2020.

The ecommerce platform has been on a tear, and its large pile of cash plus high valuation is causing a lot of investors to ponder where the platform could invest in the coming months and years. Merchants are concerned, too—after all, their livelihood is tied directly to Shopify’s continued investment in the ecommerce platform. So where does Jordan Brannon, our COO, expect Shopify to invest next?

Watch below and find out.

Over the years, Coalition and team have been right in predicting Shopify’s next steps on several occasions. We called their move into payments, into fulfillment, into email, and more. While the timing always varied a bit from our projections, and some of the moves didn’t match exactly what we anticipated, we’ve managed to have a surprisingly accurate prediction rate.

And that’s all without insider information! We’re simply evaluating what Shopify has done, and projecting how their underlying philosophy / approach to their market will drive what they do next.

Jordan has a few big areas where he is projecting Shopify will invest:

First, he’s predicting that Shopify will take its investment in the fulfillment category and more effectively monetize it by making hardware and software kits readily available to merchants not using Shopify’s actual fulfillment centers. Doing so is aligned with the core Shopify SaaS model and fits well with their current approach to selling POS hardware and software solutions.

Many ecommerce merchants are disinterested in shifting their inventory to a new fulfillment provider or 3PL in the vein of Amazon. It’s expensive, time-consuming, and many Shopify merchants aren’t of the scale yet where a distributed, machine learning fulfillment network is advantageous.

Rather, being able to purchase and pay for the use of an easy-to-use, natively-integrated order management, fulfillment, and shipping solution is a lot more appealing. Many small ecommerce companies have very crude fulfillment processes and this incremental step allows Shopify to increase its take rate from each merchant without increasing their total expense, while also more closely aligning their future business prospects with dependency on Shopify.

Second, he projects that Shopify will move to target aspects of the traditional ERP market. In line with its current approach of focusing on perceived TAM and share value, aiming at large multi-billion dollar software providers like SAP and Microsoft sells a good story. It also potentially makes the Shopify Plus product (which, despite growth amidst COVID-19, still underwhelms many large enterprises) more appealing.

The ERP market has also entered the ecommerce market frequently as a competitor to Shopify so Shopify isn’t making any enemies it doesn’t already have. Further, it’s a very rich opporutnity with many small and mid-sized businesses paying tens of thousands of dollars in annual implementation and licensing costs. A scalable, easy to use, SaaS and cloud based ERP solution built to integrate natively with Shopify’s ecommerce, payments, and fulfillment solution is hardly out of the question.

Don’t be surprised if Shopify starts with some kind of basic accounting offering. Intuit Quickbooks and others exist without a lot of competition and leave a lot of merchants more frustrated than satisfied. Shopify is already handling transactions, profit reporting, banking integrations, and has some basic Staff functionality in place. It’d be an easy win for their share value to indicate that they are tackling the rich world of small business accounting software.

Finally, Jordan projects that Shopify will invest in more consumer-facing advertising to build interest in Shopify’s merchant-facing solutions, including the Shop App, Shop Payments, and more. The goal? With increased consumer traffic and usage of Shopify products directly, Shopify is able to target the huge dollar opportunities of the consumer advertising. Google, Amazon, Facebook and others heavily depend on these revenue streams and undoubtedly Shopify’s leadership team is considering how to build enough interest in the Shop App to start their own venture into that space.

Recent news about the Shopify Studios “I Quit” program is likely an approach we’ll see more of from Shopify as it tries to go right to the consumer.

If you have any other predictions or projections you want to bounce off our team, or if you’re a merchant who would like help evaluating Shopify or other ecommerce platforms, click here to reach out to our team today.

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