Shopify post-pandemic – a star is born?

Photo by Andrea Piacquadio on Pexels.com

As more shoppers fear going into a physical store or have gotten used to the convenience of online shopping, Shopify is well placed to become the next retail superpower. Here is why.

Ecommerce as share of retail will grow

We’re nearing the end of the lockdown and the retailers who survived it can finally open up their offline stores again. Does it mean that thousands of shoppers will now crowd in front of the retail outlets shopping for a new look, new makeup and all the products they couldn’t get hold of during the lockdown?

Data seems to be saying the contrary – A recent study by First Insight found that 78% of women would not feel safe testing beauty products, 65% would not feel safe trying on clothes in a dressing room and 66% would not feel safe working with a sales associate.

Something more than just fear is at play though. During the lockdown, many shoppers had to overcome their distrust of buying things online – 14% of UK shoppers used online grocery delivery for the first time during the pandemic. It’s not only buyers who go online though, it’s also the sellers.  In a survey for the website builder GoDaddy, a fifth of micro businesses said they had gone online for the first time during lockdown and nearly half that their use of digital and social media tools had increased.

Once buyers have grown comfortable shopping from their living rooms, why would they decide to drive all the way to a physical store with its limited inventory, especially if they perceive it as a threat to their health and life?

Growing anti-Amazon sentiment benefits Shopify

It seems certain that ecommerce will grow as share of retail. But I’d also like to argue that a few big players will emerge as winners and own this sector and that Shopify is going to be one of them.

While Amazon remains the biggest ecommerce platform in the US, it’s very likely that Shopify has just quietly become the second biggest one. Shopify is just a tool to build an ecommerce store, not one central site so it’s quite hard to estimate the total traffic or sales volume of all the Shopify sellers. However, a recent article by Financial Times claimed that Shopify’s GMV has already exceeded that of eBay. Which would indicate that Shopify is already the second biggest player in the US ecommerce.

While Shopify might never surpass Amazon which aggregates products from thousands of small businesses in one central site and thus benefits from a network effect, its share should keep growing. One reason for this is the growing anti-Amazon sentiment, both among buyers, outraged by their treatment of warehouse workers, and among sellers who fear that selling on Amazon could damage their brand.

At least at the moment, apart from a few analysts, the public opinion is largely enthusiastic about Shopify.

Shopify increasingly moves up market

A part of Shopify’s charm is in its humble beginnings. The founder, Tobi Lutke, first wrote the code for the platform to build his own ecommerce store. He quickly realized that the software he created was more valuable than the store itself and started a new company, whose mission was to help hopeful entrepreneurs easily start an online retail business.

Fast forward to 2020 – more than one million companies use Shopify’s software and a vast of majority of them are tiny entities, often one-woman businesses. However, when household names such as Heinz or McDonald’s decide to create their online presence, the Canadian company is often their platform of choice. Even the world’s biggest luxury products maker, LVMH, started using Shopify for some of their brands.

One reason for that is certainly the momentum – some of the Shopify sellers quickly grew into widely recognizable brands (Alo Yoga, Rothy’s, Allbirds, Outdoor Voices to name only a few) which gave the platform the hot status that its competitors like BigCommerce or SalesForce Commerce Cloud arguably lack.

But the main reason for the platform’s success is certainly the app ecosystem. While Shopify’s main software is less sophisticated than that of its competitors, the fact that it can be paired with one of 2400 apps created for the platform gives sellers unlimited possibilities. There is an app for international marketing, an app for buying stock, an app for product recommendations… There is an app for anything. A project that could take months of work and cost thousands of dollars using a traditional ecommerce technology can be achieved in a matter of days on Shopify.

Compared to Amazon, the cost of operating a Shopify store is lower (roughly 2% commission compared to 10-20% on Amazon) and less risky for the brand.

That’s why, if Shopify manages to maintain its coolness, it will pose a much more serious threat to Amazon than Walmart or eBay.

Fashion comes clean

photo of woman near clothes
Photo by Burst on Pexels.com

Fashion industry is responsible for as much pollution as oil industry. It employs thousands of people in deplorable conditions, often risking their lives to deliver the latest trends to the developed world.

As consumers are ever more conscious of the human and environmental cost of what they wear, these brands want to prove that we can do better, in all areas, from production to shipping.

Fashion consumes 98 million tons of nonrenewable resources annually. Fashion employs garment workers paid as little as $ 0.35 per hour to work in extremely hazardous conditions. Factories producing viscose, a synthetic textile used in blouses, skirts and suits are regularly accused of water and air pollution with chemicals.

What can fashion brands do to align with the values of their increasingly “woke” customers?

Rent the Runway – buy no clothes

What better way to limit the disastrous impact of fashion on the world than to… stop producing fashion altogether? Rent the Runway is a service for fashion-conscious people willing to join the “rental revolution”. It sports thousands of designer clothes that are there for rental, not for buying. “Smaller footprint” is one of the site’s top selling points.

rent_the_runway
Smaller footprint is one of the main reasons you would choose to rent rather than to buy

In a very smart move, Rent the Runway partnered with a hotel chain for a clothes delivery service. Rather than traveling with a bag full of clothes you can have your favourite styles waiting for you in your hotel room… without the guilty feeling of increasing your carbon footprint.

Vestiaire collective – buy again

For those who’d still rather buy than rent, the most environment-friendly option is to buy again. Vestiaire collective makes it possible to sell superfluous designer products cluttering our closets and to buy thousands of curated, pre-owned goods.

While dealing in second-hand products, it maintains a luxury, exclusive touch – a sign that buying pre-owned products is becoming socially acceptable for ethical reasons. The Real Real or Vide Dressing are other examples of the same trend.

Patagonia – repair and reuse

While remaining in the “buy new clothes” business, Patagonia makes a real effort to ensure long life for the clothes they produce. One of the most visible actions is their Worn Wear program.

patagonia
Patagonia’s mission is to extend the life of their products

On one hand, Patagonia encourages selling pre-owned Patagonia goods – either in-store or by posting them.

On the other hand, they organize road shows during which they meet their customers and repair their clothes!

Most of all, they commit to producing high quality product that can last for years, as “keeping clothing in use just nine extra months can reduce the related carbon, water and waste footprints by 20-30%.”

Rothy’s – recycle

Somewhat less radical but equally noteworthy is the concept of ethically sourcing raw materials.  The upper parts of Rothy’s shoes are woven from plastic water bottles thus giving a second life to the notorious polluter.

Rothy’s efforts to use recycled materials go a long way – even the blue ribbon used to seal the packaging is obtained from recycling.

Talking about the packaging, as an ecommerce pure player, Rothy’s are aware of the carbon footprint generated by shipping products. Their packaging is stripped to a bare minimum and “fully biodegradable.”

rothys

Allbirds, also competing in the SSS (“sustainable shoes on Shopify”) category, takes a similar approach. While the shoes themselves are produced from natural, ethically sourced materials, laces are made from recycled plastic bottles and packaging – from recycled cardboard.

Guilt-free fashion

The most sustainable approach to fashion would arguably be to

  1. always wear the same clothes
  2. only wear self-knitted sweaters from the wool coming from one’s own sheep

As these are either complex to put in place or socially unacceptable, it’s good to see fashion brands waking up to the threat they have become to the world. Renting, re-using, repairing and recycling can visibly reduce our carbon footprint… while still making us look fabulous!

5 main issues you may encounter when selling internationally

international ecommerce
Photo by Porapak Apichodilok on Pexels.com

Expanding internationally seems like the most obvious way of growing your company. If you’re already the market leader for your type of business in your home country, where would you try to look for growth if not abroad? If you have strong local competitors and have to give up on some of your margins to remain in the game isn’t it obvious to try your luck elsewhere?

It is. Only, if you don’t do it right, it may come at a price.

Having worked with thousands of ecommerce merchants who tried their luck abroad, here are some of the challenges I have observed.

Different consumer expectations in different countries

It’s common knowledge for Cross Border Trade veterans but may be less obvious to merchants who until know have only contented themselves with their domestic market – consumers behave differently in different parts of the world and have different expectations. Germans, for once, has the highest return rate in Europe, with 41% of orders being returned. The return rate there is more than twice higher than in Italy or Spain. You should also expect German consumers to thoroughly read through your terms and conditions and privacy policy and point out anything which is not in accordance with the German law. Ouch!

International taxes

Once you start to export, you should make sure you’re up to speed with the local tax regulations in the countries you’re selling to. If you export to the European Union, once you have exceeded a pre-defined threshold, you need to register for paying the VAT tax on the goods that you sell in a given country (please note that this explanation of the VAT regulations starts by saying : “Due to the complexity of
the law, this information is not exhaustive”). The recently introduced GST in Australia works in a similar manner.

Countries with unreliable postal services

You’d be surprised by the number of shipments that will mysteriously get lost once you start delivering to countries such as Italy or Greece. In Russia, you should generally only deliver to business addresses. In the countries with many islands (such as France) delivery rates may vary a lot between a mainland and island addresses.

Custom duties

If you export to Canada a good whose value exceeds $150 (it’s called the de minimis threshold), the good risks being stopped at the border and your end consumer may have to pay an extra fee in order to receive it. Other countries have their own de minimis thresholds above which the products you ship may be eligible for custom duties.

How do you navigate across this incredibly (and increasingly!) complex landscape? The best advice is to look for some help, for instance with the experienced Cross Border Trade experts at WebInterpret.

Singles’ Day in all its’ numbers

chinese girl shopping
Photo by Pixabay on Pexels.com

You have probably heard this one : Singles Day is bigger than Black Friday and Cyber Monday combined. But probably also this one : Singles Day growth has decelerated compared to last year’s. Whichever way you choose to look at it, the sheer size of the Chinese ecommerce extravaganza makes one dizzy.

Here it is in all its numbers :

85s – the time it took to spend $1B during this year’s Single Day

27% – growth of the Singles Day GMV (Gross Merchandise Value, or simply sales of goods) YoY

10 – the number of times the Singles Day shopping holiday has been held by Alibaba, the Chinese equivalent of Amazon

4 – the number of times the number “1” appears in the date 11.11 making it the most lonely day in the calendar year which is how the Singles Day came to live

3.2% – the drop in the Alibaba’s stock share price upon the 2018 Singles Day results

$30.8B – GMV of the 2018 Singles Day

180 000 – number of brands participating in the event