On April 28th,2020 Shopify quietly revealed a new application produced in house by them. This application is simply called the "Shop" app and despite it being released months back at this point a lot of people don't know about the application and what its purpose is. Today we will go over what the Shop app is, what its purpose is and how it can evolve in the near future possibly becoming a powerful ecommerce tool.
According to Shopify the Shop app is described as "a digital shopping assistant that brings together the best features of Arrive and Shop Pay (formerly Shopify Pay) to make it easy for customers to speed through checkout, track their order and shipment details, and rediscover brands they love". So what does this mean? Essentially the shop app is a marketplace application that allows users to find any online store that is built on the Shopify platform. The catch is that for a shop to be live on the Shop application they must be accepting Shop Pay (Shopify's own payment processing system) as a form of payment. This is a major hint that they have some sort of big plan for this application in the future but we will get back to this in a minute.
In its current stage the app can be classified as somewhat of an open beta. Currently you can search for your favourite stores, follow them to create a customized feed of new products/deals from your favourite retailers and also buy products through the app and track shipments of these purchases through the app. Think of the app as a fusion of instagram and amazon of sorts. At the moment there are two sides to the Shop app both being somewhat lacklustre at the moment. The two sides of the application are the consumer side and the merchant side. The consumer side being the actual app that we just discussed is available on android and ios app stores. The merchant side is available through the Shopify app store and can be managed through your Shopify dashboard.
At the moment you can't really change much on your merchant profile besides your header and store logo. On the consumer side of the application you don't really get shown any stores besides what is close locally based on your location. The purpose of this is to help businesses gain local traffic/customers but overall it's a very odd system considering the point of the internet is to allow you to find all sorts of products you like from around the world.
So is this app just some experiment Shopify is doing for fun or is there a bigger picture to this? The team at Mr.Web definitely thinks there is a bigger picture to the Shop app. Going back to the requirements for Shopify store to be listed on the Shop app the main requirement is that the Shopify store has the accept Shop Pay payments. This means Shopify will make a small transaction fee on any purchase made through this application. Now for Shopify to actually be this strict and force all Shop app customers/merchants to use their native payment system they must be expecting the app the produce a reasonable or high volume of transactions. This is a very promising indicator that Shopify has high hopes and big plans for this Shop app.
So what's next? As of right now there is no concrete plan Shopify has announced for the evolution of the app but we have a pretty big hunch on whats next. We believe the app will slowly be transformed into a mega hub for ecommerce similar to Ebay,Amazon,Wish etc. Shopify already has the merchants, the merchants have the products all they are missing is the platform. Now although there will be a lot of advantages to this if it becomes a reality there will also be some disadvantages for merchants.
Since payments are done through Shopify they essentially have control over the merchants money. There is a big probability the Shop app will introduce some sort of buyer protection or money back guarantee for consumers. The good news is that merchants will have to step up their game (if they already haven’t) and provide products as described and shipped in a reasonable manner. This can be extremely hurtful to some stores however, particularly stores that rely on slow shipping dropshipping methods. Products coming in from China can take months to arrive at times and many merchants can find themselves getting charged back for orders if consumers claim their order has never arrived. Not only will the dropshipper have lost money on the sale in this situation but they will also lose the money spent purchasing the product being dropshipped.
Another factor to look at is competition. One of the main benefits of having a Shopify store is the fact that your store is essentially an online boutique that exclusively shows your products. A customer is not seeing your competitors product/price while on your site. This might (most likely will) change with the Shop app. With the Shop app consumers will quickly be able to compare prices between similar/the same products. Creating an amazon scenario where your margins are low and you must rely on large volume to make good money. Although this is great news for consumers it is terrible news for merchants. On of the best things about Shopify is that you can take a readily available/inexpensive product add your branding and brand image to it and mark it up a considerable amount. This means merchants will have to start investing a lot more time into product development and branding/marketing to justify their high margins if they want to sell well on the Shop app.
So who's the winner if our theory about the Shop app is correct? Well the biggest winners will undoubtably be Shopify since they will be making ridiculous amounts of money off transaction fees if the platform takes off. Consumers will also benefit from more options, lower prices and possibly better products. Now the Shop app won't essentially just be ill and gloom for merchants. It can potentially expose their products too many new customers that might have never come across them. If a merchant has a product that is worth the money, branded effectively and their customer service is good there should not be a reason for the Shop app to hurt them.
At Mr.Web we look forward to see how the Shop app plays out. In the meantime we are focusing on helping our clients strengthen their brand image, products and customer service/marketing so when the time comes/if the time comes they are prepared to thrive on the Shop app marketplace.