๐ŸŽฏ Shopify's App Ecosystem

The anti-Amazon playbook

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Shopifyโ€™s App Ecosystem

Ever wondered how Shopify managed to grow their transaction volume to 50% the size of Amazon Marketplace?

When Shopify launched in 2006 it was called โ€˜Snowdevilโ€™โ€ฆ and it was planned to be an online store for snowboarding equipment.

At the time, the founders had 2 options to launch their store:

  1. Attempt to assemble a complex web of clunky tools that donโ€™t work well together, or

  2. Launch on Amazon Marketplace and helplessly wave goodbye to ~15% of revenue skimmed off their top line.

The solution? Pivot โ€˜Snowdevilโ€™ into โ€˜Shopifyโ€™, and build the ultimate toolbox for independent online sellers.

Letโ€™s dig into a strategy that enabled them to pull it off:

The Shopify App Store.


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Chess Move

The what: A TLDR explanation of the strategy

Shopify's App Store provides merchants a comprehensive toolkit of specialised 3rd party integrations to build, run and improve their online stores.

By cultivating a rich ecosystem of developers building for every edge-case, Shopify transformed its platform into a one-stop-shop for all possible ecommerce needs (just like Apple and the iPhone).

Amazon won ecommerce by beingย the department store.

Shopify claimed its wedge by beingย how sellers build their own store.


The how: The strategic playbook boiled down to 3x key takeaways

Let others do the building:

Becoming an all-in-one toolbox is great in theory, until you consider the endless list of user needs you have to solve for.

So, Shopify welcomed third party developers into the tent, empowered them to monetise easily, and let them build countdown timers, recommendation engines, search boxes, and fulfilment integrations to their heartโ€™s content.

Now, Shopifyโ€™s feature coverage is immense and dynamic:

Updated European compliance requirements? GDPR apps jump on it straight away.

New TikTok commerce features announced? Developers ship updates for sellers to take immediate advantage.

Takeaway: Can you provide the right incentives and ecosystem structure for third-parties to help make your offering more complete?

Be the glue:

Trying to integrate tools that donโ€™t play together is like building a house with sticks and band-aids. Now imagine what it was like in 2006.

A part of what makes Shopifyโ€™s App Store so powerful is how seamless it is for merchants: Add an app, instantly start configuring, deploy new functionality to your store within minutes.

From email marketing to accounting software to shipping providers, the App Store lets merchants rapidly operationalise not just an online storefront, but an entire ecommerce business.

Takeaway: If you can do one thing really really well, maybe it should be making things seamless for your customers.

Become the competitionโ€™s biggest weakness:

For years, analysts debated who would beat Amazon at their own game.

Shopify took another approach -

Rather than compete head on, they built an App Store to become everything that Amazon wasnโ€™t:

Centralised tool stack โ†’ Third-party app ecosystem

Lookalike product pages โ†’ Customisable storefronts

Singular merchant experience โ†’ Extensible backend

Takeaway: If you canโ€™t beat โ€˜em, become what they canโ€™t.

Shopify didnโ€™t set out to become the โ€˜next Amazonโ€™.

They made a bet that the โ€˜next Amazonโ€™ was justโ€ฆ sellers themselves.

Rabbit Hole

The where: 3x high-signal resources to learn more

Shopify and the Power of Platforms

Stratechery hit a slam dunk on this write-up - read if you enjoy hand-drawn mental models and back-to-back โ€œOh wowโ€ moments. Our favourite quote:

โ€œ๐˜Œ๐˜ท๐˜ฆ๐˜ณ๐˜บ ๐˜ณ๐˜ฆ๐˜ง๐˜ฆ๐˜ณ๐˜ณ๐˜ข๐˜ญ ๐˜ฑ๐˜ข๐˜ณ๐˜ต๐˜ฏ๐˜ฆ๐˜ณ, ๐˜ฅ๐˜ฆ๐˜ท๐˜ฆ๐˜ญ๐˜ฐ๐˜ฑ๐˜ฆ๐˜ณ, ๐˜ต๐˜ฉ๐˜ฆ๐˜ฎ๐˜ฆ ๐˜ฅ๐˜ฆ๐˜ด๐˜ช๐˜จ๐˜ฏ๐˜ฆ๐˜ณ, ๐˜ข๐˜ฏ๐˜ฅ ๐˜ฏ๐˜ฐ๐˜ธ 3๐˜—๐˜“ ๐˜ฑ๐˜ณ๐˜ฐ๐˜ท๐˜ช๐˜ฅ๐˜ฆ๐˜ณ ๐˜ช๐˜ด ๐˜ด๐˜ช๐˜ฎ๐˜ถ๐˜ญ๐˜ต๐˜ข๐˜ฏ๐˜ฆ๐˜ฐ๐˜ถ๐˜ด๐˜ญ๐˜บ ๐˜ช๐˜ฏ๐˜ค๐˜ฆ๐˜ฏ๐˜ต๐˜ช๐˜ท๐˜ช๐˜ป๐˜ฆ๐˜ฅ ๐˜ต๐˜ฐ ๐˜ค๐˜ฐ๐˜ฎ๐˜ฑ๐˜ฆ๐˜ต๐˜ฆ ๐˜ธ๐˜ช๐˜ต๐˜ฉ ๐˜ฆ๐˜ข๐˜ค๐˜ฉ ๐˜ฐ๐˜ต๐˜ฉ๐˜ฆ๐˜ณ ๐˜ฏ๐˜ข๐˜ณ๐˜ณ๐˜ฐ๐˜ธ๐˜ญ๐˜บ ๐˜ข๐˜ฏ๐˜ฅ ๐˜ฆ๐˜ฏ๐˜ด๐˜ถ๐˜ณ๐˜ฆ ๐˜ต๐˜ฉ๐˜ข๐˜ต ๐˜š๐˜ฉ๐˜ฐ๐˜ฑ๐˜ช๐˜ง๐˜บ ๐˜ด๐˜ถ๐˜ค๐˜ค๐˜ฆ๐˜ฆ๐˜ฅ๐˜ด ๐˜ฃ๐˜ณ๐˜ฐ๐˜ข๐˜ฅ๐˜ญ๐˜บ, ๐˜ฃ๐˜ฆ๐˜ค๐˜ข๐˜ถ๐˜ด๐˜ฆ ๐˜ต๐˜ฉ๐˜ข๐˜ต ๐˜ฎ๐˜ฆ๐˜ข๐˜ฏ๐˜ด ๐˜ต๐˜ฉ๐˜ฆ ๐˜ฑ๐˜ช๐˜ฆ ๐˜ช๐˜ด ๐˜ฃ๐˜ช๐˜จ๐˜จ๐˜ฆ๐˜ณ ๐˜ง๐˜ฐ๐˜ณ ๐˜ฆ๐˜ท๐˜ฆ๐˜ณ๐˜บ๐˜ฐ๐˜ฏ๐˜ฆ.โ€

How Shopify grows

Jaryd Hermannโ€™s newsletter โ€˜How they Growโ€™ is practically required reading for us strategy nerds. Hereโ€™s his take on Shopifyโ€™s app store:

โ€œ๐˜๐˜ต ๐˜ฎ๐˜ข๐˜ด๐˜ด๐˜ช๐˜ท๐˜ฆ๐˜ญ๐˜บ ๐˜ธ๐˜ช๐˜ฅ๐˜ฆ๐˜ฏ๐˜ด ๐˜ต๐˜ฉ๐˜ฆ๐˜ช๐˜ณ ๐˜ข๐˜ฅ๐˜ฅ๐˜ณ๐˜ฆ๐˜ด๐˜ด๐˜ข๐˜ฃ๐˜ญ๐˜ฆ ๐˜ค๐˜ถ๐˜ด๐˜ต๐˜ฐ๐˜ฎ๐˜ฆ๐˜ณ ๐˜ฃ๐˜ข๐˜ด๐˜ฆ, ๐˜ฃ๐˜ฆ๐˜ค๐˜ข๐˜ถ๐˜ด๐˜ฆ ๐˜ฏ๐˜ฐ๐˜ธ ๐˜ฎ๐˜ฐ๐˜ณ๐˜ฆ ๐˜ต๐˜บ๐˜ฑ๐˜ฆ๐˜ด ๐˜ฐ๐˜ง ๐˜ฑ๐˜ฆ๐˜ฐ๐˜ฑ๐˜ญ๐˜ฆ ๐˜ค๐˜ข๐˜ฏ ๐˜ถ๐˜ด๐˜ฆ ๐˜š๐˜ฉ๐˜ฐ๐˜ฑ๐˜ช๐˜ง๐˜บ ๐˜ง๐˜ฐ๐˜ณ ๐˜ข๐˜ฏ๐˜บ๐˜ต๐˜ฉ๐˜ช๐˜ฏ๐˜จ, ๐˜ฐ๐˜ณ ๐˜ข๐˜ฅ๐˜ฅ ๐˜ง๐˜ถ๐˜ฏ๐˜ค๐˜ต๐˜ช๐˜ฐ๐˜ฏ๐˜ข๐˜ญ๐˜ช๐˜ต๐˜บ, ๐˜ฅ๐˜ฐ ๐˜ด๐˜ถ๐˜ฃ๐˜ด๐˜ค๐˜ณ๐˜ช๐˜ฑ๐˜ต๐˜ช๐˜ฐ๐˜ฏ ๐˜ด๐˜ข๐˜ญ๐˜ฆ๐˜ด, ๐˜ฐ๐˜ณ ๐˜ฅ๐˜ฐ ๐˜ธ๐˜ฉ๐˜ข๐˜ต๐˜ฆ๐˜ท๐˜ฆ๐˜ณ ๐˜ธ๐˜ช๐˜ต๐˜ฉ๐˜ฐ๐˜ถ๐˜ต ๐˜š๐˜ฉ๐˜ฐ๐˜ฑ๐˜ช๐˜ง๐˜บ ๐˜ค๐˜ญ๐˜ถ๐˜ต๐˜ต๐˜ฆ๐˜ณ๐˜ช๐˜ฏ๐˜จ ๐˜ข๐˜ฏ๐˜ฅ ๐˜ฎ๐˜ถ๐˜ฅ๐˜ฅ๐˜บ๐˜ช๐˜ฏ๐˜จ ๐˜ต๐˜ฉ๐˜ฆ ๐˜ฎ๐˜ฆ๐˜ด๐˜ด๐˜ข๐˜จ๐˜ช๐˜ฏ๐˜จ ๐˜ฐ๐˜ง ๐˜ต๐˜ฉ๐˜ฆ ๐˜ค๐˜ฐ๐˜ณ๐˜ฆ ๐˜ฑ๐˜ณ๐˜ฐ๐˜ฅ๐˜ถ๐˜ค๐˜ต.โ€

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