๐ŸŽฏ Shopify's App Ecosystem

The anti-Amazon playbook

Read time: 3 minutes

Welcome to the 1,682 strategy nerds who have joined us over the last 2 weeks!

Join the growing community of 15,021 readers getting byte-sized strategy playbooks here:

Sign Upย ย | ย Advertise

All done? Perfect - onto todayโ€™s breakdownโ€ฆ

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.

SPONSORED

Land your next big career move with a Sidebar โ€˜Personal Board of Directorsโ€™

  • โ€œYouโ€™re the average of the people you keep closest; Sidebar helps you raise that bar.โ€ - Global Director, Reddit

  • โ€œTap into a new level of coaching support, professional development, and peer-driven accountability.โ€ - Senior Director, Credit Karma

  • โ€œProviding and receiving support from others who play a similar role to you is one of the best ways to grow your capabilities and succeed.โ€ VP Product, Roku

You can spend a decade finding your people, or apply to Sidebar and find them today.

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.

Breakdown

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€

Recommendations, friends, and sponsors

Taplioย -ย The ultimately Swiss army knife for LinkedIn creators. Donโ€™t waste time manually posting content, engaging with creators, and building your personal brand without the tool that literally saves you hours each week.

Faster Than Normal - A top-shelf addition to any inbox: in this newsletter Alex Brogan delivers timeless ideas, tactics, and resources for self-improvement to 45,000 readers every Wednesday and Saturday morning.

Rustic Fluteย - We recently got stuck on a painful email configuration problem. Deep in YouTube tutorials, we left a desperate call for help in the comments. An internet stranger was generous enough to spend hours helping out - a true random act of kindness. This is his newsletter - check it out!

Feature your business in this newsletter โž”

We have a growing audience of 15,000+ readers from top companies like Google, Meta, Atlassian, Stripe, and Snapchat. If youโ€™d like to sponsor Strategy Breakdowns, see more information here.

That's all for todayโ€™s issue, folks! Optimise your feeds by following along on Twitter [@tomaldertweets] and LinkedIn [/in/tom-alder]

Got feedback? Any requests for the next breakdown?

Let us know by replying to this email!

Join the conversation

or to participate.