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๐ฏ Shopify's App Ecosystem
The anti-Amazon playbook
Read time: 3 minutes
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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 โSnowdevilโโฆ and it was planned to be an online store for snowboarding equipment.
At the time, the founders had 2 options to launch their store:
Attempt to assemble a complex web of clunky tools that donโt work well together, or
Launch on Amazon Marketplace and helplessly wave goodbye to ~15% of revenue skimmed off their top line.
The solution? Pivot โSnowdevilโ into โShopifyโ, and build the ultimate toolbox for independent online sellers.
Letโs 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 being the department store.
Shopify claimed its wedge by being 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 heartโs content.
Now, Shopifyโs 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 donโt 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 Shopifyโs 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 competitionโs 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 wasnโt:
Centralised tool stack โ Third-party app ecosystem
Lookalike product pages โ Customisable storefronts
Singular merchant experience โ Extensible backend
Takeaway: If you canโt beat โem, become what they canโt.
Shopify didnโt set out to become the โnext Amazonโ.
They made a bet that the โnext Amazonโ was justโฆ sellers themselves.
Rabbit Hole
The where: 3x high-signal resources to learn more
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