Shopify: Making Business Fun & Profitable Again
The Story of the Second-Largest Publicly Traded Company in Canada
The story of Shopify is breathtaking.
The guy who once Googled the meaning of “CEO” has built a company that not only dominates the e-commerce space but also is the second-largest publicly traded company in Canada. The guy is no one other than the co-founder and CEO of Shopify, Tobi Lutke.
How did a German guy do this all, and how did Shopify become so big?
We will see. What’s interesting is, in the history of tech, Shopify has raised the least amount of venture capital while becoming one of the most valuable companies in the world. For context, Shopify has only raised $122 million of total VC money in four rounds, that’s all it has got. But today, Shopify's market cap hovers around $141 billion dollars, which is pretty remarkable.
What’s more…as you just read, the company is Canadian, so it doesn’t even belong to Silicon Valley. So the idea of “If you want to build a multi-billion dollar company, you must go to Silicon Valley” is proven wrong by Shopify. I mean seriously, we believe that in order to build a successful, valuable company, one must raise a ton of capital, and must belong to Silicon Valley, which couldn’t be further from the truth.
Shopify and Tobi Lutke have a lot to teach you about building and scaling a company. And to make it easier for you, I devoted more than 40 hours studying Shopify and Tobi’s working philosophy, so you don’t have to. And I’m going to condense the information and break down the strategies & tactics Shopify used to grow in this exact deep dive, absolutely free for you.
Get your popcorn ready, and let’s dive in!
1. What is Shopify
If you have bought something online from a store other than eBay and Amazon, you probably have bought it from a store powered by Shopify. Shopify is an e-commerce platform that helps people sell digital and physical goods.
Here’s what Shopify’s mission statement says about itself:
“Making commerce better for everyone
We help people achieve independence by making it easier to start, run, and grow a business. We believe the future of commerce has more voices, not fewer, so we’re reducing the barriers to business ownership to make commerce better for everyone.”
This is the same platform that helped its merchants sell $11.5 billion worth of products this year Black Friday-Cyber Monday (BFCM) through the platform. From early Friday in New Zealand to late Monday in California more than 76 million customers all over the globe bought from brands powered by Shopify.
Because of Shopify, “New businesses” don’t have to worry about the complexity of building and selling products online. With the help of Shopify, anyone can sell, scale, and manage their business online, with little to no experience at all. This has always been a core mission of Shopify since its launch around two decades ago.
This begs the question: What makes Shopify different or unique from Amazon and eBay?
First let’s start with this: To win in a market, you don’t need to be early. Amazon was founded in July 1994, the next year in 1995 eBay was born. These two companies had already dominated the e-commerce market before Shopify came along in 2006. But despite everything, Shopify successfully positioned itself in the market and separated it from its competitors.
However, Amazon is still the biggest player in the e-commerce space. But Shopify has also successfully taken its slivers of 10-12% of the total e-commerce market globally, whereas Amazon has 38-40% domination, and eBay 5-6%.
So how did Shopify do it?
Today, Shopify is a totally different and unique e-commerce platform from Amazon and eBay. We know it all, right? Here are the following things Shopify did that separated it from its competitors and helped stood out in the market:
#1: Complete Control Over the Store: When a merchant wants to sell products on Amazon or eBay, they have to compromise on what they can do and what they CAN’T. For example, you can’t have a custom design store—color, branding, messaging, or how you want your store to look. There is very limited customization and control you have on your Amazon or eBay store. But this is completely opposite on Shopify. On Shopify, you can control everything—the branding, the design, the messaging, and the way you want your store to look. This instantly put Shopify above Amazon and eBay.
#2: Cost Efficient: Amazon and eBay have so many (hidden) charges at a massive rate. When you sell a product on these two platforms, it massively differs and influences what percentage of your revenue and income you have to split with the platform—ranging from 5-70%, which is just mind-boggling. But this is totally opposite on Shopify, because it has price transparency, Shopify comes with a monthly membership and a small service fee on each sale you make.
#3: No Competition: When you sell your stuff on Amazon and eBay, basically you have to compete with other sellers. That’s just how these platforms work. To give you some context, for example, let’s say I’m looking for a mic, and I come across your mic on Amazon, but then I see another mic below your mic via recommendation, which seems better than yours, I’m hooked and want to buy that mic, not yours. You lost a sale. But this is opposite on Shopify, since all the merchants have their own store, they don’t have to compete with each other, they just have to bring their “Own” traffic to their store.
#4: Control Over Customer Data: Amazon and eBay don’t allow you to see the sensitive data of the customers. This means sellers don’t get the full data access of customers, which makes it hard for sellers to build connections or contact if needed. But Shopify does the opposite, it allows its merchants to see everything in the form of data provided by the customers. And this helps the merchants build trust and relationships, or contact them if needed.
#5: Sense of a Community: Believe it or not, when you are a seller on Amazon or eBay, you don’t get the feeling of belonging to a community, because you’re just a seller selling your own thing. There is no such thing as an Amazon community, event, workshop, or anything like that. But Shopify “Does” have these kinds of things—Shopify regularly organizes events, workshops, has a community online, and does meetups to inspire and connect merchants with each other. This helps merchants of Shopify feel a sense of community.
Interesting? But guess what, these are just the tip of the iceberg, there are so many things to learn from Shopify. The story of Shopify is so inspiring for future founders, builders, and leaders. And I’m going to take you through it without sounding like I’m exaggerating.
The story of Shopify begins.
Founding Story
The founding story of Shopify go-together with its co-founder and CEO, Tobias Lutke, better known as Tobi Lutke. But unlike Stripe, Airbnb, and Uber, I can’t just directly start the founding story of Shopify right before it was founded. Because it won’t just seem confusing but also it’d be a creepy way to tell the full story. That’s why before diving into the Shopify founding story, let’s first take a look at its co-founder and CEO, Tobi Lutke’s life story.
Shopify had three co-founders, but Tobi is the guy who largely contributed to the company’s success. Because of his vision, mission, and leadership style, the company stood out in the market, successfully dominated the e-commerce space, and became the second-largest publicly traded company in Canada.
This is the story of Tobi Lutke.
Tobi Lutke was born in 1981 in Koblenz, Germany. From an early age, Tobi was obsessed with computers. His parents brought him an Amstrad Colour Personal Computer when he was just six. The computer intrigued him so much that he became a lazy student—finding shortcuts to solve schooling questions and skipping or completing the classes as soon as possible so he could use his computer. He would literally do maths like how many days of classes he’d just need to attend to become eligible to attempt for an exam and get just a decent grade.
Said differently, Tobi just loved sitting all day in front of his computer playing games.
Tobi says: “Of course, I couldn’t read or write yet, but I could push all these buttons and I just loved everything about it.” By the time he was 11 or 12, he was already rewriting the codes of the games he would play, and could also code to make new games. He was so, so obsessed with his first love “Computer” that his “Worried” parents took him to frequent assessments.
At age 16, he left school after 10th grade as he never enjoyed schooling. The reason was simple: He couldn’t see how all the classes and the school would help him build a career or find a job since it was all based on theoretical knowledge, which he never liked. Tobi always craved practical knowledge—learning things while doing.
So what did he do?
He left the traditional schooling path and followed the apprenticeship program in computer science at Siemens. If you don’t know about the apprenticeship program is, it’s a way to learn about computer science (or any subject), make an income on the side, and get a certificate from the company once you finish the program.
In 2002, when he was just 21 years old, he moved to Canada. Now at this point, he already had some programming skills. But sadly after coming to Canada, he learned that he couldn’t get a job since he had no degree. He would often spend the majority of his time working at coffee shops. Lo and behold, the love and passion for snowboarding developed for Tobi, he enjoyed winters snowboarding on hills and mountains—for hours and hours.
Serendipity happened, and guess what? On a trip to Whistler, B.C. he met a girl named Fiona McKean. Quickly both fell in love with each other and became a couple. And soon Tobi started living in his girlfriend's parents’ house. Now this is the moment when things get interesting.
In 2004, this event had to happen in the McKean family. At which Tobi’s girlfriend invited many of her friends, and one of them was Scott Lake, kind of a “Startup Guy” who loved starting new businesses. At this point, Scott Lake had started many businesses, and luckily he was planning to start a new one. As it happened, he came to the event where he met McKean along with her boyfriend, Tobi Lutke. As they caught up, both guys started talking to each other and quickly planned to start a new business.
So what was the business plan?
The two guys planned to sell snowboarding equipment. But as they were looking to build a store, they realized that there were no platforms that allowed “New businesses” to sell products online. And the platforms that existed were too focused on established businesses—making it hard for these two guys to build a store for their snowboarding equipment.
Here’s how Tobi defines it:
But luckily Tobi was a programmer, he knew how to code. So he started searching for the best possible way to build a store. He found out about Ruby, a programming language, that he thought would be perfect to build the store. He found that he could use Ruby on Rails, which was just a few years old, but could help build the store the guys wanted to build.
The Snow Devil was born.
”At the beginning, there was no grand plan," says Lake. "We just said let's do e-commerce, let's sell some snowboards, and eventually it became Snowdevil." The guys launched the website after building it for two months by themselves. For the equipment, they found a retailer from the US who’d helped them ship the snowboarding equipment in exchange for monetary value.
Since Ruby on Rails was pretty new, Tobi’s work gained popularity in the programming community, as he would share the models and frameworks he would build. Soon with its popularity, the website got its first sale from a customer living in Pennsylvania, United States. However, the website was getting traffic mostly from paid ads, the guys run Google search ads to generate sales, Tobi has said that “They’d get per click for 20 cents.” Watch the full video here:
The website kept getting popular and the guys had a running business. But there was something more waiting for these two guys to build. As they were running the store, many merchants and other small business owners started asking how they could sell their products on their website too. But sadly, the website was not built for other merchants to sell their products, it was just for “Snow Devil.”
The guys knew something had to change.
Early Days
After running Snow Devil for a few years, and getting a ton of questions from other business owners about how they could also sell their products online too, the guys realized they needed to change something, and it sparked an idea.
The idea of building a platform that’d allow people to sell their products online—an e-commerce platform. They knew that the idea had potential since they had seen it by selling their own equipment. But it was 2006, and building software was expensive. So what did the guys do?
They found a couple of people who’d provide funds for the project: The guys approached McKean’s father, Lutke’s uncle, and an entrepreneur who had also immigrated to Canada.
The guys secured $200,000 from 10-ish people.
They first called it Jaded Pixel but soon changed the name to Shopify in June 2006. The company got so popular so quickly that it started hiring new people, and that’s when the third co-founder, Daniel Weinand, a fellow German programmer who also had immigrated to Canada, joined.
By the end of 2007, Shopify had 1,000 active merchants selling their products on the platform, and the total Gross Merchandise Volume had reached over $1 million. Most of the merchants were small business owners living in Ottawa and had heard about Shopify from word of mouth. As the company grew older, the more popularity it gained, offline and online. But this was one of the best ways for co-founders to improve the product quickly. They would just sit beside these local merchants and let them do “Things” on Shopify, and then they’d ask the merchants about what are the problems they were facing and the features they wished could have. And the guys just built those things on the go.
The same year the company also raised the first VC money of $250,000 CAD from angel investors.
The co-founder of Shopify Scott Lake said, “Startup is exciting when it’s new.” But when he saw that the company was growing and becoming more challenging to run every day, he decided to quit, it was 2008. This was the same period when the company had 10 full-time employees and was doing $60,000 in total revenue every month. Lake leaving the company was a big deal, but despite the challenges, Lutke didn’t lose his motivation and kept going. One of the biggest challenges for Tobi Lutke, the co-founder and CEO of the company was, he didn’t know how to run a company, how to manage people, and how to scale a company.
So what did he do?
He would read business books from accounting to management at night. He also flew to Silicon Valley and interviewed other prominent founders, investors, and tech-savvy people to get their insights and learn from them. He would take notes and once he would reach his hotel room, he would go through all the terminologies and concepts he’d noted and read Wikipedia pages about them. Little did he remember "I had no business background whatsoever," Lütke has said. "I didn't know what CEO meant. I had to Google it.”
Scaling
Shortly after Lake leaving the company, in 2009, Shopify launched API and App Store, which totally transformed the business because now developers could build and integrate the platform with their websites and platform. Also, the App Store helped sell any software or app on Shopify—allowing the company to reach a broader audience and more people.
In 2010, Shopify launched a program called “Build-A-Business.” The goal of this program was to let anyone build their e-commerce store, and whoever did better business would win cash prizes and be mentored by entrepreneurs like Richard Brunson and Eric Ries. The program was very successful and it attracted many new merchants on the platform.
In 2013, Shopify partnered with Stripe to allow merchants to accept payments without any third-party payment gateway. Before this, the merchants on the platform had to find their payment gateway like Paypal or other platforms, which was hectic for merchants. But with the help of this partnership, Shopify reduced the barrier for anyone to join the platform, and build their business. The same year, Shopify launched what it called “Point of Sale” a way to accept payments in person. A huge unlock for small, local businesses who happened to be offline.
On April 14, 2015, Shopify filed for an initial public offering (IPO) on the New York Stock Exchange and Toronto Stock Exchange. Shopify went public on May 21, 2015, and in its debut on the New York Stock Exchange, started trading at $28, more than 60% higher than its US $17 offering price.
In 2016, Shopify introduced Shopify Capital to allow its merchants to get loans and advance payments from Shopify. Shopify knew that most businesses don’t have enough cash flow to run an e-commerce business, and they also knew that if they could offer money loans to their customers, then that’d be a huge unlock, not only for merchants but also for Shopify. It worked and since it launched Shopify has provided $5.1 billion worth of loans to its merchants, as low as $200 to $2 million for thousands of customers. Shopify succeeded because it removed complexity for its customers. In this 2018 interview, Tobi says: “Every single time we took complexity out, success went up” Watch the full video here:
And as you know the rest is history.
The company kept growing onwards–launching new programs and introducing new products on its radar. For example, Shopify partnered with platforms like Amazon, Facebook, and TikTok that massively increased business growth, introduced Shopify Studio, allowing anyone to get content production tools–in-house, and also allowed selling B2B to allow “Business to sell to business” by enabling buck ordering, custom pricing, wholesale account, and instant transactions.
Today, Shopify is one of the most valuable, successful companies in the world.
2. Business Model
Shopify's business model is pretty interesting.
There are several ways Shopify generates its revenue and income through. But when it first started, it had just one or two ways to make money—subscription and commission base. But as Shopify grew, so did its business models.
Turns out, Shopify has way more business models to generate income than I thought it had. I thought “How many? Maybe it’s making money through subscription, commission, and App Store business” Man, I was wrong! Well not wrong, but it has way more business models than just making money through subscription and commission.
But unlike Uber or Airbnb, Shopify doesn’t help connect any party. It just helps anyone make a store, sell their products online, and generate income from “Their” traffic source. This means Shopify is definitely not an aggregator or mediator. This makes the Shopify business model even more interesting.
Let’s go through them one by one!
Subscription and Commission Fee
This is Shopify’s main income stream to generate revenue.
Shopify has transparent pricing on how much it charges via subscription and commission fee. The subscription to use Shopify comes with many pricing models, for example: Basic for $29, Shopify for $79, Advance for $299, and Shopify Plus, which is mostly for large enterprises for $2300 per year. Keep in mind, these are prices you get when you buy yearly plans, which means it’d be a bit more expensive when you buy them on monthly plans.
That’s for using the platform, Shopify also has a service fee that it charges on each sale you make. For example, in Basic starts from 2.9% + 30¢, and for Advance it starts at 2.5% + 30¢ on online payment—along with many other features Shopify provides depending on the plan you choose.
Shopify also offers Starter, Retail, and Enterprise Commerce plans for businesses of different sizes. Starter for $5 a month, Retail for $89 a month, and Enterprise Commerce on custom pricing.
Shopify Capital
Shopify launched Shopify Capital in 2016 to help its merchants get loans and payments in advance. Since its launch, Shopify Capital has funded $5.1 worth of capital to its customers—offering from $200 to $2 million that deposits in days, not months!
But unlike Banks, Shopify doesn’t check your credit card store, instead, it analyses your store performance, and predicts the potential of your business, and then based on the eligibility, you get what you deserve. Shopify Capital has a fixed and service fee that ranges from 5-25%.
Shopify App Store
Shopify launched the Shopify App Store in 2009, the same year Apple launched the App Store. But despite this, Shopify App Store thrives and still generates significant revenue for Shopify.
Shopify doesn’t just allow its merchants to sell products—clothing, appliances, accessories, but also “Apps” too through its App Store. Anyone can build and sell their apps on the Shopify App Store, and they just have to give a 20% service fee on each sale they make. These are the apps that merchants can use to streamline their e-commerce store by installing marketing, designing, or customer support tools created by Shopify or independent developers.
For example, if you make $1,000 through your app, you’re going to pay $200 to Shopify. That’s the trade—in exchange for Shopify helping sell your App, which I think is pretty reasonable.
Shopify Theme Store
To save its merchants time, effort, and money, Shopify launched the Shopify Theme Store, which allows anyone to build their e-commerce store by using ready-to-use website templates without needing to hire a designer, or website developer.
Shopify Theme Store has tens of thousands of themes available for anyone to use for their e-commerce store. And unlike the Shopify App Store, The Theme Store doesn’t have any service or commission fee. Instead, it comes with a flat fee that depends on the type of theme you buy.
The website templates price ranges from $100 to $500 on the Shopify Theme Store.
Shopify Shipping
Just like Amazon has its own shipping service called Amazon Easy Ship, the same thing Shopify has, Shopify Fulfillment Networks, which helps merchants connect to trusted courier partners in their area, while Shopify taking all the logistics and processes.
Since selling on Shopify mostly happens to be physical goods, Shopify knows how hard it is for merchants to take care of all the product shipping inventory. And that’s why Shopify partnered with trusted companies like Flexport to help ship products worldwide through its service.
Although, there aren’t any specific number or percentage Shopify charges for shipping products as it largely varies from place to place and item to item, plus it also depends on the Flexport shipping prices. However, Shopify Shipping service is optional, if you think you can ship your products without Shopify Shipping service, go for it, Shopify allows you to do that too.
Point of Sale Hardware
It’s 2024, yet not all businesses are online.
Seeing this, Shopify made it easier for local businesses to accept payments in person with receipts, card, and barcode readers that help accept credit card and internet banking payments in person. If you’re wondering, Point of Sale (POS) is a device that helps you do that, which Shopify offers you. And what’s interesting is, you get a card reader absolutely for free when you pick a plan on Shopify, but it comes with a recurring fee—Retailer.
So these were some of the business models of Shopify. I know I didn’t cover all the business models, for example, Shopify Tax, Shopify Balance, Shopify Studio, etc. But you can see the other business models that Shopify has in the below image:
3. Shopify’s Financials
Shopify is the second-largest publicly traded company in Canada.
But no one thought, not even its co-founders that one day Shopify would have that badge attached to its name. But guess what, here we are, two decades later, Shopify not only dominates the e-commerce market but also dominates in Canada!
The financials of Shopify must look interesting, right? We’ll see. In this section, I’m going to take you through how Shopify is doing number-wise. Is it growing? Is it sustainable? Is it making a profit?
However, the co-founder and the CEO of Shopify, Tobi Lutke has made a rule in the company that “Anyone caught checking the company’s stock price in office would have to buy Doughnut for their team.” God Damn! But since we are not employees of Shopify, we can check it, right? And we are not even in the office, so it makes sense lol.
Let’s dive into Shopify financials!
A pretty good upward movement in the company’s stock, when it first went public, the stock price was around $2 ($2 billion of total market cap) the price kept steady for years till 2019, and in 2020, when coronavirus hit, the company stock price spiked, reaching a total market cap of $211 billion in 2021—to its highest, then again it went plateau. But again it seems that the price is going upward moment—showing a strong business expansion and growth in the company. Right now the company’s market cap hovers around $141 billion.
The company's total revenue growth YoY has kept positive for the last few years—from $1.5 billion in 2019 to $8.2 billion in total revenue in the last twelve months, a remarkable CAGR of 41%! Talking about net income, the company lost $3.4 billion in 2022—has turned positive to $1.3 billion in the last twelve months. Similarly, the operating income which was again negative of $476 million in 2022 has turned positive of ~$1 billion in the LTM—showing a strong business sustainability and growth in the company while reducing its expenses and costs.
What’s the future, will Shopify continue to strive to dominate and tap into different markets?
I guess, yes! Shopify continues to invest in R&D (research and development) to find new opportunities and markets that can help Shopify become a trillion-dollar company. The company spent $365 million in 2019, which has gone up to $1.3 billion in the recent twelve months, a total change of 274%—showing a strong signal that the company is pouring money into finding new business opportunities. While other operating expenses are pretty steadier and have slightly increased over the course of the year.
A few more stats about Shopify:
Shopify CEO: Tobias Lütke
Shopify HQ: Ottawa, Canada
Shopify worldwide: 175 countries
Shopify total employees: 11,600 employees
Shopify total merchants: 2.06 million merchants
Shopify total active stores: Over 5.6 million active stores
Shopify total payment volume: GMV of $69.72 billion 3Q 2024
Note: This analysis is based on my research and opinion. The author doesn’t encourage you to invest in the company through this article. If you want to invest in the company, make sure you do your due diligence and invest at your own risk. To learn more about Shopify and how it’s doing number-wise, this earning report from Shopify would be helpful.
4. Shopify’s Strategy
Unlike Uber, Shopify didn’t waste its early days trapping in controversies and bad allegations. Shopify growing strategies in the early days were mostly “White hats.” The interesting thing is though, the co-founders of Shopify had no previous background in running a company, especially the CEO, Tobi Lutke.
But Tobi’s dedication and hard work made Shopify a multi-billion dollar company. However, it was not easy at all, since the guy had no business background, he had to learn everything about building and running a company. So what did he do? He would read business books about managing a team, accounting, leadership, and decision-making. He would also interview people he thought could teach him valuable lessons about running a company.
And it worked.
So in this part, I’m going to take you through the strategies and tactics Shopify’s team (not only Tobi) used to grow the company in the early days. Most of the strategies happen to be great, so this means you can use many of them in your business and company.
Let’s dive in!
Focusing on New, Small Businesses
You build a better product when you have experienced the problem you’re solving.
This was true for Shopify. When Tobi and his team started building Shopify they knew that most platforms that were available in those days mostly focused on big, large businesses. And there were literally almost none that were obsessed over small, new businesses.
Back in 2005, not anyone could start a business online, because it wasn’t just too expensive but also you had to deal with many other things, for example finding a payment gateway to accept payments, and building the platforms for months or years, which means hiring people. It was all chaotic, expensive, and time-consuming.
But Shopify said “We are going to make business fun and profitable again…” By allowing anyone to start their business in just two hours or days. And while it was true, with the help of Shopify, anyone could start their online business and sell the stuff they wanted to sell.
This allowed normal people and new, small businesses to kick start their business in days, not years and didn’t require a $100k upfront cash investment, which massively reduced the barrier to entry. Anyone could start their business without hiring anyone.
And guess what? It worked.
By focusing on small businesses, Shopify positioned itself from other platforms and became the go-to platform for anyone who doesn’t have big upfront cash available, or big teams, but wants to start their business from their garage or mom’s basement.
Educating Customers
Focusing on small, new businesses means educating them as well.
Just focusing on small, new businesses was not enough, so Shopify also started creating a ton of educational content that was tailored for its customers. Shopify knew that “The more customers are informed and aware of their business, the more they will earn, and the more they’ll earn, the more we will earn.”
It was all win-win.
But not many companies take time and spend money on content creation except Stripe and Shopify, you know. Shopify understood it, and that’s why it started creating blog posts, video courses, seminars, and extra business curriculums to educate its customers.
It was quite successful since new businesses also wanted those resources to be available online, in front of them. And plus it was all free so was also a no-brainer for the customers.
Today it’s known as Shopify Academy, yes! Still, to date, Shopify invests inventory to create content for its customers. Anyone could access the company’s courses, events, blog posts, and video curriculum just by entering their email id.
Shopify Capital
In 2006, Shopify introduced Shopify Capital to help businesses get loans and gain capital in advance from the platform. The idea was that: Shopify would fund businesses that are doing well on the platform but don’t have enough cash flow to sustain the business.
But unlike Banks, Shopify doesn’t look at your credit card store or rating. Instead, it analyses your business on the platform and then decides what your business is worth, and based on that, it gives you the amount you deserve. What’s more…unlike banks, it doesn’t take an interest rate. Instead for advance payment, it charges a fixed price ranging from 15-25%, and for loan, it ranges from 9-15%. So far, Shopify has funded $5.1 billion worth of capital to its merchants through Shopify Capital, which is just so cool to think about, isn't it?
It is the same concept Stripe uses, just like Stripe has Stripe Capital, Shopify has Shopify Capital. It’s known as one of the best strategies for platforms to help their customers win so that the platform could also win along the way.
Building Trust and Relationship
Shopify has this thing called “Trust by Default.”
Tobi Lütke’s views on trust can be summed up in one of his famous quotes:
"Trust is the foundation of everything we do. It’s the reason merchants choose Shopify and the reason they stay with us."
From Shopify’s transparent pricing to helping customers win business using Shopify is about trust. And why not? Trust is one of the biggest factors in business. We don’t do business with people or businesses we don’t trust, right? There are many ways Shopify has built trust with its customers, for example one is, unlike other e-commerce platforms, Shopify doesn’t have any hidden pricing or fees, you get to see what you’ve been charged, which just makes sense for merchants.
Shopify understands this: “If your customers don’t trust you, they won’t stick with your product in the long run.” So if you want your customers to stick to your service, you gotta have to build trust and relationships with your customers.
Obsessing Over Merchants
As Jeff Bezos says “Obsess over customers” The same principle Shopify uses to improve the product. And we can know this from Shopify’s mission statement:
“Making commerce better for everyone
We help people achieve independence by making it easier to start, run, and grow a business. We believe the future of commerce has more voices, not fewer, so we’re reducing the barriers to business ownership to make commerce better for everyone.”
You see? Shopify does this by getting consistent feedback from its merchants and customers, and by providing 24/7 customer support to listen to customers' problems. Shopify also offers custom support to individual merchants to help them solve the problems they have about branding, designing, payment interrogation, and so many other things.
How can you not grow and improve when you do those things? Impossible.
Building a Community
Shopify has built a strong community.
Where is the Amazon community, or where is the eBay community? I never heard of them. I don’t think these both companies focus on building a community. But Shopify? I have heard about the Shopify Community. Shopify has always been focused on building a community, you can even see this from the Shopify home page, and its story video on YouTube, which you can watch here:
What’s more…Shopify regularly hosts events and meetups to educate, inspire, and celebrate merchants and their wins. This allows anyone selling on Shopify, become part of the community, exchange ideas, and grow together—while inspiring the world.
High Degree of Autonomy
Tobi Lutke, the co-founder and CEO of Shopify is a big believer in “Letting people build from freedom.” This allows team members to think differently and creatively. Anyone on the team has the ability to speak, share, and try new ideas that they think would be useful and beneficial for the company. Meaning the freedom of working independently at Shopify is real. Employees and the team don’t need permission for everything, they can do what they think would be the best for the company’s future.
The company also has this culture called “Remote by Default” meaning, the company massively promotes remote work, so employees can work from anywhere in the world. The core belief behind this is that, employees perform at their best when they are where they want to be—the company need not to force them to come to the office.
At Shopify, the degree of autonomy is high.
Strategic Partnerships
Shopify believes in collaboration, not competition.
Throughout the span of Shopify's growing phase, it has made so many strategic partnerships, instead of competing with its competitors—eBay or Amazon.
A totally different approach, right?
Shopify has partnered with so many other big companies like Amazon, Facebook, TikTok, Stripe, YouTube, etc to help its merchants win. For example, any creator creating content on TikTok, Facebook, Instagram, or YouTube can have a store directly on their social media profiles, or can directly add the Shopify product’s link to the content they publish, all thanks to Shopify's partnership with other companies.
Shopify has also partnered with Stripe to enable payment systems on its platform, this means merchants don’t need to find a third-party payment gateway like Paypal to accept payments. Another strategic partnership Shopify made was partnering with Amazon to help its merchants sell on Amazon while using Shopify.
All these partnerships allowed brands like Gymshark, Kylie Cosmetics, Fashion Nova, and so many other brands to still use Shopify for their e-commerce store. Because they don’t have to worry about third-party payment gateways, and they can directly have their store on the social media profiles and generate sales. A huge win for both Shopify and its merchants.
Thanks for reading, catch you on the next one.
An absolutely amazing and detailed breakdown. 😎🔥🔥