14 ms·

Shopify and the Power of Platforms

549 points by jonbaer 7y ago

Townley 7y ago
> Shopify is giving merchants an opportunity to differentiate themselves while bearing no risk if they fail. In addition to this being a great position for Shopify, this is an amazing thing for merchants compared to Amazon's offering; it's the critical difference between "We'll sell your stuff" and "We'll empower you to easily sell your stuff" that leaves power and agency in the hands of individual companies. Semi-related: For a really insightful conversation about Shopify, personal interactions, and running a good company, I highly recommended The Knowledge Project's interview with the company's CEO, Tobi Lütke: https://fs.blog/tobi-lutke/ https://fs.blog/tobi-lutke/
- rluhar 7y ago
  The Knowledge Project podcast is awesome. Here are some snippets that I found very useful. On starting his company in a secondary market: I do think that there is an almost complete difference between how you build a company in a primary talent market and sort of secondary talent markets. For instance, one of the biggest differences in secondary places is, if I hired someone, the chance that we are going to still work together in a decade from now is super high. Hiring for future potential It means that it’s a much better idea to hire for future potential rather than for current skill. Once you do that, what you realize is, a dollar invested into helping to train people or even subtle things like making sure that next to any junior programmer, like for every five junior programmers in a team, you have one person who can become their mentor—these basic ideas all start having way more dividends On building a hiring process for a learning organisation ..we have a hiring process that really, really finds people of high future potential. And then, we try to help them reach this potential 10, 20 years earlier in their career than they ever thought was possible, through coaching, through book clubs, through anything. Fixed vs. Growth Mindsets Everything in Shopify is built around this idea that if someone shows up with a fixed mindset, we convert them to a growth mindset quickly. And then once we have a growth mindset, we fill people with context (i.e. explain what their role is and what they are expected to do). On the role of processes with an organisation There are three kinds of process. There’s a kind of process that makes things that were previously impossible to do, possible. That’s good. Then there’s a kind of process that makes something that was previously possible significantly simpler, which is also good. However, 99.9% of all process that exists in corporate America is the third category, which is actually just telling people to behave slightly different from what common sense tells them to do. So we have lots and lots and lots of examples where we just avoided having to create process by just changing the environment in which we all spend our time in.
  - greymalik 7y ago
    > we have a hiring process that really, really finds people of high future potential Did he elaborate on the details of this process?
    - thatoneguy 7y ago
      I know it definitely sounds ageist. Is a 45 year old fresh-out-of-university-to-start-new-CS-career going to be considered and hired by Shopify on a regular basis (i.e. not just hiring one and being like "see, we're not ageist")?
      - anbop 7y ago
        That person is going to have a hard time anywhere. All the drawbacks of age and none of the professional benefits.
  - sseppola 7y ago
    Just came here to say thanks, didn’t know of The Knowledge Project, and this episode was great. Cheers
- DenisM 7y ago
  What about traffic though? Amazon gives you traffic, user reviews, used confidence.
  - imjk 7y ago
    Sure, you have to work to target your own audience and build the trust with them yourself, but it's a tradeoff that benefits you in the long run. Your not beholden to the whims "the platform" as many media companies learned the hard way by putting so much of their focus on Facebooks platform in the past decade.
  - q_queue 7y ago
    I think to some extent Amazon's commoditization of 3rd party vendors has hurt customer confidence, though surely not enough to make up for the increase in revenue.
  - aussiegreenie 7y ago
    Amazon has a HUGE fake products problem. The brand is damaged and getting worse. People already avoid Az and it will only get worse.
j4_hnews 7y ago
As Amazon gobbles up more product categories, there may be less viable categories that potential e-commerce startups might venture into on their own. This could mean over time, more Shopify merchants would be selling overlapping product categories (the ones Amazon has not yet gobbled up yet). Which would mean that as a Shopify merchant, you would competing with other Shopify merchants (not Amazon). How do you differentiate, when the Shopify platform makes the same set of selling advantages available to everyone? You leave Shopify ...
- asdfokd8 7y ago
  This assumes a trend toward product commoditization. However, I believe the opposite trend is actually taking place: toward product brands. https://medium.com/@thecraigmartin/the-greatest-threat-to-retailers-acab2a5f864 https://medium.com/@thecraigmartin/the-greatest-threat-to-re...
  - j4_hnews 7y ago
    Amazon Basics?
    - asdfokd8 7y ago
      Some products will always remain predominantly in the category of a commodity. And probably all products will have a commodity category. But I think overall the trend is toward beloved brands for more and more things which were once commodities, like mattresses or reading glasses. And when Brands are sought, retailers/aggregators are just more expensive middlemen.
      - jasonsync 7y ago
        My beloved brands keep getting eaten up by big brand knock offs like Amazon Basics, or, keep getting bought out by the big brands. I would love to see this happen with mattresses actually. Buying a mattress is currently ridiculous. Why do I need a guy in a suit showing me around like I'm buying a car?! What's the difference between these mattress brands that I have never heard of. I'm not loyal, because it's a one time purchase every ten years. The brand I purchased last will probably no longer the exist next time. My latest eye glasses were purchased at the grocery store optical centre, not a mom and pop shop or specialized brand. Much cheaper that way, and good quality. I wouldn't be surprised to see Amazon take over this category as well. Hasn't Walmart already?
_csoo 7y ago
Shopify is just the next closed-source iteration of WordPress and Magento. WordPress has one of the largest platforms and they've taken over (and open-sourced) blogging, content management, learning management systems, and ecommerce. They and Magento are better examples of a platform than Shopify. In the long-term, "platforms" like Shopify lose because they don't have nearly enough developers. They have ~3000 "apps" listed in their app store: https://apps.shopify.com/browse/all?pricing=all&requirements=off&sort_by=popular https://apps.shopify.com/browse/all?pricing=all&requirements... WooCommerce has 285 plugins, and WordPress has 54,000+ plugins. Magento has ~5000 plugins. It would be cool if Stratechery took a look at free/open source on the platform/aggregator spectrum.
- MuffinFlavored 7y ago
  I don't think "number of plugins" is a good comparison metric here. The Shopify app store is regulated + tested by Shopify before getting the approval to go live. WordPress plugins are the wild west, many of them incompatible with each other.
  - omouse 7y ago
    Regulated meaning a tightly controlled and closed "market"? Number of plugins isn't the greatest metric but it's a good leading indicator. It's kinda hard to estimate how many merchants and customers and volume of transactions have been processed when they aren't being tracked by a central entity ;)
    - Miss_Vee22 7y ago
      What was meant was moderation. Shopify works with developers to ensure the plugin's code will be compatible/quality more similar to how Apple does moderation.
    - wc91 7y ago
      If only Shopify was some sort of publicly traded company that publicly reported these numbers. If only...
parentheses 7y ago
It's easy to think platforms are difficult to build. With some of the "platform infrastructure" mentioned, it's very possible to assemble a large majority of a new platform out of large chunks rather than building from scratch. One of the infrastructure components of Shopify missed in the article is Stripe. Stripe makes it possible for them to scale to serve clients in many countries and offer an e-commerce capability. Then there is AWS. I think the article misses some of the depth of platform building capabilities that are out there and available for use.
CriticalCathed 7y ago
It's an interesting article, but the most interesting part to me was the Bill Gates Line article the author also wrote. [0] The distinction between a platform and an aggregator was not one that I ever considered. I'm convinced by this article that it's a useful one. Does anyone know why it is that Shopify's stock has risen by 100% over the last year? I looked it over and couldn't figure out why -- is it the 3PL Fulfillment Network this article mentions? [0] https://stratechery.com/2018/the-bill-gates-line/ https://stratechery.com/2018/the-bill-gates-line/
- omouse 7y ago
  They're beating earning expectations consistently: https://finance.yahoo.com/quote/SHOP/ https://finance.yahoo.com/quote/SHOP/ They're also growing and hiring more which always looks good in the books. Unfortunately, while their revenue is growing their earnings are in the negatives: 1B revenue in 2018 up from 673M in 2017, however they're -64M in earnings and -40M in earnings previous to that. Not to mention the hype stories like this: "Shopify's market share could triple within five years rivaling Amazon", https://finance.yahoo.com/news/shopify-apos-market-share-could-124900532.html https://finance.yahoo.com/news/shopify-apos-market-share-cou...
- SolaceQuantum 7y ago
  It's not uncommon for people to be selling artisian products on shopify, which a trend that's been increasing over time. There's a large boost towards 'natural/homemade' products towards daily consumeables, accessories, clothing, indie perfumes, beauty products, etc. At least this is my experience in several hobbyist circles I lurk in.
- hackermailman 7y ago
  Shopify reported 50% yearly revenue growth which helped the stock price, and gov of Canada/provinces used shopify exclusively for their online marijuana ordering starting last year too. That said their lack of net income is a problem https://www.fool.ca/2019/05/07/where-will-shopify-tsxshop-stock-be-in-5-years/ https://www.fool.ca/2019/05/07/where-will-shopify-tsxshop-st... and their hiring process is ridiculous even by modern meme hiring standards meaning it's going to get harder to hire people when they can just work for FAANG which are all opening offices, or already have offices in Canada and don't have the same very long process starting with telling a recruiter 'your life story' for over an hour.
_csoo 7y ago
"We'll empower you to easily sell your stuff" that leaves power and agency in the hands of individual companies. WordPress + WooCommerce, PrestaShop and Magento already do that. Drop $10 to $20/month on hosting on DigitalOcean, install Wordpress, install WooCommerce, buy a cheap theme, buy whatever extra plugins you need, setup your payment system (PayPal and Stripe are supported), and you're off to the races. And it's better than that, there's people with years and years of experience in modifying and creating plugins and themes so once you have enough $$$ from the basic setup, re-invest into the business and get better developer support for all the GPL'd plugins and themes you're using.
- toomuchtodo 7y ago
  > WordPress + WooCommerce, PrestaShop and Magento already do that. Drop $10 to $20/month on hosting on DigitalOcean, install Wordpress, install WooCommerce, buy a cheap theme, buy whatever extra plugins you need, setup your payment system (PayPal and Stripe are supported), and you're off to the races. My wife is starting a fashion business. This is a hill too high to climb for a non-technical user. She was up and running in 30 minutes with my credit card and Shopify earlier this week. We don't have time to maintain an instance, troubleshoot Wordpress theme and plugin incompatibilities, etc. That's time better spent on sales funnel optimizations, manufacturing product, and customer support. Would we consider more advanced ecommerce systems? Sure, when she hits $1MM/year in annual revenue. Until then, Shopify earns their keep (and margin) by taking care of the mundane. Make dollars, don't pinch pennies. See: "Dropbox is just ftp + git" [1] [1] https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224
  - omouse 7y ago
    I don't know, these options look just as much as "swipe credit card, get started" as Shopify's options: https://www.siteground.com/woocommerce-hosting.htm?afcode=d5848c3dbd9ad5d21d8e623ec04881b9&campaign=woocommercehosting https://www.siteground.com/woocommerce-hosting.htm?afcode=d5... * Until then, Shopify earns their keep (and margin)* That's fair. For business stuff I've swiped the credit card and paid for support as well. If the Shopify experience is easier than WooCommerce, etc. then I get it.
chiefalchemist 7y ago
> "To that end, I would argue that for Shopify a high churn rate is just as much a positive signal as it is a negative one: the easier it is to start an e-commerce business on the platform, the more failures there will be. And, at the same time, the greater likelihood there will be of capturing and supporting successes." Yes and no. The excessive lowering of the barrier to entry is self defeating. That is, more stores === more noise. Throwing still more at the wall isn't going to increase success. That friction will increase Failure.
- naringas 7y ago
  but Shoppify's model doesn't involve marketing, they leave all that up to the merchants. so shoppify itself isn't directly affected by this.
  - chiefalchemist 7y ago
    The supply of customers is not endless. It's in Shopify's best interest to optimize the churn to success ratio - not simply have more success stories. We all know the metric. Happy customer tell three people. Unhappy customer tell 10 or more. That is, as the number of failed store owners grows so does the fiction and reputation debt for the Shopify brand.
    - scribu 7y ago
      But is the Shopify brand featured prominently during the shopping experience? I would assume no, given the article's assertion that Shopify is just a facilitator, which lets the shop's owner shine instead.
asdfokd8 7y ago
It seems to me like Aggregators vs Platforms is related to Products as Commodities vs Products as Brands. Aggregators win when products are anonymous commodities. Brands win when products are beloved. It seems like the trend (for many reasons: over-marketing, dis-satisfaction, dis-trust, a race toward the barely-legal) is toward products as brands: brands which are authentic and relational and participants themselves in the experience (that "get it"). I think this trend will prove to be great for platforms, and bad for aggregators. https://medium.com/@thecraigmartin/the-greatest-threat-to-retailers-acab2a5f864 https://medium.com/@thecraigmartin/the-greatest-threat-to-re...
bhouston 7y ago
I predict that Shopify will eventually create an Amazon-like system where products from its merchants can be listed in a unified e-commerce frontend site all together. Not sure if I will be correct about this but I might as well try for a third correct prediction about Shopify: * Fulfilled by Shopify (https://news.ycombinator.com/item?id=18524131 https://news.ycombinator.com/item?id=18524131) * Shopify POS (https://news.ycombinator.com/item?id=6289827 https://news.ycombinator.com/item?id=6289827).
- bluetidepro 7y ago
  Fun fact: The startup Storenvy [1] tried that model, and I'm not sure how well they are doing these days. Each store on their platform goes into a unified site, but then they also have unique url's websites for each of the brands on the platform. [1] https://www.storenvy.com/ https://www.storenvy.com/
  - opportune 7y ago
    This is basically the story of wayfair too
- yhoiseth 7y ago
  Interesting. Do you have a timeline for your prediction?
  - bhouston 7y ago
    It would likely happen by May 2021. Thus within 2 years?
- ky0ung 7y ago
  I don't think this makes sense to do. Shopify is great at developing software to help merchants sell online. They have successfully built a relationship with the merchant side of the market...but what is there advantage on the creating a business on the retail customer side? At the moment, Shopify only services the merchants. This being said, it is still possible to build a business on customer side, but the question is...would it make sense? I'd say it wouldn't make sense to do this. Shopify has no relationship with the retail customer. To build it, they'd have to build traffic from scratch. They'd have to not only build a unique customer brand, but also have to figure out a way to drive traffic, which would likely be through aggressive marketing (Facebook / Google ads), which wouldn't be economical. Secondly, what would Shopify build a brand around for customers? Amazon's brand is built on the promise of not only providing the cheapest prices, but also the convenience of 2 day shipping (achievable only through scale), amazing customer service (and lenient refunds, again achievable only through scale). This being said, what would Shopify's "brand" promise be? Curation of their favorite products? Who says that Shopify is qualified to curate? All of these factors make it hard for me to believe that they'd enter and create a serious business from a unified e-commerce site that'd compete with Amazon.
baybal2 7y ago
On my first job ever, when I was an exchange student in Singapore in between 2007-2009, I did API integration for a trade company with Alibaba's APIs or whatever you can call them back then. You was making a CVS file with product description, putting it on a web server, and directed Alibaba's product feed downloader on it. Alibaba also had "hosted frontpage" back then. The same thing you get now with a store in *.alibaba.com subdomain. It was actually much more feature rich back then. They were allowing upload of more or less fully featured HTML pages, but around 2010 they discontinued both. If Alibaba guys ever knew what a gold mine they were sitting on all that time...
valueprop 7y ago
Hi, Considering about working on an open source with turnkey SaaS hosting modern alternative. Drawback: MVP is quite big. Would you see such a need, or is everyone happy with Shopify? Some questions, if you can spare a few minutes: What are top 3-5 issues with the platform that you're currently using? What do you like most about the current platform? What would be the must-haves of another store platform in order for you to switch to it? Appreciate your insights!
- valueprop 7y ago
  I guess downvoting means Happy with Shopify :) Good to know!
- hombre_fatal 7y ago
  I don't really understand who an "open source turnkey ecommerce solution" serves. The last thing you need when trying to sell product is to now deal with running software and a server. Kinda reminds me of when I thought I could build a webshop for my father with Rails and Stripe. Thank god I realized sooner than later that there's basically zero upside to running this software and I switched my father to Shopify where he's happily been since. I think this kind of solution only seems good to HN nerds who don't realize what Shopify brings to the table, or that technology is somehow the hardest part of running a webshop. It seems naive. Since you're asking these questions, it sounds like you don't have much domain experience. I encourage you to create a simple Shopify shop and try selling something, if only to see what it gives you out of the box that your turnkey solution can't. That would be essential experience to have before you even make your initial commit.
- robryan 7y ago
  This service might be interesting to look at: https://www.liquidweb.com/products/managed-woocommerce-hosting/ https://www.liquidweb.com/products/managed-woocommerce-hosti... Fills a space somewhere between full self hosting/ developing from a base open source cart and Shopify.
benologist 7y ago
If anyone is interested in a 'Shopify for SaaS' I am in private beta with one, my platform is an open source app store for web applications with developer registration and payouts through Stripe Connect. Developers can code single page apps on the website or import their servers by URL. Users can install the creations for personal or organization use, imported or freely subscribed or paid subscriptions. My email is in my profile if anyone is interested in participating in my beta. Example of a web app on my platform - https://github.com/userappstore/integration-examples/blob/master/hastebin/hastebin-app-store-subscription/src/www/public/14-second-user-creates-shared-post.png?raw=true https://github.com/userappstore/integration-examples/blob/ma... Case study for how that app, hastebin, was ported - https://github.com/userappstore/integration-examples/blob/master/hastebin/hastebin-app-store-subscription.md https://github.com/userappstore/integration-examples/blob/ma...
wenbin 7y ago
Tobi is like a younger Jeff Bezos :) I binge listened quite a few his podcast interviews https://lnns.co/aECRtZ2fNn9 https://lnns.co/aECRtZ2fNn9
- jonny_eh 7y ago
  He's also much generous, and technically adept (he created a bunch of popular early Ruby gems).
stcredzero 7y ago
This is ultimately the most important distinction between platforms and Aggregators: platforms are powerful because they facilitate a relationship between 3rd-party suppliers and end users; Aggregators, on the other hand, intermediate and control it. Would YouTube count as an Aggregator? Are they becoming less about the task to "facilitate a relationship between 3rd-party suppliers and end users" and more about seeking to "intermediate and control?"
idlewords 7y ago
I just want to plug the Stratechery newsletter, which whether you agree with the author's conclusions or not is consistently excellent, and a spur to thinking about our industry,
- akulkarni7 7y ago
  I just took a look at it thanks to this comment and wow, that is some terrific content. Thanks for sharing!
melenaos 7y ago
I am Shopify app developer and I earn my living from 3 published apps in the Shopify marketplace. I can answer any question you may have.
- kumarm 7y ago
  Thank You. 1. Do you see the Market for shopify apps growing? Any indications would be helpful from your experience. 2. Best way to get started on Shopify apps for developers?
  - deleted 7y ago
    [deleted]
  - melenaos 7y ago
    New stores open every minute but at the same time some others close, if you have a good placement in the marketplace listings then new people use the app and if you can keep them, you will grow a decent monthly revenue. Shopify is missing many things and the apps are there to fill those gaps, Shopify doesn't replicate the apps functionality to drag them out of the game so yea, there is much space left for new apps. Shopify has a great resource of information on how to get started here: https://developers.shopify.com/app-development https://developers.shopify.com/app-development You may find an API library for your preferred language in this list: https://help.shopify.com/en/api/tools/supported-libraries https://help.shopify.com/en/api/tools/supported-libraries
- yhoiseth 7y ago
  Do you have any ideas for Shopify apps you'd like to share?
  - melenaos 7y ago
    If you need inspiration you can navigate through the marketplace. I have released such a 'borrowed idea' app before 4 months and i barely have 15 users on it. It's not much but it's more than nothing, it took me less than two months to develop it and about 6 months to release it (slow app verification procedures and stupid bugs). https://apps.shopify.com/ https://apps.shopify.com/
dvduval 7y ago
The main reason I don't use Shopify is the merchant fees. I can do better paying a developer to WooCommerce. and we have a pretty good system for doing all the patches and everything and haven't had any security problems or anything like that. and if I'm not happy with my hosting or with some feature I can just change myself. I don't depend on this other company which has already done a few things that were kind of heavy-handed in my view.
dkrich 7y ago
The main differentiator between Amazon and everyone else continues to be Prime. Having people paying $120/year to come back and shop on their site is an advantage that nobody can compete with. Shopify could try and compete by creating a similar membership service, and perhaps they will, but at this point I'm skeptical it would gain much traction. The main reason people use Prime is to buy commodity goods with fast free shipping. In this case I'm defining commodity goods as those where the supplier isn't that important and the alternative is driving to a local store and buying the same thing. Shopify is almost at the other extreme: the sites that sell goods on its platform must differentiate themselves with niche offerings and consequently, I'd bet that the average Shopify customer makes purchases a lot less frequently than the average Amazon customer. People shop on those sites because the local stores don't have what they are looking for. Another reason I'm a bit skeptical about the "Shopify is a threat to Amazon" narrative is that at a certain scale it seems that stores would leave Shopify and just manage their own websites and inventory. So Shopify is sort of a business incubator that is extremely valuable when a business' scale is limited. But the few that become huge hits would likely leave to save transaction costs, so Shopify would lose that business. Totally agree with the Wal-Mart analysis though. They seem to be all over the place. I sometimes wonder why Wal-Mart doesn't at least try to start a subscription service. They would definitely have to undercut Amazon on price and eat losses for a while, but I don't understand the idea of advertising a no-subscription required model when that model clearly works so well for so many other businesses. The most obvious issue is that they are at a huge disadvantage in distribution center build-out, but why couldn't they start regionally in a couple of densely-populated areas and expand from there? Price the service aggressively and maybe give members discounts on groceries or other in-store products, an area where Wal-Mart has a massive advantage over Amazon.
rladd 7y ago
Here are some excerpts from my recent conversation with Shopify support: Q: noticed that sockfancy.com is using shopify? is there a way to set things up like they do: user checks off the options they want and then they go directly to a single-page checkout for their subscription? A: A subscription is a recurring order. For recurring orders they are using Recurring Orders & Subscription Box App by Bold, and Recurring Orders Enterprise, which is only available to Shopify Plus merchants. Q: how about the single page checkout? A: The single page checkout is also a feature of Shopify Plus plan, which starts at $2000 per month. They are also using cashier by Bold. Q: It looks like those Bold plugins add commission costs of about 3% or more per sale? A: I don't know the details of that, but again they are available only for Shopify Plus. Yes it's true that you can set up a generic site cheaply, but for a site that actually works well and has single page checkout, etc. you get into some very big bucks, and also some very large sales commissions.
- rladd 7y ago
  Another point about hosted platforms: if they run slowly, there's not that much you can do to fix it. Here's a GTMetrix report for the aforementioned site: https://gtmetrix.com/reports/sockfancy.com/gSNvns6s https://gtmetrix.com/reports/sockfancy.com/gSNvns6s Fully Loaded Time - 7.8s Not sure anyone would think this is an acceptable amount of time to wait for a page to load.
  - gcbw2 7y ago
    It's not like you could also do anything about slow page loads if selling via amazon or wallmart.
    - rladd 7y ago
      Yes, but Amazon brings traffic and a customer base to the picture. Shopify doesn't. Shopify is competing with any other shopping cart software, and for companies concerned with performance there may be a case for hosting your own.
      - 7y ago
saadalem 7y ago
I love this tweet from Tobi : "I'd rather buy @amazon in 2029" https://mobile.twitter.com/tobi/status/1068282069397123072 https://mobile.twitter.com/tobi/status/1068282069397123072
tedmcory77 7y ago
Amazon is a good cash business, but hard to build a brand on. Shopify is easier to build a brand on, but harder to make actual money on initially. If Shopify turned us off tomorrow (they can), we’d be able to continue. If Amazon did, it’s game over on that platform.

549 points by jonbaer 7y ago

> Shopify is giving merchants an opportunity to differentiate themselves while bearing no risk if they fail. In addition to this being a great position for Shopify, this is an amazing thing for merchants compared to Amazon's offering; it's the critical difference between "We'll sell your stuff" and "We'll empower you to easily sell your stuff" that leaves power and agency in the hands of individual companies. Semi-related: For a really insightful conversation about Shopify, personal interactions, and running a good company, I highly recommended The Knowledge Project's interview with the company's CEO, Tobi Lütke: https://fs.blog/tobi-lutke/ https://fs.blog/tobi-lutke/

rluhar 7y ago
The Knowledge Project podcast is awesome. Here are some snippets that I found very useful. On starting his company in a secondary market: I do think that there is an almost complete difference between how you build a company in a primary talent market and sort of secondary talent markets. For instance, one of the biggest differences in secondary places is, if I hired someone, the chance that we are going to still work together in a decade from now is super high. Hiring for future potential It means that it’s a much better idea to hire for future potential rather than for current skill. Once you do that, what you realize is, a dollar invested into helping to train people or even subtle things like making sure that next to any junior programmer, like for every five junior programmers in a team, you have one person who can become their mentor—these basic ideas all start having way more dividends On building a hiring process for a learning organisation ..we have a hiring process that really, really finds people of high future potential. And then, we try to help them reach this potential 10, 20 years earlier in their career than they ever thought was possible, through coaching, through book clubs, through anything. Fixed vs. Growth Mindsets Everything in Shopify is built around this idea that if someone shows up with a fixed mindset, we convert them to a growth mindset quickly. And then once we have a growth mindset, we fill people with context (i.e. explain what their role is and what they are expected to do). On the role of processes with an organisation There are three kinds of process. There’s a kind of process that makes things that were previously impossible to do, possible. That’s good. Then there’s a kind of process that makes something that was previously possible significantly simpler, which is also good. However, 99.9% of all process that exists in corporate America is the third category, which is actually just telling people to behave slightly different from what common sense tells them to do. So we have lots and lots and lots of examples where we just avoided having to create process by just changing the environment in which we all spend our time in.
- greymalik 7y ago
  > we have a hiring process that really, really finds people of high future potential Did he elaborate on the details of this process?
  - thatoneguy 7y ago
    I know it definitely sounds ageist. Is a 45 year old fresh-out-of-university-to-start-new-CS-career going to be considered and hired by Shopify on a regular basis (i.e. not just hiring one and being like "see, we're not ageist")?
    - anbop 7y ago
      That person is going to have a hard time anywhere. All the drawbacks of age and none of the professional benefits.
- sseppola 7y ago
  Just came here to say thanks, didn’t know of The Knowledge Project, and this episode was great. Cheers
DenisM 7y ago
What about traffic though? Amazon gives you traffic, user reviews, used confidence.
- imjk 7y ago
  Sure, you have to work to target your own audience and build the trust with them yourself, but it's a tradeoff that benefits you in the long run. Your not beholden to the whims "the platform" as many media companies learned the hard way by putting so much of their focus on Facebooks platform in the past decade.
- q_queue 7y ago
  I think to some extent Amazon's commoditization of 3rd party vendors has hurt customer confidence, though surely not enough to make up for the increase in revenue.
- aussiegreenie 7y ago
  Amazon has a HUGE fake products problem. The brand is damaged and getting worse. People already avoid Az and it will only get worse.

j4_hnews 7y ago

As Amazon gobbles up more product categories, there may be less viable categories that potential e-commerce startups might venture into on their own. This could mean over time, more Shopify merchants would be selling overlapping product categories (the ones Amazon has not yet gobbled up yet). Which would mean that as a Shopify merchant, you would competing with other Shopify merchants (not Amazon). How do you differentiate, when the Shopify platform makes the same set of selling advantages available to everyone? You leave Shopify ...

asdfokd8 7y ago
This assumes a trend toward product commoditization. However, I believe the opposite trend is actually taking place: toward product brands. https://medium.com/@thecraigmartin/the-greatest-threat-to-retailers-acab2a5f864 https://medium.com/@thecraigmartin/the-greatest-threat-to-re...
- j4_hnews 7y ago
  Amazon Basics?
  - asdfokd8 7y ago
    Some products will always remain predominantly in the category of a commodity. And probably all products will have a commodity category. But I think overall the trend is toward beloved brands for more and more things which were once commodities, like mattresses or reading glasses. And when Brands are sought, retailers/aggregators are just more expensive middlemen.
    - jasonsync 7y ago
      My beloved brands keep getting eaten up by big brand knock offs like Amazon Basics, or, keep getting bought out by the big brands. I would love to see this happen with mattresses actually. Buying a mattress is currently ridiculous. Why do I need a guy in a suit showing me around like I'm buying a car?! What's the difference between these mattress brands that I have never heard of. I'm not loyal, because it's a one time purchase every ten years. The brand I purchased last will probably no longer the exist next time. My latest eye glasses were purchased at the grocery store optical centre, not a mom and pop shop or specialized brand. Much cheaper that way, and good quality. I wouldn't be surprised to see Amazon take over this category as well. Hasn't Walmart already?

_csoo 7y ago

Shopify is just the next closed-source iteration of WordPress and Magento. WordPress has one of the largest platforms and they've taken over (and open-sourced) blogging, content management, learning management systems, and ecommerce. They and Magento are better examples of a platform than Shopify. In the long-term, "platforms" like Shopify lose because they don't have nearly enough developers. They have ~3000 "apps" listed in their app store: https://apps.shopify.com/browse/all?pricing=all&requirements=off&sort_by=popular https://apps.shopify.com/browse/all?pricing=all&requirements... WooCommerce has 285 plugins, and WordPress has 54,000+ plugins. Magento has ~5000 plugins. It would be cool if Stratechery took a look at free/open source on the platform/aggregator spectrum.

MuffinFlavored 7y ago
I don't think "number of plugins" is a good comparison metric here. The Shopify app store is regulated + tested by Shopify before getting the approval to go live. WordPress plugins are the wild west, many of them incompatible with each other.
- omouse 7y ago
  Regulated meaning a tightly controlled and closed "market"? Number of plugins isn't the greatest metric but it's a good leading indicator. It's kinda hard to estimate how many merchants and customers and volume of transactions have been processed when they aren't being tracked by a central entity ;)
  - Miss_Vee22 7y ago
    What was meant was moderation. Shopify works with developers to ensure the plugin's code will be compatible/quality more similar to how Apple does moderation.
  - wc91 7y ago
    If only Shopify was some sort of publicly traded company that publicly reported these numbers. If only...

parentheses 7y ago

It's easy to think platforms are difficult to build. With some of the "platform infrastructure" mentioned, it's very possible to assemble a large majority of a new platform out of large chunks rather than building from scratch. One of the infrastructure components of Shopify missed in the article is Stripe. Stripe makes it possible for them to scale to serve clients in many countries and offer an e-commerce capability. Then there is AWS. I think the article misses some of the depth of platform building capabilities that are out there and available for use.

CriticalCathed 7y ago

It's an interesting article, but the most interesting part to me was the Bill Gates Line article the author also wrote. [0] The distinction between a platform and an aggregator was not one that I ever considered. I'm convinced by this article that it's a useful one. Does anyone know why it is that Shopify's stock has risen by 100% over the last year? I looked it over and couldn't figure out why -- is it the 3PL Fulfillment Network this article mentions? [0] https://stratechery.com/2018/the-bill-gates-line/ https://stratechery.com/2018/the-bill-gates-line/

omouse 7y ago
They're beating earning expectations consistently: https://finance.yahoo.com/quote/SHOP/ https://finance.yahoo.com/quote/SHOP/ They're also growing and hiring more which always looks good in the books. Unfortunately, while their revenue is growing their earnings are in the negatives: 1B revenue in 2018 up from 673M in 2017, however they're -64M in earnings and -40M in earnings previous to that. Not to mention the hype stories like this: "Shopify's market share could triple within five years rivaling Amazon", https://finance.yahoo.com/news/shopify-apos-market-share-could-124900532.html https://finance.yahoo.com/news/shopify-apos-market-share-cou...
SolaceQuantum 7y ago
It's not uncommon for people to be selling artisian products on shopify, which a trend that's been increasing over time. There's a large boost towards 'natural/homemade' products towards daily consumeables, accessories, clothing, indie perfumes, beauty products, etc. At least this is my experience in several hobbyist circles I lurk in.
hackermailman 7y ago
Shopify reported 50% yearly revenue growth which helped the stock price, and gov of Canada/provinces used shopify exclusively for their online marijuana ordering starting last year too. That said their lack of net income is a problem https://www.fool.ca/2019/05/07/where-will-shopify-tsxshop-stock-be-in-5-years/ https://www.fool.ca/2019/05/07/where-will-shopify-tsxshop-st... and their hiring process is ridiculous even by modern meme hiring standards meaning it's going to get harder to hire people when they can just work for FAANG which are all opening offices, or already have offices in Canada and don't have the same very long process starting with telling a recruiter 'your life story' for over an hour.

_csoo 7y ago

"We'll empower you to easily sell your stuff" that leaves power and agency in the hands of individual companies. WordPress + WooCommerce, PrestaShop and Magento already do that. Drop $10 to $20/month on hosting on DigitalOcean, install Wordpress, install WooCommerce, buy a cheap theme, buy whatever extra plugins you need, setup your payment system (PayPal and Stripe are supported), and you're off to the races. And it's better than that, there's people with years and years of experience in modifying and creating plugins and themes so once you have enough $$$ from the basic setup, re-invest into the business and get better developer support for all the GPL'd plugins and themes you're using.

toomuchtodo 7y ago
> WordPress + WooCommerce, PrestaShop and Magento already do that. Drop $10 to $20/month on hosting on DigitalOcean, install Wordpress, install WooCommerce, buy a cheap theme, buy whatever extra plugins you need, setup your payment system (PayPal and Stripe are supported), and you're off to the races. My wife is starting a fashion business. This is a hill too high to climb for a non-technical user. She was up and running in 30 minutes with my credit card and Shopify earlier this week. We don't have time to maintain an instance, troubleshoot Wordpress theme and plugin incompatibilities, etc. That's time better spent on sales funnel optimizations, manufacturing product, and customer support. Would we consider more advanced ecommerce systems? Sure, when she hits $1MM/year in annual revenue. Until then, Shopify earns their keep (and margin) by taking care of the mundane. Make dollars, don't pinch pennies. See: "Dropbox is just ftp + git" [1] [1] https://news.ycombinator.com/item?id=9224 https://news.ycombinator.com/item?id=9224
- omouse 7y ago
  I don't know, these options look just as much as "swipe credit card, get started" as Shopify's options: https://www.siteground.com/woocommerce-hosting.htm?afcode=d5848c3dbd9ad5d21d8e623ec04881b9&campaign=woocommercehosting https://www.siteground.com/woocommerce-hosting.htm?afcode=d5... * Until then, Shopify earns their keep (and margin)* That's fair. For business stuff I've swiped the credit card and paid for support as well. If the Shopify experience is easier than WooCommerce, etc. then I get it.

chiefalchemist 7y ago

> "To that end, I would argue that for Shopify a high churn rate is just as much a positive signal as it is a negative one: the easier it is to start an e-commerce business on the platform, the more failures there will be. And, at the same time, the greater likelihood there will be of capturing and supporting successes." Yes and no. The excessive lowering of the barrier to entry is self defeating. That is, more stores === more noise. Throwing still more at the wall isn't going to increase success. That friction will increase Failure.

naringas 7y ago
but Shoppify's model doesn't involve marketing, they leave all that up to the merchants. so shoppify itself isn't directly affected by this.
- chiefalchemist 7y ago
  The supply of customers is not endless. It's in Shopify's best interest to optimize the churn to success ratio - not simply have more success stories. We all know the metric. Happy customer tell three people. Unhappy customer tell 10 or more. That is, as the number of failed store owners grows so does the fiction and reputation debt for the Shopify brand.
  - scribu 7y ago
    But is the Shopify brand featured prominently during the shopping experience? I would assume no, given the article's assertion that Shopify is just a facilitator, which lets the shop's owner shine instead.

asdfokd8 7y ago

It seems to me like Aggregators vs Platforms is related to Products as Commodities vs Products as Brands. Aggregators win when products are anonymous commodities. Brands win when products are beloved. It seems like the trend (for many reasons: over-marketing, dis-satisfaction, dis-trust, a race toward the barely-legal) is toward products as brands: brands which are authentic and relational and participants themselves in the experience (that "get it"). I think this trend will prove to be great for platforms, and bad for aggregators. https://medium.com/@thecraigmartin/the-greatest-threat-to-retailers-acab2a5f864 https://medium.com/@thecraigmartin/the-greatest-threat-to-re...

bhouston 7y ago

I predict that Shopify will eventually create an Amazon-like system where products from its merchants can be listed in a unified e-commerce frontend site all together. Not sure if I will be correct about this but I might as well try for a third correct prediction about Shopify: * Fulfilled by Shopify (https://news.ycombinator.com/item?id=18524131 https://news.ycombinator.com/item?id=18524131) * Shopify POS (https://news.ycombinator.com/item?id=6289827 https://news.ycombinator.com/item?id=6289827).

bluetidepro 7y ago
Fun fact: The startup Storenvy [1] tried that model, and I'm not sure how well they are doing these days. Each store on their platform goes into a unified site, but then they also have unique url's websites for each of the brands on the platform. [1] https://www.storenvy.com/ https://www.storenvy.com/
- opportune 7y ago
  This is basically the story of wayfair too
yhoiseth 7y ago
Interesting. Do you have a timeline for your prediction?
- bhouston 7y ago
  It would likely happen by May 2021. Thus within 2 years?
ky0ung 7y ago
I don't think this makes sense to do. Shopify is great at developing software to help merchants sell online. They have successfully built a relationship with the merchant side of the market...but what is there advantage on the creating a business on the retail customer side? At the moment, Shopify only services the merchants. This being said, it is still possible to build a business on customer side, but the question is...would it make sense? I'd say it wouldn't make sense to do this. Shopify has no relationship with the retail customer. To build it, they'd have to build traffic from scratch. They'd have to not only build a unique customer brand, but also have to figure out a way to drive traffic, which would likely be through aggressive marketing (Facebook / Google ads), which wouldn't be economical. Secondly, what would Shopify build a brand around for customers? Amazon's brand is built on the promise of not only providing the cheapest prices, but also the convenience of 2 day shipping (achievable only through scale), amazing customer service (and lenient refunds, again achievable only through scale). This being said, what would Shopify's "brand" promise be? Curation of their favorite products? Who says that Shopify is qualified to curate? All of these factors make it hard for me to believe that they'd enter and create a serious business from a unified e-commerce site that'd compete with Amazon.

baybal2 7y ago

On my first job ever, when I was an exchange student in Singapore in between 2007-2009, I did API integration for a trade company with Alibaba's APIs or whatever you can call them back then. You was making a CVS file with product description, putting it on a web server, and directed Alibaba's product feed downloader on it. Alibaba also had "hosted frontpage" back then. The same thing you get now with a store in *.alibaba.com subdomain. It was actually much more feature rich back then. They were allowing upload of more or less fully featured HTML pages, but around 2010 they discontinued both. If Alibaba guys ever knew what a gold mine they were sitting on all that time...

valueprop 7y ago

Hi, Considering about working on an open source with turnkey SaaS hosting modern alternative. Drawback: MVP is quite big. Would you see such a need, or is everyone happy with Shopify? Some questions, if you can spare a few minutes: What are top 3-5 issues with the platform that you're currently using? What do you like most about the current platform? What would be the must-haves of another store platform in order for you to switch to it? Appreciate your insights!

valueprop 7y ago
I guess downvoting means Happy with Shopify :) Good to know!
hombre_fatal 7y ago
I don't really understand who an "open source turnkey ecommerce solution" serves. The last thing you need when trying to sell product is to now deal with running software and a server. Kinda reminds me of when I thought I could build a webshop for my father with Rails and Stripe. Thank god I realized sooner than later that there's basically zero upside to running this software and I switched my father to Shopify where he's happily been since. I think this kind of solution only seems good to HN nerds who don't realize what Shopify brings to the table, or that technology is somehow the hardest part of running a webshop. It seems naive. Since you're asking these questions, it sounds like you don't have much domain experience. I encourage you to create a simple Shopify shop and try selling something, if only to see what it gives you out of the box that your turnkey solution can't. That would be essential experience to have before you even make your initial commit.
robryan 7y ago
This service might be interesting to look at: https://www.liquidweb.com/products/managed-woocommerce-hosting/ https://www.liquidweb.com/products/managed-woocommerce-hosti... Fills a space somewhere between full self hosting/ developing from a base open source cart and Shopify.

benologist 7y ago

If anyone is interested in a 'Shopify for SaaS' I am in private beta with one, my platform is an open source app store for web applications with developer registration and payouts through Stripe Connect. Developers can code single page apps on the website or import their servers by URL. Users can install the creations for personal or organization use, imported or freely subscribed or paid subscriptions. My email is in my profile if anyone is interested in participating in my beta. Example of a web app on my platform - https://github.com/userappstore/integration-examples/blob/master/hastebin/hastebin-app-store-subscription/src/www/public/14-second-user-creates-shared-post.png?raw=true https://github.com/userappstore/integration-examples/blob/ma... Case study for how that app, hastebin, was ported - https://github.com/userappstore/integration-examples/blob/master/hastebin/hastebin-app-store-subscription.md https://github.com/userappstore/integration-examples/blob/ma...

wenbin 7y ago

Tobi is like a younger Jeff Bezos :) I binge listened quite a few his podcast interviews https://lnns.co/aECRtZ2fNn9 https://lnns.co/aECRtZ2fNn9

jonny_eh 7y ago
He's also much generous, and technically adept (he created a bunch of popular early Ruby gems).

stcredzero 7y ago

This is ultimately the most important distinction between platforms and Aggregators: platforms are powerful because they facilitate a relationship between 3rd-party suppliers and end users; Aggregators, on the other hand, intermediate and control it. Would YouTube count as an Aggregator? Are they becoming less about the task to "facilitate a relationship between 3rd-party suppliers and end users" and more about seeking to "intermediate and control?"

idlewords 7y ago

I just want to plug the Stratechery newsletter, which whether you agree with the author's conclusions or not is consistently excellent, and a spur to thinking about our industry,

akulkarni7 7y ago
I just took a look at it thanks to this comment and wow, that is some terrific content. Thanks for sharing!

melenaos 7y ago

I am Shopify app developer and I earn my living from 3 published apps in the Shopify marketplace. I can answer any question you may have.

kumarm 7y ago
Thank You. 1. Do you see the Market for shopify apps growing? Any indications would be helpful from your experience. 2. Best way to get started on Shopify apps for developers?
- deleted 7y ago
  [deleted]
- melenaos 7y ago
  New stores open every minute but at the same time some others close, if you have a good placement in the marketplace listings then new people use the app and if you can keep them, you will grow a decent monthly revenue. Shopify is missing many things and the apps are there to fill those gaps, Shopify doesn't replicate the apps functionality to drag them out of the game so yea, there is much space left for new apps. Shopify has a great resource of information on how to get started here: https://developers.shopify.com/app-development https://developers.shopify.com/app-development You may find an API library for your preferred language in this list: https://help.shopify.com/en/api/tools/supported-libraries https://help.shopify.com/en/api/tools/supported-libraries
yhoiseth 7y ago
Do you have any ideas for Shopify apps you'd like to share?
- melenaos 7y ago
  If you need inspiration you can navigate through the marketplace. I have released such a 'borrowed idea' app before 4 months and i barely have 15 users on it. It's not much but it's more than nothing, it took me less than two months to develop it and about 6 months to release it (slow app verification procedures and stupid bugs). https://apps.shopify.com/ https://apps.shopify.com/

dvduval 7y ago

The main reason I don't use Shopify is the merchant fees. I can do better paying a developer to WooCommerce. and we have a pretty good system for doing all the patches and everything and haven't had any security problems or anything like that. and if I'm not happy with my hosting or with some feature I can just change myself. I don't depend on this other company which has already done a few things that were kind of heavy-handed in my view.

dkrich 7y ago

The main differentiator between Amazon and everyone else continues to be Prime. Having people paying $120/year to come back and shop on their site is an advantage that nobody can compete with. Shopify could try and compete by creating a similar membership service, and perhaps they will, but at this point I'm skeptical it would gain much traction. The main reason people use Prime is to buy commodity goods with fast free shipping. In this case I'm defining commodity goods as those where the supplier isn't that important and the alternative is driving to a local store and buying the same thing. Shopify is almost at the other extreme: the sites that sell goods on its platform must differentiate themselves with niche offerings and consequently, I'd bet that the average Shopify customer makes purchases a lot less frequently than the average Amazon customer. People shop on those sites because the local stores don't have what they are looking for. Another reason I'm a bit skeptical about the "Shopify is a threat to Amazon" narrative is that at a certain scale it seems that stores would leave Shopify and just manage their own websites and inventory. So Shopify is sort of a business incubator that is extremely valuable when a business' scale is limited. But the few that become huge hits would likely leave to save transaction costs, so Shopify would lose that business. Totally agree with the Wal-Mart analysis though. They seem to be all over the place. I sometimes wonder why Wal-Mart doesn't at least try to start a subscription service. They would definitely have to undercut Amazon on price and eat losses for a while, but I don't understand the idea of advertising a no-subscription required model when that model clearly works so well for so many other businesses. The most obvious issue is that they are at a huge disadvantage in distribution center build-out, but why couldn't they start regionally in a couple of densely-populated areas and expand from there? Price the service aggressively and maybe give members discounts on groceries or other in-store products, an area where Wal-Mart has a massive advantage over Amazon.

rladd 7y ago

Here are some excerpts from my recent conversation with Shopify support: Q: noticed that sockfancy.com is using shopify? is there a way to set things up like they do: user checks off the options they want and then they go directly to a single-page checkout for their subscription? A: A subscription is a recurring order. For recurring orders they are using Recurring Orders & Subscription Box App by Bold, and Recurring Orders Enterprise, which is only available to Shopify Plus merchants. Q: how about the single page checkout? A: The single page checkout is also a feature of Shopify Plus plan, which starts at $2000 per month. They are also using cashier by Bold. Q: It looks like those Bold plugins add commission costs of about 3% or more per sale? A: I don't know the details of that, but again they are available only for Shopify Plus. Yes it's true that you can set up a generic site cheaply, but for a site that actually works well and has single page checkout, etc. you get into some very big bucks, and also some very large sales commissions.

rladd 7y ago
Another point about hosted platforms: if they run slowly, there's not that much you can do to fix it. Here's a GTMetrix report for the aforementioned site: https://gtmetrix.com/reports/sockfancy.com/gSNvns6s https://gtmetrix.com/reports/sockfancy.com/gSNvns6s Fully Loaded Time - 7.8s Not sure anyone would think this is an acceptable amount of time to wait for a page to load.
- gcbw2 7y ago
  It's not like you could also do anything about slow page loads if selling via amazon or wallmart.
  - rladd 7y ago
    Yes, but Amazon brings traffic and a customer base to the picture. Shopify doesn't. Shopify is competing with any other shopping cart software, and for companies concerned with performance there may be a case for hosting your own.
    - 7y ago

saadalem 7y ago

I love this tweet from Tobi : "I'd rather buy @amazon in 2029" https://mobile.twitter.com/tobi/status/1068282069397123072 https://mobile.twitter.com/tobi/status/1068282069397123072

tedmcory77 7y ago

Amazon is a good cash business, but hard to build a brand on. Shopify is easier to build a brand on, but harder to make actual money on initially. If Shopify turned us off tomorrow (they can), we’d be able to continue. If Amazon did, it’s game over on that platform.