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Two Can Play at This Game
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This morning, Shopify took another shot across the bow of Amazon. Soon, Shop Pay will be unbundled from the Shopify platform, available for all businesses, regardless of commerce platform.
Why does this matter? Three C’s encapsulate how I see this being disruptive: Consumers, Competition, and Capital.
Consumer channels are changing. Shopify is slowly becoming a household name with the consumer — especially with creators like MrBeast and Emma Chamberlain in their pockets. The recent reframing of the Shop App as a marketplace, complete with a 1% cash-back reward, means that Shop becomes a destination for consumers (podcast link), not just a byproduct of strong brands that drive consumer adoption. The Shop App curation is scary good, and consumers are beginning to show signs of trust in the Shopify brand.
Competition in the next age of eCom means accepting reality. The reality is that the Enterprise will not buy into Shopify proper. At least, not in the next 24 months. In order to build on-ramps into the Shopify ecosystem, Shop Pay unbundling itself as a payments solution on every website does what Amazon Pay did in the prior generation, and the Facebook Like button in the generation before that. Shopify concedes defeat that they’ll never be the “one platform to rule them all” — there is a place in the Enterprise for AEM and Salesforce, et al. Enterprise sales motions require playing games of inches as well as yards, though, and this incremental gain will help eager VPs tell a story to executives about “hedging bets” in emerging ecosystems. This is a win-win-win for the ecosystem.
Capital is being eviscerated before our eyes. Bolt and Fast were among the most visible in the payments space, going after the one-click payments patent held by Amazon that expired in September of 2017. Bolt and Fast collectively raised $700M, and led the charge of copycat products all seeking the network effects that always-logged-in-identity-and-payments solutions may bring. Shopify was best positioned to take advantage of that, and by unbundling it from the core platform, they compete head-on with every startup left in the space.
A freebie insight to gain here is that Shop Pay will benefit from the early mass adopters who turn their checkouts into NASCAR-style logo soup. The halo effect of putting Shop Pay next to “Buy With Prime” (podcast link) and Paypal does a whole heck of a lot to create an equivalency of trust in the mind of the consumer. And brands get the reach of the ecosystem in return.
It’s brilliant and marks the “two can play at this game” era of Shop vs. Amazon.
My one critique — I’m not sure how Shopify squares this (pun intended, sorry) with their recent cobranded report with BCG, which alleges that other platforms convert 67% worse than Shopify. If that were the case, the Shop Pay unbundling may send a mixed message. Why allow your brand to exist at the bottom of the funnel on a poorly converting website?
The tradeoff here, of course, is that the “brand” of Shopify needs to expand in order to compete over time. There’s enough elasticity there to exercise, I’m sure.
Want to see what ChatGPT thinks about that BCG report? Click here to read my conversation with GPT about how to interpret that study.
— Phillip
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