When we think of ecommerce, Shopify stands out with the likes of Amazon and Alibaba. Founded in Canada in 2006, Shopify is a platform that helps businesses build ecommerce websites with a minimum level of coding. While selling on marketplaces can be excellent for quickly starting and accessing a large customer base rapidly, brands large and small have realized the benefits of greater control and flexibility that come from owning their own ecommerce website and assets. That’s where Shopify comes into the picture.
So what’s the impact of Shopify on ecommerce?
As per Builtwith, 3.74 million websites today run on Shopify. Think of it this way – Shopify knows what’s happening on 3.74 million webstores worldwide. The platform knows who has bought what, what they’ve added to their cart, and most importantly, what price points appealed to each buyer. It’s about as close to a birds-eye view of the ecommerce world as one can get.
Shopify’s latest announcement has sent something of a tremor through the world of ecommerce with the launch of Shopify Audiences. Simply put, marketers can now take advantage of Shopify’s database to target their paid marketing efforts more effectively.
Let’s explore more with an example.
Imagine that you are selling athletic shoes. You want to advertise them on several different platforms, so you compare the various ad options available. Let’s see what kind of data is available with each of these platforms:
- Google – knows who the sport & fitness enthusiasts are. They know what people are searching (thanks to Search), what sites they are visiting (via Chrome & the Google Display Network), and to some extent, what they buying (based on Google Shopping)
- Facebook & Instagram know who are sharing their running and workout pics, engaging with similar content, and showing interest in attending events around sports and fitness. Thanks to the catalog ads, some product interest data is also available with Facebook.
- Now comes Shopify. Shopify knows who is interested in buying sport shoes. They may or may not be fitness enthusiasts. They may not be talking much about their workouts, but they look to buy what you are selling.
While Google & Facebook have solid networks and data – what Shopify brings to the table is much more focused on high accuracy in predicting intent.
“Ever since Apple started cracking on the data you could get from apps, [companies like Shopify] are trying to back-fill that!”
- Mark Lewis, Founder, Netalico
It’s almost a shot in the arm for performance marketers who have been struggling ever since Apple’s iOS 14 update (something that crippled targeting on Facebook/Instagram for good).
So how does it work?
Shopify Audiences lets brands choose products in their catalogs that they want to put in front of shoppers who are more likely to purchase. Using machine learning, the Audiences tool creates a lookalike audience for that product that can then be deployed on advertising platforms. Audiences are currently available on Facebook and Instagram but will soon expand to other platforms like TikTok, Snap, Pinterest, Microsoft Advertising, and Criteo.
As per Kaz Netajian, VP-Products @ Shopify, “Shopify Audiences will give merchants a new, effective way to find prospective customers — one of the hardest challenges in growing a business — while enabling merchants to meet obligations under their applicable privacy regulations.“
What’s our take?
At Eunimart, we are pretty bullish about the impact of Shopify Audiences. However, we need to consider an important point – 72% of Shopify sites are based in the US. If we consider the next 2 regions, the UK & Australia, with the US, we get to almost 90%. Our take is that the impact and relevance of Shopify Audiences will drop off sharply outside of these 3 regions.
At this point, Shopify Audiences is available only to Shopify Plus customers, making it inaccessible to many SMBs. For smaller businesses, Google & Meta (Facebook & IG) will continue to be some of the best options. However, Audiences may eventually lead to rationalization in the cost of acquisition for all.
Let’s consider an example. Today, a large enterprise and a small startup may be bidding for the same interest on Facebook – pulling the traffic cost high. With the prevalence of Shopify Audiences, we may see the larger enterprises move away from bidding on more generic interests – indirectly helping to bring down traffic costs for SMBs.