Can There Be a Shopify Alternative?
tl;dr — Shopify practically bridges the offline & online world. It is tough, but not impossible.
Is there a worthy Shopify alternative? Can there be a Shopify alternative? There is a beauty in Shopify that cannot be matched. But, as with everything digital, no slot at the top is guaranteed forever.
I was inspired to write this because of two things: the COVID lockdown that forced digital on businesses, small & large alike, AND this memo from 2010 by the Series A investor in Shopify (link).
Recap of Shopify & it’s Growth
Other than the Google-able things, here are a few unique points:
- They were taken up as part of the Bessemer’s portfolio to invest in bridging technologies for SMB in 2010.
- Over the last decade, they’ve managed to be active on 3.6 million sites. They received their billionth order in the second quarter of 2018. Let that sink in — a billion orders in 2018!
- There are 2400 Shopify apps that superpower the stores to get the latest features/trends. Do you want Facebook shopping integration? There is an app for that. Do you want Drop Ship Vendors? There is an app for that. Apart from the listed apps, many providers have integrations with Shopify, if you ask.
Shopify occupies (nay! Owns!) the bridge between offline & online worlds. It is the gateway to eCommerce. Just like MailChimp (tell me an alternative that does the same thing Mailchimp does at the same price? I’ll wait), which bridges the gap between traditional & email marketing, or Freshbooks or Zendesk in their respective fields, it is a troll that runs the bridge. And you have to pay the troll!
Sure, you can opt to spend a cool $4–5k to set up a basic eCommerce site OR spend a Million or two to set up an enterprise-grade Salesforce Commerce Cloud with all the bells and whistles, but the ROI for both is a gamble and a risk.
Side note: Businesses should, IMO, graduate from system to system, having felt as an organization, the pain of each platform. This helps them understand & value the new platform better.
But it’s easier to just throw a portion of your margin at Shopify and go online in days. That is the space that Shopify owns.
Is it worth building a Shopify website?
From a purely financial motive, if you have volumes, you pay a lesser percentage to Shopify:
The additional features that you get are decent with each plan — however, for organizations moving into digital, they’re fairly redundant.
You can spend anywhere between 5–20% of your revenue if you use Shopify.
Compare that to a standard eCommerce site using Magento or Prestashop, you’ll spend ~10% of your revenue (assuming average numbers here) for hosting & setup. It’s a hit for small businesses — where the setup can take a large chunk of investment & time.
I have to highlight some regional differences for Shopify here. The primary focus for Shopify is the North American & European markets, where there is a strong demand. In places like the Middle East or South East Asia, where the availability of a reliable Shopify-integrated Payment Gateway is tough, we’re stuck to integrating with a hosted checkout option. This adds to the costs as we end up paying .5–2% for Shopify and 2–3% to the gateway. Add the basic add-ons and it is tough for a pure eCommerce player to get started with Shopify.
In contrast, NA & EU have a direct integration with a lot of delivery partners & payment players that it is easy for a new eCommerce shop to set up a site using Shopify.
These regional differences create a strong demand for a Shopify alternative here in the GCC, with possible expansions to Asia, West Europe & South America.
How can a Shopify alternative succeed?
I think the following aspects will guarantee success for the alternative:
Sign-up cost reduction
With the current Shopify model, the monthly fees paid to Shopify are unreasonable — especially given the fact that there is a per-transaction charge. It should be simple to set up the stores and start trading.
Regional Vendor Integrations
Create a strong eco-system of integrations with existing payment vendors. Shopify has an extensive integration portfolio — combating it would be tough — but not impossible.
Easy developer onboarding
Make it easy for developers to build apps. Create a training & assistance platform for the developers and businesses to integrate with the new platform
Plans based on needs
Current Shopify plans do not add value to a retailer. By restructuring the plans to fit the various types of users — going as far as to create an enterprise plan that provides additional resources to work with the enterprise — will go a long way to ensure success. Typical plans could be:
- Online Only Store
Focuses on features required to sustain online — social integrations, vendor integrations, marketing support, email tie-ups. Additional integration for regional marketplaces will be a great sell.
- Offline adding Online
Adding support for POS integration or ERP integration for billing, Store features, support staff integrations, etc.
- Online with pop up stores
Online only businesses who have some offline presence (like pop up stores or in-mall popups).
Which offers additional functionality like Warehouse, ERP, catalog, inventory, price integrations from various sources.
- Customize your plan
Where customers can pick and choose features they want to create their own plan! This I find is missing in Shopify.
So, really, can there be a Shopify alternative?
Yes, but it’s going to be a tough ride. See, in my opinion, Shopify has reached this space of monopoly that it cannot be shaken out of… However, the world is big, and regional players have some advantages. With enough money power and talent behind it, it should be possible to create an alternative.
The worry is that the returns are at least 3–4 years away for any team that starts on this path — a definite concern for a VC.
As someone who has worked with a lot of up & coming businesses and enterprises alike, I can assure you, there is a regional gap.
I know WooCommerce enjoys a marginally higher audience (see diagram below), WooCommerce has a few issues. Unlike Shopify, where everything is click-click-Go!, with WooCommerce, you need some technical support, which adds to your setup costs.
Still, the time it takes to set up a Shopify site is many orders lesser than its competitors. The diagram above shows us the obvious aspect about Shopify — it is not for life — you eventually need to graduate out to other more custom solution. But I’ll be darned if there is any other easier way to go-online!
Thank you for reading! I’d love to know if there are some great Shopify alternatives that you think are doing a better job than Shopify!
As always, feel free to reach out to me on Linkedin if you have questions or comment below. Thank you!