More than just a checkout tool: Why Shop Pay will become Shop ID

What is Shopify:

You can look at Shopify at a collection of brands all built on the same infrastructure. Why were they able to amass these 2M independent brands? Because they provide the service to make online commerce as easy as possible in return for a monthly fee.

But since Shopify launched Shop Pay it gave a clear signal that it is not only focussed on Merchants anymore. They are trying to construct a "Merchant-Customer" flywheel. Today I'm going to give my personal perspective on what the next steps could be in strengthening that Merchant-Customer Flywheel.

So what is the promise of Shop Pay. Shop Pay let's customers checkout extremely easily by having your card info, billing address, shipping address. Ready to be used with a click of a button. It sounds a bit awkward, because why would people use something you can't see when you can use it? In the end the customer has no clue when a store they are visiting is powered by Shopify, right? And this is exactly why this step of Shopify is so interesting to think about, why would they do something like this?

What is Amazon:

Let's take a step back and look at Amazon for a second. Why has their marketplace business been so successful? You have one spot where you can literally buy everything, you trust it, there are a ton of reviews, you are subscribed to their Prime network that gives you all sorts of advantages, and you know the delivery is going to be hyper efficient. Said differently, they own the full experience. Because of this they became the most used product search bar  and they are becoming an advertising behemoth because who wouldn't want to advertise on the biggest product search bar that signals a buying intent, right?

But that also might be the weakness of Amazon, everything looks the same, there is no soul in buying products on Amazon. You are kind of disconnected to the brand you are buying from. And that is totally fine in a lot of cases. But not in every case.

Back to Shopify:

Let's take a step back and look at Amazon for a second. Why has their marketplace business been so successful? You have one spot where you can literally buy everything, you trust it, there are a ton of reviews, you are subscribed to their Prime network that gives you all sorts of advantages, and you know the delivery is going to be hyper efficient. Said differently, they own the full experience. Because of this they became the most used product search bar  and they are becoming an advertising behemoth because who wouldn't want to advertise on the biggest product search bar that signals a buying intent, right?

But that also might be the weakness of Amazon, everything looks the same, there is no soul in buying products on Amazon. You are kind of disconnected to the brand you are buying from. And that is totally fine in a lot of cases. But not in every case.

What does Shopify know:

Let's first think about everything that Shopify knows. The customer might not know what the store he is browsing on is powered by. But Shopify does know what products are bought throughout the internet on the stores of the 2 Million merchants that it powers. It knows if those sales are going up or down, it knows what products work well, it knows what kind of metrics make sure you store works well, etc etc etc.

Let's supercharge the idea:

Now they are trying to supercharge this for example with ShopPay. Now they know across stores what people are buying with their "Shopify account". This let's Shopify connect incredibly valuable dots that it wouldn't be necessarily able to connect.

Based on this knowledge they launched Shopify Audiences. Now what is Shopify Audiences. Quoting from Shopify's website "a marketing tool powered by an audience network and machine learning that helps merchants find high-intent buyers for their products. As of the end of 2022, merchants can sync Shopify Audiences with Facebook and Instagram. Shopify also launched Audiences for Google in Q4, allowing merchants to reach high-intent audiences from their own store - across YouTube, Google Search, Google Display Network, and Gmail. Within Editions on February 9th we announced the launch of Audiences for Pinterest, which operates like the Meta integration where Plus merchants can use the tool to find high-intent buyers across Shopify and upload to Pinterest for better targeting."

What does this mean, that they are trying to give the value, by accruing all of this data, back to the merchants to feed them with high intent buyers. This rings a bell, as this is one of the reasons why Amazon did such a good job that we mentioned above.

Summary:

Okay, this makes sense. Let's summarise:

- Shopify powers the checkout of all those merchants

- It provides the merchants with as many tools as possible to create a brand aligned, bespoke experience that makes sure you can show who you are as a brand to create brand loyalty

- It provides a unified way to pay on all these stores with Shop Pay

- It tries to leverage the data it gets from all of these transactions and tries to give back that value to their merchants with Shopify Audiences.

Brand loyalty and accounts:

But, what is one of the core ways that brands can measure brand loyalty? It is how many people have an account on their store. Because that is what signals brand loyalty, intent to buy more things from that brand. Which means a potential increased LTV for merchants. One of the dreams of every brand, to increase their LTV.

Extrapolation starts:

Let's start extrapolating to the future now that we have all this baggage.

Not so long ago, Shopify launched their new account structures. A passwordless account structure that is hosted on the Shopify domain. A signal that, just like the checkout, Shopify wants to also own the account structure. A place that they will update, keep secure and open up via APIs just like they are doing with their checkout.

Now, why would they do this? Imagine that you have a ShopID, in the real sense of the word. An ID on the internet that you use for shopping. Just like you have your Amazon account where amazon brings everything to you in that account. Shopify is trying to get you everywhere with your ID. It's kind of like your international passport vs your citizenship of your country. Amazon is the citizenship. They try to give you as much value in the country you reside in. Shopify gives you your international passport with which you can go around to different countries and experience different things but as a national of a certain country, with all the additional safety, rules, etc that comes with.

Why would you need such a thing? Imagine that you love buying clothes from bespoke brands, with bespoke experiences. Imagine that instead of all the separate accounts you have on all of your favorite stores, you have one account, your ShopID that you login with on all of these stores.

Imagine that your sizes, your preferences, your digital avatar lives in that ShopID and by logging in with that ID that the store in a click of a button is personalised to you. Instead of seeing only images of models on the store, you all of a sudden see yourself (your avatar) wearing the clothes of the brand you are visiting, imagine you standing in between the models, imagine you being able to fit clothes, combine clothes and see if they match. Imagine that if you bought the items, that your avatar can then wear those items in other virtual spaces and that your avatar has the same closet that you have in the real world.

What am I actually saying:

What I'm saying here is that there might be a unique added value that Shopify can provide that makes the bespoke experience that independent brands create for you even more compelling. Instead of needing to add you avatar to all of the accounts of all of those independent brands that Shopify helps to do something that only companies with such a big reach can provide powering independent brands with superpowers that we only thought were possible in closed off systems that came with a lot of rules, such as the predefined user experience a brand needs to comply with when offering products on Amazon!

Hope you enjoyed this speculation trip. I have no actual clue where things might be really going but I just think it's fun to think about these things out loud and open up the discussions to see if this valuable for brands, if people would subscribe to such a thing and thus ultimately if the future might look a little like what I tried to summarise.

On to the future!