Shopify (SHOP) – Editions 2024 & RBC – February 3, 2024
Shopify published its biannual “Editions” product update this past week. The report guides investors and merchants through all of the product innovation Shopify has been delivering over the last several months. We’ve spoken about a lot of these as the announcements have come out throughout 2023. Here are the highlights.
From a store building perspective, Shopify made a few announcements. It added more flexibility for product descriptions, with product variant limits rising from 100 to 2,000. This should make product presentations for highly complex SKUs a lot neater and more organized. Importantly, product pages remember and auto-apply standard variables to all variants so you don’t have to tediously do so one at a time. Furthermore, it created a new product upload flow to make listings all the more seamless. Shopify added 14 new APIs to enhance checkout customization and 90 new apps, including conversion tracking to better support its stakeholders. Conversion tracking will be a highly valuable tool for merchant split-testing to observe exactly what works and relatedly tweak storefronts with confidence. No more guesswork.
To track the utility of these tools and performance of stores overall, it debuted a new Web Performance Dashboard with more key performance indicators (KPIs) like store latency to maximize search engine optimization and conversion. It upgraded its back-end infrastructure to make stores 35% faster. A 10% improvement to load times boosts merchant conversion by 7%. To offer even more value, it also moved from 3-page to 1-page checkout to reduce time to completion by 4 seconds. Again… Time is money. These optimizations will be ongoing to ensure Shopify is providing its merchants with far more value than anyone else.
“ButcherBox recently migrated to Shopify and has seen increased conversion rates on their store, even though they kept the UX the exact same.” – From the Release
Shopify is also infusing AI into its shopping and discovery flows for consumers via “Semantic Search.” This goes beyond keyword matching to leverage AI inference and understand what a consumer is looking for. If you search “I want to run” it will take you to shoes & clothing appropriate for that activity. I love to run.
For brick and mortar, Shopify debuted the ability for merchants to ship goods from their stores with its point of sale (POS) technology. This will morph physical real estate into distribution center space to cut shipping costs, inventory needs and headache. This was a big ask from merchants, and now it’s a reality.
For marketing, Shopify Audiences (automated and highly relevant/targeted customer lists for merchants to use in campaign creation) updated its retargeting algorithm to double the size of potential buyers. Shopify Cash (cash back rewards for shopping at a Shopify merchant) is now called Shop Campaigns. As part of the re-brand, Shopify added the ability to intelligently estimate ad returns to maximize success.
“In November 2023, we saw a 143% month-over-month increase in new customers acquired on Shop. The campaign effectively and effortlessly helped us acquire new customers.” – Kitsch’s VP of Growth Yingying Kuang.”
In AI land, Shopify Magic (its suite of AI-enabled services) is working on a few things. “Media Editor” is a GenAI tool to automate product and marketing content creation. This allows merchants to shed the costs of outsourcing and storing professional-grade content by allowing them to easily do so themselves. “No design skills needed.” It also rolled out Sidekick (AI shopping assistant to help merchants with all walks of their business) in beta testing. This is a big part of Shopify becoming an even better partner by allowing merchants to focus on building and growing rather than maintaining. RBC sees all of this work in AI creating accelerating merchant, volume and revenue growth beyond currently brisk rates. This isn’t a stretch. Azure is already seeing GenAI prop up its growth with AWS following closely behind. GenAI is here and is making real financial impacts right now. In conclusion, none of this is new. Consistent readers have been hearing about these announcements one at a time over the last several months. Still, I think it’s good to track the pace of innovation at this company and this offers an aggregated review of that pace over the past half year.