Shopify’s new marketplace takes a markedly different approach than Amazon’s

• Shopify’s Shop app now has a web version, too.
• Shopify executives have long said they do not want to build a marketplace like Amazon’s.
• The launch of the new site is intended to be a growth driver for Shop Pay and Shop Cash.

Shopify recently announced that its Shop app for consumers is now available on the web. Shoppers using the new site can search for and purchase products from across Shopify’s merchant base, just like they can on the app.

At first glance, the new site resembles online marketplaces such as Amazon. When a shopper enters a search query, similar products from different merchants are displayed next to each other.

Shopify executives have long stated that the company does not want to create a marketplace where customers can buy “commoditized products” from a variety of merchants. When the Shop app first began testing search, a company representative told Insider that the goal was to help merchants build stronger relationships with their customers, not to create competition among sellers. Shop, unlike Amazon, does not prioritize low prices or fast shipping.

The latest version of the Shop product suite aims to keep that dynamic going. According to a Shopify representative, product listings on the website are not indexed by Google and thus do not compete with a merchant’s website in search results.

Rick Watson, CEO and founder of RMW Commerce Consulting, sees the new Shop site as an opportunity to expand Shop Pay, Shopify’s one-click checkout, through Shop Cash, the company’s new rewards program. Offering rewards and cashback is a common strategy for direct-to-consumer brands to build customer loyalty.

After nearly a year of beta testing, Shopify officially launched Shop Cash in June. Shoppers who use Shop Pay can earn 1% back in Shop Cash on their purchases. Shop Cash can only be used at Shop. The app and website also display special offers from merchants that multiply shoppers’ Shop Cash rewards.

“If you go to the Shop website, the entire story is really about how to checkout easily from Shopify merchants that you know and love already,” Watson went on to say.

A Shopify spokesperson told Insider that the ability to spend Shop Cash on the new website “gives shoppers an additional surface to discover new brands and spend the Shop Cash they’ve earned.”

“We’re excited to help merchants reach more customers and drive sales through Shop Cash offers during the holiday shopping season,” the company said.

‘We’re not talking about those metrics’

It’s unclear how large a user base Shopify has developed for Shop so far. Shopify launched the app in April 2020, with features aimed at encouraging users to shop from local businesses and to follow stores they like in order to receive updates on deals and new arrivals. The app also displays order tracking information for all online purchases made by the user.

Its most difficult challenge is to transform Shop into a destination where customers return time and again to discover new products and make purchases.

“A marketplace connects sellers and buyers through a product catalog that can be searched.” “Shopify’s web app and its predecessor, the Shop app, are as much marketplaces as Amazon,” Juozas Kaziuknas, CEO of e-commerce intelligence firm Marketplace Pulse, told Insider. “The only question is whether Shopify is driving buyers to use it by spending money on marketing or not.” It has all of the necessary features. What is lacking are users.”

During Shopify’s third-quarter earnings call on November 2, Mizuho Securities analyst Siti Panigrahi asked if the company would share the Shop app’s active user numbers and the percentage of purchases that currently come from the app.

“We’re not discussing those metrics. We’re not saying anything yet, but the Shop app is becoming increasingly popular,” company president Harley Finkelstein responded. “We were very clear when we launched it that the goal is to strengthen merchant relationships and increase customer LTV.” It is a new owned channel that provides consumers with an end-to-end shopping experience.”

Watson believes that Shopify will benefit more from leveraging this dynamic rather than directly competing with Amazon.

“If Shopify stays close to the needs of merchants, then I think they will be in a good place,” he went on to say.