February 4, 2021

The rise of Shopify and its consequences

A long year of Corona, Lockdown, Shutdowns, working from home… People seem to get tired of it. Bored at home seems to become a major problem in most countries. Yet, the “Corona-year” has also created new trends and initiatives. Such as: entrepreneurship in the digital world. For example as a shop owner. Not surprisingly though that Shopify has become one of the top most visited websites.

We are now one year past the Corona outbreak and at first glance, not much has changed. We are even looking at another potential lockdown. While some people are starting to lose their patience, there seems to be a trend all around the world, but especially in Switzerland on how some like to spend their time. Instead of going out, people now become small entrepreneurs and create their own businesses on Shopify, so much that it has become the top 10 most visited page in Switzerland just before Netflix. While going out and meeting friends has become almost impossible, people need to spend their time differently. At the same time, most stores had to close and now fully rely on E-Commerce, as they have no other choice. As a combination of these two trends, many have asked themselves “why not me? Why not an online-shop”.

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Opening a store in real life seems like so much work and administration that nobody would ever want to do that on the side of their normal daytime job. With the move to E-commerce, a lot of the entry barriers of opening a shop fall apart, which is why more and more people from the buyer side of business, are switching to the vendor side. Therefore it comes as no surprise that Shopify is listed under the top 10 visited pages of Switzerland at the beginning of 2021. The daily average time spent on Shopify is even higher than the popular Social Media pages like Facebook, Instagram and Youtube. The Hype is real. But what are the consequences for the market and it’s players?

At first glance, big companies don’t seem to lose much. The typical Shopify business is usually selling a focused range of 1 to 3 different products to keep it simple. That way they have more control over the numbers and progress of the business and minimize the risk of losing money without noticing. Therefore, the market share that they take away is incredibly small compared to the big players as they exist in Switzerland.

Typically, in Switzerland everything is very much bundled. The reason for that is, that we do not make part of the EU so there is no competition from widely spread services like Amazon. The closest thing to Amazon is probably Galaxus which is owned by Migros themselves. That in combination with the high buying power in the swiss market make up for a perfect place for unbundling.

Unbundling is the process where these mini companies take away small parts of the market from big companies that are not concerning on their own, but can have a much larger impact in their sum. Companies like Coop or Manor are being taken apart, because they lack a real speciality. A good example for unbundling is the swiss beer market, where more and more local breweries have started with their own beers and slowly split off quite a big chunk of the total beer consumption. It will be very interesting to keep an eye on this process with the new Shopify-Hype and how that all plays out.

Something we know already is that we have received a good amount of requests to do digital marketing with some of these new mini shops. One of the main challenges lies in advertising in a country with different languages. Because of our experience with advertising in Switzerland and also are multilinguality we can say that, at least in our experience, campaigns like these have been astonishingly successful with an ROAS of 5 and more (Returns on ad spent are ratioed 5 to 1).

This article has been posted by Olivier Kennedy
on February 4, 2021
in #Website
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