[scabbycakes]

As someone who worked developing Shopify apps (NOT a Shopifyt employee to be clear), I can attest to the incredibly high percentage of shops that evaporate from the platform on a nonstop basis.

Something like 80% of the people that would install our apps in their shops would be gone or in limbo after a couple months. (Not an app uninstall, their shops actually no longer existed.)

The charts we see from Shopify like this always say "Number of merchants" and the number climbs up towards a million, but at what point do they start excluding their delinquent/disappearing merchants? I'm not convinced they're factoring in churn.

[lunaru]

A huge part of Shopify's revenue comes from Shopify Plus. We're also fellow app developers[1], and we've noticed that if you offer value to their higher end businesses, you'll be running at churn rates that are much lower than what you'd think you'd get with the "average Shopify merchant".

Something like 70% of small businesses fail[2], so it's not surprising you'll see a large amount of churn if your audience is the broad set of all merchants, including those that are probably just kicking around the idea of spinning up a drop shipping business on the side. That doesn't mean there aren't great businesses in the Shopify ecosystem.

[1] - https://apps.shopify.com/reamaze [2] - https://www.fundera.com/blog/what-percentage-of-small-busine...

[Axsuul]

Also a Shopify app developer here[1]. My software targets established online sellers and my churn is considered low.

[1] https://www.trunkinventory.com

[dragonsh]

You are right the churn is very high because one thing shopify can't do is get traffic for those online stores. So non tech savvy goes to Shopify open a store, because it's easier than running $5 VM to manage many similar e-commerce platform. But then that person needs to work himself for traffic acquisition on his own site which is expensive and after a while stops it. Launching a store is easiest thing to do with plethora of other platforms besides Shopify. On Amazon the story is different, store owner focus on to bring real traffic where buyer has a intention to buy. So from day one store owners focus is on getting sales. On Shopify first problem is getting traffic then convert to sales then to manage sales and delivery, store owner does all these which can be done on plethora of other tools including closed source or open source, with similar ease of use.

Whether it's Amazon or eBay they are spending a lot on getting traffic to those vendors who sale through them. Shopify has been a loss making entity for last three years without significant money on traffic acquisition for it's vendors, they do spend to get more store owner traffic not on buyer traffic. [1]

So I am not sure if Shopify can even be compared with eBay or Amazon. Reason eBay is affected is due to Amazon nothing to do with Shopify which is just a tool to launch an online shop.

[1] https://finance.yahoo.com/quote/SHOP/financials?p=SHOP

[CameronNemo]

there is a lot to unpack here.

. you operate under the assumption that amazon is driving traffic fairly. in reality, there are at least 17 pieces of flair on each search page. remember that most scrubs do not use ublockorigin!

. "getting traffic" is also called networking. making connections with diverse groups. it is part of building a brand, reputation, and yes a client base. trying to avoid that step often makes your business trivially replaceable. for commodities that is actually fine, but many shop owners are not selling commodities.

. you are spot on about shopify having many alternatives. perhaps the competition will benefit shop owners as a whole. i can hope.

[mattmanser]

70% fail within 10 years, which is not much longer than Shopify has even existed.

The GP seems to be saying 80% of shopify businesses fail within a year.

Totally different statistics, the page you linked to says only 20% fail within their first year.

I wouldn't be surprised if setting up a shopify merchant page is a 'pre-business' action, before you're completely serious about the business.

[mikeryan]

This seems like a "feature"? Not to discount the churn numbers - but being able to quickly and at low cost set up a high quality commerce site where folks don't have to be heavily invested seems like they're providing the service as intended.

I enjoy the Shopify experience from the Vendors that use it and do stick around.

[scabbycakes]

I suppose as a user you could definitely look at it that way.

As an investor I'd be worried about losing their churned-out merchants to other platforms like Etsy and Woocommerce and Weebly and about ten other platforms hacking away at their knees. To be fair to Shopify though, I think they know they've already lost the battle for the little merchants and have fixated on other things.

[dwd]

I think you'll find the churn is mostly small businesses that go nowhere, not losses to other platforms.

Magento is probably the biggest loser to Shopify after making v.2 impossible for smaller merchants to maintain so they're moving their v.1 stores to Shopify instead. Shopify is also way simpler for your work-from-home new mum than setting up a WooCommerce store.

The only reasons to go to WooCommerce would be support for a specific payment gateway or content management which Shopify is still lacking. Maybe ongoing fees for some functionality that is standard in WooCommerce or can be had for a small one-off fee is a turn-off for some as well.

Coming from a background building stores in Magento 1 & 2, WooCommerce, ZenCart/OpenCart and now wrapping up a fairly complex Shopify integration I'm warming to it.

[zawaideh]

I'm assuming The shops are startups that failed after s while. They are enabling them to be started quickly.

[TylerE]

There are tons of scammers using Shopify. They’ll put up dozens of storefronts selling name brand sneakers or AirPods at “90%” off and stuff like that.

Of course, they never ship product (because they don’t have any) or if you’re lucky you get some super low quality alibaba knockoff.

[IAmGraydon]

With all due respect, if you are foolish enough to believe you can buy name brand sneakers and AirPods at 90% off from anywhere, you had it coming. There are many ways a scammer can set up a quick site, hook up a payment processor and start taking money. This is not a Shopify problem. It’s an internet-wide problem.

[TylerE]

It’s not really a a good look for Shopify to be leaving those stores up.

[lrem]

As a consumer, at least in Europe, I have a bunch of rights executed via the retailer. If I have a serious doubt the retailer will be around in 2 years, I'll choose a different one. This should limit Shopify's prospects of international growth.

[mkorfmann]

It doesn't.

Seeing this point remembered here will help some, but overall you A. either won't know you're shopping at a shopify.com store or B. you'll not care because the company is too big to fail (Tesla).

[martco]

This explains how I got scammed on Shopify last summer. I’m not talking about a missing product label or receiving a counterfeit item. I paid $1200 for a Shopify product (drone) and received a box with a poster tube inside of it that said “the world is yours”. Nothing else. The merchant was gone that day. The real scammers live on Shopify.

[qaq]

Imagine the surprise of a dude who ordered the poster "the world is yours" and got a drone.

[Snackchez]

I know this won't add to the conversation, but your comment made my day. I got a good laugh out of this. Thanks!

[newguy1234]

Now you know why people call it scamify :)

[peach]

Da fuq? Did you manage to get anything back?

[tehlike]

Credit card chargeback would bring everything back.

[throwaway082319]

Indeed -- same position here. The trouble with developing Shopify apps is that your own application churn is additive with Shopify's. While that's the case with every platform, Shopify's churn rate is eye-wateringly high.

[Axsuul]

While that may be true, consider the amount of customers that wouldn't have signed up in the first place if it weren't for Shopify's app store.

[fourseventy]

I'm about to dev a Shopify app myself. How hard is it to stand out on the shopify app store and get some traction?

[scabbycakes]

REALLY hard.

What you might be seeing a lot of these days is that app dev companies go around buying up other well-established apps and/or their development companies just because they can't find an app to make or get traction with apps they make at this point in the game. Even with great teams and money coming out their ears, they're having a hard time getting established with new apps.

There are 20 apps all doing the same thing competing with each other and all of them have had years head start, so having zero reviews compared to hundreds of favourable reviews can almost be insurmountable for a newcomer. Having said that, if you have 50 subscribers for your possibly obscure app, you can still eke out a good living.

Keep in mind there's a review process though, so just because you make it doesn't mean it will be published in their marketplace. Shopify tries hard to maintain an air of fairness but a large part of getting visibility with your app is who you know, too.

[scarab]

Great points.

Re: "Keep in mind there's a review process though" - My experience of this is that Shopify wouldn't approve my App because there were existing Apps in their store which they thought were too similar.

So make sure it's sufficiently differentiable to existing Apps (no, I don't know what that means either!)

[jammygit]

I suppose this is a commoditize your compliment situation?

[drchiu]

It's difficult, as others have mentioned. I have a few legacy side projects on Shopify. At this point, I would say treat it as a marketing channel for your SAAS, but don't rely on it solely as a means of distribution.

Some merchants on it are professionals and operate their business that way. Many merchants (and I don't have a percentage) are somewhere in the prosumer to wantrepreneur range and have unrealistic expectations.

Much of Shopify's strategy here, in developing a developer ecosystem, is to have developers effectively do technical support for its customer for free. I've troubleshooted (more times than I can count) theme, general platform, and other app issues. A while ago when Shopify was down after a merchant installed my app complained that I broke their Shopify store when in fact the entire Shopify platform was having a hiccup.

[cardy31]

Sure but churn is a poor stat to look at. Shopify could minimize churn by only taking on big pre-established brands. But that probably wouldn’t be best for the company. So high churn it is, which hasn’t hurt them yet.

[bonestamp2]

> I'm not convinced they're factoring in churn.

I guess it depends on why you're interested in the user number to begin with. I mean, from an investor standpoint, their profits keep growing so I'm not as interested in the exact number of merchants actually using the platform (assuming it's still a reasonably high/diverse number).

[downandout]

A big factor in their churn rate is the fact that a significant chunk of their growth has come from make money online gurus. Search YouTube for “Shopify dropshipping” or similar and you’ll see what I mean. It became viral among the scam artists, who all came up with different systems to sell, with one thing in common among them: Step 1 is to go open a Shopify account.

When the systems that most of these gurus sell fail to work, their students simply abandon their Shopify stores. I would never buy shares of Shopify for this reason. For now, they continue to grow because there are still thousands of gurus pushing Shopify, but we are reaching the end of that cycle. As soon as a new fad takes hold among the gurus, Shopify will be a ghost town.

[jeromegv]

Nothing you say is backed by data. Their revenue keeps growing with Shopify payments (they take a share of every transaction), which is an entirely different metric than the number of stores. If those were all empty store with no sales that would show. But that’s not the case. Also huge growth with their enterprise solutions shopify plus. Read their financials, it’s all there and easy to understand.

[downandout]

Nothing you say is backed by data.

And none of the data you pointed to disproves anything I said. Additionally, there is some data to back up my position: while it’s true that it would be impossible for anyone to have data on how many accounts have been opened due to the guru effect, a quick search of YouTube should help you understand the gigantic scale of this issue.

Here’s why you have not disproved a single thing I said. Most of these gurus are preaching facebook ads + Shopify + dropshipping. As long as these students keep putting money into FB ads, and the gurus keep recruiting people, Shopify payments sales volume will continue to grow - whether or not the guru students are actually making a net profit after expenses. But of course that won’t continue forever, as people don’t have infinite sums of money to lose, and most will lose money.

Right now, there is still enough momentum to keep it growing. I would imagine that within a year though, you’ll start seeing it level off or start to decline, as the gurus move onto the next fad. Once that starts happening, the whole house of cards comes tumbling down.

[tim333]

The cohort data from their presentation https://s2.q4cdn.com/024715446/files/doc_presentations/2019/... suggests the 'ghost town' thing won't happen. eg the 2014 cohort are producing like 2x the revenue they did in 2014 rather than dying off.

[downandout]

Of course they are, there are many more gurus pushing them today than there were in 2014, and those that still remain from 2014 will necessarily have grown their revenues. Further, because the guru quotient was relatively minor in 2014, the businesses that used Shopify back then would tend to be more solid than those that have been brought into the fold in the last 2 years. That won’t continue forever, and the internet marketing world is already starting to show signs of Shopify fatigue. Courses aren’t selling as well, etc. The fact that they are at 2x what they were in 2014 does not disprove that their growth is being driven by a fickle source that is soon to end.