Shopify: Retailers Demand More Omnichannel Features Unifying Digital and Physical

As consumers demand a seamless experience across both eCommerce and brick-and-mortar channels, Shopify is seeing its customers expect more features that bring digital-like capabilities to the in-store journey.

On a call with analysts Wednesday (Aug. 7) discussing the company’s second-quarter 2024 financial results, Shopify President Harley Finkelstein discussed how the company is expanding the digital features available to retailers in their physical stores. The company’s point-of-sale (POS) solution is gaining traction, with offline gross merchandise volume (GMV) increasing by 27% year over year.

“Offline commerce is still a huge deal for us, still happening in physical stores,” Finkelstein said. “… We’re introducing the features [merchants] care about most, like improving operating efficiency such as the new remote smart grid layout editor, omnichannel return rules, and the ability to stack multiple discounts at checkout, which makes it easier for merchants to customize the promotional strategies.”

Consumers, for their part, expect offerings such as omnichannel returns and digital discounts for in-store transactions to simplify their purchasing journeys wherever they may shop. The PYMNTS Intelligence report “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar Shopper and What It Means for Merchants” found that 4 in 10 shoppers prefer to engage across both digital and physical channels when they make retail purchases. Additionally, the study found that 72% of consumers want omnichannel rewards programs, and 71% said the same of coupons for both digital and physical store use.

Indeed, central to Shopify’s strategy is the concept of unification, an approach meant to ensure that every new feature integrates into the platform as if it had been there from the beginning, and that it works across channels.

“This is a key value proposition for Shopify and something that as we have evolved from an online store to a comprehensive unified operating system for commerce anywhere, anytime is becoming increasingly more important,” Finkelstein said. “Whether online or offline, direct-to-consumer or B2B, domestic or global, Shopify captures it all.”

One advancement highlighted was the streamlined Markets feature, which simplifies international selling. Previously, merchants had to navigate separate workflows for Markets and Markets Pro. Now, these have been consolidated into a single cross-border product, making it easier for merchants to expand globally without juggling multiple stores or complex systems. This ease of expansion is meant to remove friction for merchants aiming to tap into international markets efficiently and effectively.

Additionally, the integration of POS with the Markets feature further simplifies the management of multinational retail operations, enabling global omnichannel businesses to operate from a single Shopify admin. Cross-border sales accounted for 14% of Shopify’s GMV in Q2, highlighting the eagerness of merchants to reach new regions.

Plus, Shopify’s payment solutions, particularly Shopify Payments and Shop Pay, are vital components of its unified commerce platform. In Q2, Shopify Payments penetration reached 61%, and Shop Pay facilitated $16 billion in GMV, up 45% from the previous year.

“We see significant growth potential for payments through international expansion, enterprise, and increasing activity in offline and B2B channels, all of which will drive higher GMV and GPV [gross payments volume], boost merchant adoption, and ultimately strengthen our ecosystem,” Finkelstein said.

Overall, Shopify reported a strong second quarter, with revenue rising 21%, gross profit climbing 25% year over year, and the free cash flow margin more than doubling to 16%.

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