Shopify’s Grand Retail Experiment

While the shift to the online space is often seen as the great game-changer in retail, Loren Padelford, vice president and general manager of Shopify Plus, said that the change is actually to something more fundamental.

“For the first 5,000 years of commerce, the merchant has been at the center. In the last five years, it’s flipped. The consumer is at the center,” Padelford said. “A lot of traditional merchants and retailers are struggling with that change. The entire model of retail has been put on its head. You now have to figure out a way to get your product in front of people who no longer come to your store. That’s a really tough change if you’re tied to legacy processes and capabilities.”

Founded in 2004, retail innovator Shopify offers a cloud-based, multichannel commerce platform that enables merchants to put the customer at the center by transacting with them across any of the channels they want to transact in. The company expanded its breadth with Shopify Plus, offering high-growth, high-volume merchants a cloud-based, fully hosted enterprise commerce platform without the limitations of legacy solutions.

From the start, Shopify has worked to enable retailers to sell. “Shopify was built to help entrepreneurs start and launch businesses,” Padelford said. “Shopify Plus started because our customers needed more help, and we wanted them to stay on Shopify. It also has now become a place for large brands, who might be using homegrown systems or legacy enterprise applications and now need to be a lot more nimble, powerful and connected. We deliver enterprise scale, reliability and confidence without the same cost curve, implementation curve and weight of the old platforms.”

The ability for companies to be more flexible has become even more essential in the past few years, Padelford said, as retail has moved into mobile and, more recently, social media channels. “Mobile has become an absolute for eCommerce,” Padelford said. “It used to be that, if you had a website that was responsive, that was enough. Now, you have to have custom-made mobile apps that are completely unique and designed for mobile. That has created a whole technology cycle just to support that. Now, we see most of our shopping and purchases on mobile devices.”

Shopify’s technological development is largely driven by customers ramping up demand for different channels. “If we get enough customers asking for that same thing, we start exploring that for channel development. Social media as a channel has recently become the most talked about. How do you sell on Facebook? How do you sell on Pinterest? How do you sell on Twitter? How do you sell on Snap or Insta?”

As of now, said Padelford, no one has a definitive answer on how to sell on social media. “That’s a huge experiment right now,” he said. “When you look at consumer behavior — I like the channel I’m on. If I’m on Facebook, it’s no longer really an option for a retailer to move me from Facebook. You have to deliver the ability to buy your products on Facebook. That’s a really different reality for merchants who are used to bringing consumers to their dot-com address. We’re experimenting a lot with those channels, trying to figure out how we do this in a way consumers like.”

What consumers like, meanwhile, has become harder to define. Experimentation has become the name of the game in the retail space. “What will allow [retailers] to be successful, to survive and thrive, is their ability to adapt to consumers who are becoming increasingly more fickle and harder to pin down,” said Padelford. “You used to not be able to experiment with your legacy application because it would take 12 months to do anything. Now, you can put up a new website, launch new brands, try a few things on the side, have mobile apps and do all these things in days. That gives so much more power to a retailer to be nimble.”

Experimentation isn’t limited to online retail, said Padelford. “Brick-and-mortar is going away … that’s patently false. People want experiences, whether it’s online or offline,” he said. “The question that brick-and-mortar retail has to answer is: How do I give someone an experience when they walk in my store that is as fast, friendly and ultimately as valuable as online? That’s where you see interesting retail experiments taking place.”

Padelford noted that brands like Nike have been experimenting with store-as-showroom concepts. Additionally, Padelford characterized the trends of flash sales and pop-up stores as retail trying to learn how to engage the customer base. “It’s all retail reinventing how it engages with a dynamic consumer,” he said. “A customer who wants a unique experience with a brand that’s novel — that isn’t just going to the same old store and seeing the same old things.”

“Whatever retail has done online related to eCommerce for the last 10 years has been great. Everyone should be really happy about where they got to,” Padelford said. “But almost all of that needs to be thrown out and rethought. We need to look at the next 50 years of what retail will look like. Brands need to tell better stories. They need to be better connected to their customers where their customers already are. They need to be more dynamic because there is more choice out there, and they need to do all that in a cost-effective way.”

Shopify plans to be there for merchants to lead the charge into the future of retail. “We’re seeing sharp opportunities for our customers,” said Padelford. “They look at us and see they can have access to unique channels, a powerful application, a partnership with someone built on new technology to help them move forward with way lest cost and less time required than ever before. Retail is now experimentation. If you’re going to survive, you need to be changing the model constantly to see what works now.”