Shopify eCommerce Refocus Includes Recruiting Celebrity Brands like The Row

From luxury fashion to tequila, Shopify remains a popular choice among celebrities for launching brands.

During the first quarter of 2023, Mary-Kate and Ashley Olsen’s luxury fashion brand, The Row, John Legend’s Loved01, and Kendall Jenner’s tequila brand 818, all opted to launch on the Shopify platform.

Shopify President Harley Finkelstein recognized the new roster of celebrity brands during the company’s latest earnings call on Thursday (May 4). Along with the callouts, Finkelstein highlighted several other brands onboarded in the same quarter, including popular consumer brands like Herschel Supply, Keen, Seiko and 7 for All Mankind.

The highlights, however, were surrounded by a whirlwind of news, including corporate layoffs and selling off parts of its business.

Finkelstein also noted that the company saw a 25% increase in total revenue to $1.5 billion in Q1 2023 and would be redirecting its attention to its core competency: enabling entrepreneurs and businesses of any size to vend their goods and services online.

“Shopify’s strong first quarter results demonstrate once again that we’re the go-to solution powering businesses of all sizes, on every surface where they sell. The changes we’re announcing today will ensure we keep pace with the high velocity of change before us, delivering the cutting-edge solutions our customers have come to expect from Shopify,” Finkelstein said.

Shopify leans into eCommerce

During the Q1 2023 earnings call, Shopify revealed that it would be offloading its logistics and fulfillment operations to Flexport. This logistics platform already has an established partnership with the eCommerce company. The operations that Shopify is selling to Flexport include Deliverr, a last-mile delivery service that Shopify acquired less than a year ago.

With that, Shopify can refocus on its core strengths: providing entrepreneurs and businesses of all sizes with a platform to sell their products and services online.

Generative AI Assistants

Shopify has launched a new AI tool called Shopify Magic that assists merchants in creating product descriptions. Shopify Magic generates a product description by inputting targeted keywords and selecting a tone.

“I think we are very fortunate to be amongst the companies with the best chances of using AI to help our customers, our merchants. And that’s how we think about the usage of AI here. How do we integrate it into the tools that help us build and ship better products to our merchants. You’re already seeing that in certain areas of Shopify,” Finkelstein said.

“The end result of that is merchants spend less time running product descriptions and more time making beautiful products and communicating and engaging with their customers,” he said.

But it’s not just merchants benefiting from Shopify’s generative AI initiatives; consumers are too.

“We announced a couple of weeks ago, Shop at AI, which is what I think is the coolest shopping concierge on the planet, whereby you as a consumer can use Shop at AI and you can browse through hundreds of millions of products and you can say things like, ‘I want to have a barbecue and here’s the theme’ and it will suggest great products, and you can buy it right in line right through the shopping concierge,” Finkelstein said.

Shopify App Ecosystem

While Shopify has noted that it is willing to negotiate with Amazon regarding Buy with Prime to serve the interests of their merchants, Finkelstein said Shopify has other established partnerships with various companies, such as Stripe, Flexport, and Affirm, domestically and internationally. Shopify also offers solutions even for niche cases, enabling merchants to achieve 100% product market fit.

“A big part of the product market fit that Shopify provides to the millions of merchants is the entire app ecosystem, the thousands of apps that allow every single merchant no matter what their use case is to get exactly what they need from Shopify. And even if it’s a specific use case, they’re able to get 100% product market fit. So, it’s not just necessarily the larger partnerships that I think demonstrate that Shopify is a great partnership company,” said Finkelstein.

Shopify’s application programming interface (API) also enables customers to access what they require directly from its core product or its partners. The company’s integration with existing infrastructure especially appeals to larger brands such as “the Mattel’s of the world,” Black & Decker and Zulily. This is an area of pride for Shopify, which continues to focus on improving its product offerings.

Adoption Up for Cross-border Tool

During the call, Finkelstein pointed to the growth momentum behind Shopify Markets. This cross-border management tool helps merchants identify, set up, launch, optimize, and manage their international markets all from a single store.

“In Q1 alone, around 100,000 merchants use either Markets or Markets Pro feature to make a cross-border sale. We launched Markets Pro into early access in September. We see more and more merchants that are adopting it now,” said Finkelstein, adding that U.S. merchants, on average, are selling to 14 countries.

Finkelstein also noted that Shopify saw about $28 billion in cross-border sales in the last year alone.

A Partnership with Flexport

Although Shopify has sold its logistics and fulfillment operations, the company stated in its SEC filing that it plans to maintain a working relationship with Flexport to enhance Shopify’s logistics services for its merchants. This includes Shop Promise, a badge for buyers that utilizes live data to anticipate the delivery timeline for each order and is enabled automatically for all merchants on the Shopify Fulfillment Network.

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