What Is Shopify?

Definitions & Examples of How to Use Spotify

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Shopify is an e-commerce platform that simplifies the process of selling goods online. The cloud-based software helps online businesses conduct transactions, market themselves, and build effective websites for online shopping.

Review some key features and potential downsides to Shopify that online retailers should consider.

What Is Shopify?

Shopify is a cloud-based SaaS (Software-as-a-Service) e-commerce solution that offers hosting, templates, marketing tools, and integration with payment gateways. You can even buy your URL through Shopify if you don’t already have one.

The platform provides customer support, which is available 24/7 via phone and email. Shopify also offers an extensive knowledge base to help you find answers on your own.

Shopify also offers point-of-sale (POS) systems for in-person transactions if you run a brick-and-mortar in addition to your online store.

How Does Shopify Work?

For people who want to break into the online retail space, but don’t have a great deal of experience, Shopify can be ideal. You can try it free before having to pay a monthly fee. The set-up process is simple, so you can open an online shop in a matter of hours—just pick a theme, customize information, add products, specify payment options, and go live. You can even try some test sales using the Bogus Gateway test payment provider. 

The real selling point of Shopify is its ease of use. If you’re a novice, don’t hesitate to try creating a professional store.

The reasons to use Shopify go far beyond a point-and-click interface. These are some of the tools and perks Shopify offers.

Secure Payments

You can accept payments in several ways. The standard way is to use Shopify’s proprietary gateway, Shopify Payments, but you can also choose from dozens of third-party payment gateways for an additional fee. Payments are secure with a free SSL certificate (the same security technology your bank uses).

Automatic Order Features 

Your shopping cart automatically calculates taxes and shipping rates, and you have the option of ordering flat-rate or free shipping at the price point you choose.

Marketing

  • Access customer analytics: Identify your ideal customer and use Shopify tools to group them by category for targeted marketing campaigns.
  • Abandoned checkout recovery: When a customer moves away from your site before checkout, you can send a reminder email to entice them back to the items they almost purchased. According to research by Moosend, 69% of all shopping carts are abandoned, but the conversion rate on a follow-up email is 10.7%.
  • Automated email templates: Customize automated store emails to verify orders, let customers know when they are on the way, announce sales, or introduce new products. Segment your lists and send special offers to targeted groups.
  • Social media integration: Add social media buttons to your store or sell directly from Instagram, Facebook, and more.
  • Blogging: Content marketing is an effective strategy and can set your store apart from competitors. Shopify has a built-in blog feature you can use to attract business.

Products

You can purchase and store your inventory if you want, but storing, packaging, and shipping products are all costly and time-consuming activities. Shopify offers a couple of options for businesses that want a little less on their plate.

  • Dropshipping: Shopify integrates with Oberlo, an online marketplace where you can find products to sell from all over the world. In effect, you’re a curator. You display and sell products, and the dropshipper takes care of delivery.
  • Shopify fulfillment services: Take advantage of existing fulfillment agreements, using services like Amazon, eBay, or Rakuten. You make arrangements to have your inventory delivered to their fulfillment centers, and they will store your products and ship them with your labeling. 

Monthly Charges

If Shopify is right for your business, you can choose from several monthly payment plans. A "Basic Shopify" account starts at $29 per month. As your business grows, you can add services and lower transaction costs by increasing your service plan to a "Shopify" account at $79 per month or an "Advanced Shopify" account at $299 per month.

There are also plans designed for special situations. Large businesses with high sales volume can use ShopifyPlus. Brand-new businesses can start with Shopify Lite.

Transaction Fees

In addition to the monthly cost, you’ll incur varying credit card fees per transaction. For example, with a basic $29 per month account, fees for online credit card transactions are 2.9% of the purchase plus $0.30.

If you choose to use a third-party payment system (as opposed to using Shopify Payments) then you'll pay an additional transaction fee. The additional charges are:  

  • 2% for Basic Shopify
  • 1% for Shopify
  • 0.5% for Advanced Shopify

When pricing your products, take the time to understand all of the charges and incorporate them into the prices you set.

Disadvantages of Shopify

There are a few potential downsides to consider before signing up for Shopify.

Add-Ons Can Get Pricey

While Shopify has nearly everything a small business could ask for in an online store, you may find that you need to add services or use third-party apps, and each additional service could add to the cost. Adding one or two additional services may not cost much, but for those with expanding or specific needs, all those extras charges can add up.

Lack of Control

You can customize your store in plenty of ways, but depending on the plan you sign up for, there may be limitations in areas such as checkout and search engine optimization (SEO). 

Commitment

Migrating a store from one platform to another is a complex operation. Make sure you’re comfortable using Shopify before committing to the service. If you later decide to switch, it'll be a hassle to move everything over to another platform.

Key Takeaways

  • Shopify is a popular e-commerce hosting service, especially for small businesses.
  • Shopify offers a variety of products and services, from dropshipping partnerships to POS systems for your retail store.
  • There are a variety of payment plans, but a Basic Shopify account will cost $29 per month.

Article Sources

  1. Moosend. "INFOG[RAPHIC] Cart Abandonment Rate & Reasons." Accessed Aug. 29, 2020. 

  2. Shopify. "Set Up Your Store, Pick a Plan Later." Accessed Aug. 29, 2020.