Shopify’s First Shop Day Shows App-Focused Strategy Is Paying Off

Could Shopify’s Shop Day grow to rival Amazon’s
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Prime Day as one of top online shopping day of the year? Shopify executives certainly hope so, and the inaugural Shop Day gave them plenty of encouragement to believe that wish can come true.

Shopify is trying to convince more consumers to think of its Shop app as the go-to, one-stop destination for all their shopping needs, whether online or in-store.

It is facing new pressure from Amazon on the mobile shopping and convenience front. Amazon recently began allowing online retailers to offer a “Buy with Prime” button on own their sites that Prime members can use to get Prime shipping benefits even when not buying from Amazon.

Shopify launched the Shop app in 2020, with consumers at first using it primarily as a way to track packages. This year has expanded how merchants and consumers can use the app, and created incentives and promotions to increase the use of the app and Shop Pay, its payment platform.

On June 2, Shopify held its first Shop Day, and unveiled Shop Cash, a loyalty program that gives consumers 1% back on purchases made through Shop Pay. Those cash-back credits can be stored on the Shop app and used for future Shop Pay purchases.

For the first Shop Day, Shopify merchants also offered bonus incentives in the form of price deals, or extra Shop Cash.

While Shopify declined to reveal how much was spent in the app on Shop Day, a company spokesperson said via email that the app reached its highest first-time buyer record for 2023 on Shop Day, and that it broke its offers redeemed record, coming in at five times its daily average in that category.

The 1% Shop Cash credit comes from the money Shopify makes processing Shop Pay transactions. Shopify pledged to give away more than $1 million in Shop Cash on Shop Day.

The positive response to the first Shop Day was “overwhelming,” Shopify’s Vice President of Product, Shop and Merchant Services, Carl Rivera, said in an interview. “We could not have expected it to go the way it did,” he said. Sales in the app exceeded Black Friday-Cyber Monday sales made with the app by 30%, he said.

“That speaks to the fact that buyers are hungry for new, engaging, shopping experiences, and that we’re really on to something with Shop Cash and the Shop app coming together to create this new type of mobile shopping experience,” Rivera said.

“We want to become the most amazing way to shop from your phone, based on the insight that shopping from your phone happens everywhere, whether you go to an online store, to a social network, or even a retail store,” he said. “Your phone is the one consistent part of every shopping experience.”

The Shop app was designed as a tool for Shopify merchants, and a way to enable them to do mobile commerce without the expense and effort of creating their own mobile app. Now, as Shopify is working on making the app more useful to consumers, the goal is to give merchants access to new customers, and better ways to convert them to loyal, repeat buyers.

When Shopify announced the Shop Day event, Harley Finkelstein, President of Shopify, called the day, and the launch of Shop Cash, a “coming of age moment” for the Shop app.

The Shop app, Finkelstein said, “allows shoppers to discover great brands, check out with one tap, and track orders in real time.” Shop Cash, he said, “represents the next evolution of Shop, connecting independent brands to more shoppers and rewarding those shoppers for being loyal fans.”

In a conference call with analysts in May, to discuss Shopify’s first quarter results, Finkelstein emphasized that expanding and updating the Shop App is a top priority for the company, noting that in February it announced some of the biggest updates ever to the app.

“Shop gives merchants an out-of-the-box mobile storefront,” Finkelstein said in the call.

According to Shopify statistics, users of the app spend more and are more likely to buy again, with 34% of orders on the app being repeat orders.

Research on Shop Pay use showed that Shop Pay, which enables one click checkout, can lift conversion rates for merchants by as much as 50% compared to guest checkout, according to Shopify.

Shopify believes it has an edge in attracting merchants to its platform and app because the app lets them create a unique store presence, and to form and maintain their own first-party relationship with shoppers, rather than let the marketplace, for example, Amazon or Walmart
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, control that relationship.

For consumers the goal is to have more of them view the Shop app as a place where they can get customized, curated recommendations and offers, and keep track of all online purchases in one place.

As customers use Shop Pay in a retail store, or online, the Shop app will be able to send then updates from a brand, or alerts when an item has dropped in price, Rivera said. The merchants, in turn, gain new ways to connect with customers.

“It becomes this 360, end-to-end marketing suite for our merchants to engage a buyer,” Rivera said, “and build a relationship with that buyer over time.”

Shop Day, which Shopify hopes to repeat annually, was held of the 17th birthday of Shopify, which started as a software company to help small businesses do e-commerce and has grown into a leading commerce platform used by over 800,000 businesses of all sizes, in 175 countries.

Shopify became one of the fastest growing companies during the pandemic, as more and more commerce shifted to online. Its gross merchandise volume (total sales handled on the platform) rose 12% in 2022, to $197.2 billion. Shopify’s revenue rose 21% in 2022, following spikes of 85% in 2020 and 57% in 2021.