Episode 261
July 1, 2022

Recapping Shopify Editions

Today founder of Checkout Promotions, Gil Greenberg, is joining the show. We recap Shopify Editions, the transformation of the Shop App, the overcrowding of the developer ecosystem, and how to thrive as an app developer in eCom. Listen now!

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this episode sponsored by

Like Never Before

  • “​​You're starting to see a lot of developers that actually want to run businesses for their apps and employing fundamentals to do so.”-Gil Greenberg
  • “There’s a world where Shopify didn’t IPO 6 or 7 years ago, and my theory is that part of Shopify’s success was that so many people were able to realize personal benefit from the growth of the stock. What if Magento IPO’d instead? We’ll never know.”  - Phillip
  • The Shopify platform is now huge and it encompasses way more than anyone outside of the ecosystem, but even more than most people in the ecosystem realize
  • “You either follow Shopify's way or you're on the highway”  - Gil
  • The launch of Shopify Functions will allow you to extend the platform where other APIs won’t let you
  • “There's still a lot of room for better experiences. You have all these apps, where's the centralized billing or better pricing when you're using multiple apps? I just haven't seen anything truly interesting appear yet.” -Gil

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Phillip: [00:01:16] Hello and welcome to Future Commerce, the podcast about the next generation of commerce. I'm Phillip.

Brian: [00:01:21] And I'm Brian. And today we have a longtime friend, former coworker, and Founder of Check Out Promotions, Gil Greenberg on the show today. Welcome, Gil.

Gil: [00:01:32] Thank you so much. I can't believe I'm here. I'm excited.

Brian: [00:01:38] {laughter} We're excited.

Phillip: [00:01:39] We're excited. It's not often that we have such rapport with someone and a lot of history with someone that comes on to the show. But it's also not often that we feature a Founder of a Shopify app and someone who recognized early on the value that Shopify has in the ecosystem. And so yeah, we are going to have you on, we're going to talk about a lot of stuff today. I definitely want to cover some of the announcements around Shopify additions. I want to hear about what's happening in the Shopify App Store. I know you've been talking a lot about that recently and you probably have a lot of thoughts, but I also want to hear about some of the innovation that's happening in the industry on your side, because seems to be a lot of validation around the thing that you're solving for in check out with check out promotions. But at the same time, it also seems like Shopify is kind of waking up the beast on the product acceleration side that is enabling some of that innovation. So I feel like that's a good place to start. Just from your perspective, is it easier today to be a Shopify app developer than it was, say, two years ago?

Gil: [00:02:54] Oh, yeah. I mean, like a couple of months ago I started a new app as a side project just to see how like a fresh start would be. And it is massively improved, just the things you can do, how quickly you can accelerate from nothing to getting it live in the App Store. So I think it's a pretty exciting time to be a developer on the Shopify platform ecosystem and definitely from the merchant side, I think there are going to be some more innovative products coming online in the next year.

Phillip: [00:03:26] There's been about a year now since they announced that they weren't going to take fees up to what is it, the first million dollars of revenue from app developers?

Gil: [00:03:36] They're just taking I think it's like two and a half percent, which is the base credit card fees. And then after 1 million, I think it's still like the 20%. But yeah, basically your first $1 million, which probably is the vast majority of the ecosystem, other than the big players, is basically yours to take, which is pretty unprecedented. And I think they maybe followed Apple and Google. But yeah, I think it's definitely been a big help for a lot of developers.

Brian: [00:04:05] So cool. Yeah. So it sounds like developer experience has vastly improved, but also the business side of being a developer is easier, and just all around it's easier to join the Shopify community, get your ideas out and then run an actual business. They're making it possible to do that.

Gil: [00:04:25] Yeah, I mean, definitely some hot takes here, but overall I'd say it's much easier. There are definitely a lot more headwinds within the space. I mean, in eCom in general, I think that  [00:04:38]you're starting to see a lot of developers that actually want to run businesses for their apps. I mean, you can have side projects, but if you want to actually grow an app into a business, you're starting to see a return of fundamentals. So probably for the last eight years, developers have relied upon the App Store too heavily as a firehose of traffic. And now you're starting to see that more traditional software as a service, Saas, fundamentals, external channels to acquire customers. And those kinds of strategies start to become more important as the App Store has basically been inundated with over 8,000 apps and just the velocity of new merchants is decelerating with all those external factors in eCom that we have. [00:05:26]

Phillip: [00:05:26] That's an under-discussed topic in our space. And maybe that's because there's sort of a niche that appeals just to the Shopify app developers that when we're thinking about larger eCommerce, the larger problem space of solving things in eCommerce, a lot of SaaS companies seem to kind of like prove their product-market fit in the Shopify ecosystem and then scale out to service a bunch of others. Would you say that the amount of competition that you're seeing for the prime spots in the App Store today is due to a lot of these side projects? It's as easy today to start a Shopify app side hustle as it is to start a Shopify store. So it's really hard for you to sort of compete and rise to the top. Is that...?

Gil: [00:06:19] I think that's pretty accurate. I mean, it's a pretty low barrier to entry. The languages are pretty open. I mean, from a fundamental sense, a Shopify app is just a website I framed into the admin, into the Shopify admin. So you don't have the barriers to entry like you would maybe on Apple where you have to learn their language. There are other ways around that, but I would say on the developer side of things the barrier to entry is higher there. Here you just have to really know the basic web development languages and you can really get a Shopify app started. So I think traditionally it's been a low barrier to entry and I think that's starting to change. Just like looking at the overall ecosystem and just hearing from other developers on their growth from 2022, it's starting to be a lot more challenging.

Brian: [00:07:07] That's interesting. Yeah. So a lot is changing. And just a week ago, as of the recording of this podcast, we saw the introduction of Shopify Additions and what that meant for the ecosystem.

Phillip: [00:07:23] What the heck was that even?

Brian: [00:07:23] Yeah. Yeah.

Phillip: [00:07:25] I'm not in this world really. Catch me up.

Gil: [00:07:29] So I'll start by saying it's basically like a changelog of the past six months of changes to the Shopify platform. I think what they've realized, or maybe what Tobi, the CEO of Shopify, has realized is the platform now is huge. It encompasses way more than probably anyone outside of the ecosystem, but even most people in the ecosystem realize. So you have things like point of sale, online, all these sales channels now that are for social primarily, and then all these other different APIs and to actually keep up to date with all the changes across the product set is very challenging both externally and then also internally in Shopify. So I think the primary goal is really to highlight all of the changes that have happened across the Shopify ecosystem for pretty much the past six months. And then any changes, there's kind of nice headliners for the next couple of months that will be coming out and then they'll just do this every six months, I guess, twice a year. And they're calling this Additions, and twice a year, and this is Summer 2022. So they said 100 plus announcements. I don't doubt that. But I will say a majority of them have probably already shipped in their life for the past several months, but maybe a lot of people don't know about them.

Phillip: [00:08:49] Yeah, I saw a little bit of chatter about that. It also seemed like they were fulfilling some promises from announcements that were made long ago. There's just I mean, maybe you could enumerate some of them, but as the Shopify ecosystem has become, it's sort of stratified in two dimensions. You have Plus and you have sort of the enterprise product set who have been clamoring for things like B2B offerings for quite some time. And then you have the app developers who have their own ecosystem. And there's a lot of need for innovation around APIs and various API improvements there not just on Plus, but elsewhere in the product. What are some of those that were already announced maybe in prior announcements, Shopify Unite, for instance? What are some of those that have either come to fruition or sort of like were held off for quite a bit of time?

Gil: [00:09:46] Yeah. I mean, look, if you go back a couple of years ago, 2019, they announced the beginning of what they call checkout extensibility. At that time, their primary feature of that was subscriptions. They launched that I think it was maybe a year or a year or two ago, but they never really launched the full extensibility of checkout until this summer. So they finally launched a way to extend checkout. And so that's been in the works for quite some time. I mean, at least three years, possibly more. And then you have a few other features like B2B, which has always been kind of a forgotten child of Shopify. They had a sales channel. It was pretty terrible, to be honest. Now they have native APIs to handle some of the aspects that you have in B2B. And then they also launched recently Shopify functions, which we can get more into later on. I think that's a pretty exciting insight into the ways Shopify is changing fundamentally. But yeah, these things have definitely been in the works for a while. And my assumption is that some of these got delayed due to 2020 COVID. Everyone's timelines and priorities shifted. So I assume that some of these things probably got delayed, but it's really exciting to see some of these things ship after they've been, maybe I wouldn't say promised, but maybe highlighted in years past and now they're coming to fruition.

Brian: [00:11:11] As a very technical founder and sort of developer first, or maybe I'm putting words in your mouth...

Gil: [00:11:20] No, no. I'm definitely a developer first, and a terrible business person. So it never asked me for business advice. But I can make things. I can put things together and then asking for profitability, that's someone else.

Brian: [00:11:35] I love that. I love that you just owned that. As a developer first, where is your mind focused on these announcements that came out? What's most exciting to you? What are you mulling over and dwelling on what you're going to do with it?

Gil: [00:12:57] Yeah. I mean, look, there are probably two parts to that. So for me as a developer, Shopify is a closed box, at least traditionally it's been a pretty closed box. You either kind of I think [00:13:06] we always said, "You either follow Shopify's way or you went down the highway." You found another alternative platform. And so they've been slowly opening up the box to be maybe multiple boxes, a larger box, and now you kind of can stick your hand into the box where before maybe it was only on the outside. And so as a developer with Shopify, you kind of had access to a limited set of APIs. Oftentimes they had internal APIs that were not public. And so you couldn't even do all the things maybe Shopify could do, but you had APIs and for non-technical people, that's a way for you to basically get data and then maybe update or create data into the system. But it's really like a transactional kind of way of thinking. So you can read and write, but you can't actively in the background adjust core logic, right? So you could add products, you could delete products, read products, but you can't like actively adjust pricing rules. And so what they have started to do is open up the ways that developers and end merchants can extend the platform, which I think is really exciting and I almost feel is underappreciated. [00:14:21] So they're calling it Shopify Functions. That's one of their I guess highlight features for Additions. And basically, it's a way to run Logic within Shopify's back end in an isolated environment so that it's secure, performant, doesn't affect the core performance of let's say checkout, doesn't cause security issues but allows you to kind of work with Shopify's mindset of, "Look, it's a box, but now you have control over parts of that box." So they're starting out with pricing rules or essentially they call it discounts, but it's like the pricing engine. So you can do discounts now that you couldn't do before. So things like tiered discounts, maybe more complex gift with purchase, but you basically can extend the discounting behavior. And this is really just the initial subset of APIs that they are launching with. And they say that it will come to other facets of Shopify in the future, like shipping and maybe order routing. But I think it's really exciting because now you're having logic that runs all the time in the background, basically within Shopify, and it allows you to really extend the platform that just regular APIs don't allow you to. So for me, this is a pretty large announcement because it's a big change of, I guess, methods that that Shopify just didn't allow before and probably was actually one of the main, I guess people would say, "Shopify can't do this and that," and maybe some of those items will be possible in the near future. And right now I'm talking about discounts, but we're talking about maybe more complex order routing to ERP systems. I don't know, that's like hypothetical, but that's pretty exciting for me.

Phillip: [00:16:13] Before we move on from that one, in times past, there's been a conversation around a merchant, someone building a store on Shopify who might be coming from, say, a larger tier, deployed software eCommerce platform. So they're rethinking the way that they're building their store and they're sort of feeling like there are certain things that they needed to accomplish. They would have had to have written sort of a custom app in the past and hosted software elsewhere and sort of maintained that on their own. Does Shopify Functions give them some sort of an ability to deploy code into Shopify's ecosystem that can run specifically for their store, that sort of obviates the need for them to have this other sort of tertiary bit of Logic that serves only their store? Or am I misunderstanding this other benefit?

Gil: [00:17:09] Yeah, I think it's not there quite yet. I think right now it's for a specific use case, which is just discounts. So if it's outside of the discounting behavior, like I know we've written in the past code to manage inventory, syncs, and ERP kind of things like to sync orders to third parties. That's not something currently Shopify Functions will assist with. But I do think you have tools now popping up that are native to Shopify, like Shopify Flow that allow you to accomplish those kinds of tasks with a no-code type of approach.

Phillip: [00:17:46] And Flow previously was available only to Plus. Right?

Gil: [00:17:51] Yeah so they've been slowly introducing Flow to now it's all plans except their most basic plan. I think that's a tremendous opportunity for developers. Previously, if you had an app and the app had to send messages to an email, to Slack, or to other apps, you had to create a custom integration between your app and that app. And so now you can leverage Shopify Flow and you really just tell the merchant, "Look, I have these connections into Flow, these other apps have connections to Flow, just set up the workflows with Flow." And I think it really will kind of like, I don't know, supercharge the community of developers and hopefully, more apps start to build into Flow. But that's also a really big, I think, announcement. But it kind of goes back to product differentiation. So that used to be a Shopify Plus exclusive feature. Now it's for all plans. And so you kind of have to think to yourself, "Okay, where are the main features that separate Shopify Plus, their enterprise offering, from the rest?" And I think that actually has probably been partially addressed with all the recent announcements.

Brian: [00:18:58] Yeah. It's interesting. Literally, right off their announcement website, it says, "Functions creates the flexibility of an open source platform without needing to deal with any of the hosting security or code versioning headaches." {laughter} I wonder what that's targeted at.

Phillip: [00:19:19] Very specific. Very specific in its messaging.

Brian: [00:19:21] Very specific in its messaging there. Yeah. And I think, it's really interesting to me and highly surprising that Functions would be more interesting and exciting to you than Token Gated Commerce is. {laughter}

Phillip: [00:19:39] I mean, I'll jump in here because I don't want to steal Gil's thunder here. There was actually an amazing podcast I recently just heard on Business Breakdowns, and I've been telling everyone about this, but I think it was Alex Danco from Shopify who I think heads up their sort of crypto working group or something.

Gil: [00:20:03] With the blockchain team.

Phillip: [00:20:04] Sure, why not? Yeah, let's call it that. That's probably the right term and had a really great breakdown on episode 28 of Business Breakdowns. It's a great podcast. Go listen to it. Had a really great thesis as to what token gating can possibly do and why it's important. And I think there's probably a lot of criticism there as to how early that is or how useful it is at this exact moment in the world. But like anything, consumer adoption kind of guides everything. It's going to be a long time before that becomes really prevalent. So I said all that to keep Gil from having to explain what token gating is. So go listen to that podcast if you really want the in-depth, but I'd love for yeah, some of that. What's your take on...?

Brian: [00:20:47] I was also a little sarcastic there, Phillip.

Phillip: [00:20:49] Oh, you were? Oh, I couldn't tell.

Brian: [00:20:50] Yeah, that was me being very dry. That wasn't even that dry.

Phillip: [00:20:53] I wanted to hear from the open source point a little more too though.

Brian: [00:20:55] I was joking around. Yeah. So, I mean, anyway. Back to you, Gil.

Gil: [00:21:00] I think everyone should try that token gated experience within the shop app, not for the token gated experience, but for the experiences in the shop app. I'm like trying to word it in a way where I don't get in trouble, but basically, it's a very interesting way that they've implemented, almost like an experience in the Shop app that's isolated. So maybe I'll leave it at that. I don't know. I feel like we could revisit that in one year.

Brian: [00:21:28] You know, you were talking to your friend Tobi just the other day when you went out to breakfast and...

Gil: [00:21:33] Oh, no, no. That's... {laughter} Look, I met him for breakfast one time for an hour.

Brian: [00:21:46] Don't deny it, Gil.

Gil: [00:21:49] You know, that's like completely off-topic, but I do kind of... Have you ever noticed that people meet someone online or they talk to someone, and then they're like, "My friend?" And you're like, "Oh, I'm your friend now."

Phillip: [00:22:01] We're friends now. Oh, I didn't know we were friends.

Gil: [00:22:05] Brands do that. Is there a word for that? The brand will they'll send you a text message like, "Hey, friends." And we're like, "No, no, we're not friends."

Phillip: [00:22:11] No, we're not friends.

Brian: [00:22:12] There needs to be a word for that. I love that.

Phillip: [00:22:15] Acquaintance?

Brian: [00:22:16] No, no, no. Like when a brand tries to call you their friend, but they're really not your friend yet.

Phillip: [00:22:22] Well, we'll name that. I love naming things. You heard on the last podcast, Brian. When I name things, it gives me power over it. I love that.

Brian: [00:22:29] Exactly.

Phillip: [00:22:31] I'm just going to keep saying that until somebody clips it out of context and uses it against me.

Brian: [00:22:36] I feel like I did that in the moment while we were talking on that episode.

Phillip: [00:22:41] Let's shift gears a little bit. So anything else? Any other announcements at Additions that you felt were quite interesting? I find it interesting that there's this kind of displaced Unite to some degree where announcements usually would have been reserved for. Any speculation as to the future of Unite as an event in the Shopify ecosystem?

Gil: [00:23:05] Uh...

Phillip: [00:23:07] Okay. Shift gears.

Brian: [00:23:09] Say no comment. That's totally cool. Also, before we move on, I don't know if this is part of Additions. I think it was. But the thing that Phillip, you were hyped on and I was hyped on too, was the loyalty play with the Shop app.

Phillip: [00:23:24] Yeah.

Brian: [00:23:26] That was really, really interesting. Gil, maybe you could talk a little bit about that functionality.

Gil: [00:23:33] I mean, I think they're just addressing almost a symptom in eCommerce, especially for Shopify merchants. I think that the type of merchants on Shopify, you have 2 million, so you have a lot of types of merchants. But if you look at the overall ecosystem and then you put them in the buckets, there's a large bucket of merchants that relied heavily on Facebook and other ways of acquiring customers that today is just much more expensive than one year ago, two years ago, especially three years ago. And so you're starting to see Shopify either acquire, like Dovetail.

Phillip: [00:24:07] Yep.

Gil: [00:24:08] Or create methods for brands to retain those customers in ways that maybe weren't possible or you had to rely on a third-party loyalty system. And so they're starting to build some of that into the Shop app through like what they just recently announced. But it's really just ways to leverage community, to retain your existing audience. You see them heavily investing in subscriptions. So they've been building out a native subscriptions API, and they've now been building out new ways to do, they call it, Selling Plans, but it's basically ways to buy products with maybe payment terms. So, Brian, you're talking about one piece of a larger puzzle, I think, that they have to address. It's not even an option in order to keep the ecosystem healthy and make sure merchants are sustainable long term. And they're not just acquiring customers and then throwing them away.

Phillip: [00:26:36] There's the discovery aspect. I love watching sort of trends of what kind of thought leadership goes around on Twitter. And a year ago, two years ago, it was "Do you know that the Costco hotdog costs $1.50 because so-and-so said the blah, blah, blah?" And it's like the same thing continues to circulate around. "Did you know that Starbucks is more of a bank with its loyalty app and platform and blah blah blah?" But before all of that, there was a thing that was going around four or five years ago was, "Why didn't Shopify just launch a marketplace where they sell all of their merchants' products and just compete head to head with Amazon?" And [00:27:16] it feels like this is finally one of those pseudo-thought leadership predictions coming to pass in some way, which is it's not really a marketplace, it's not really competing with Amazon, but it is absolutely solving a brand discovery issue. And if you're a consumer, it's pretty easy in this large, very, very large eCommerce ecosystem to pattern match certain types of brands and certain types of consumers together because they tend to shop in frequent look-alikes. And that seems so obvious. It's finally here. I think what's really interesting on the back side is how they're rewarding consumers by giving consumers a cash rebate. As a result, to use Shop pay means to save money now and that is a very, very different positioning to keep a consumer not only just aware of the brand that they're purchasing from but there's consumer awareness of the financial product that makes it possible and the eCommerce platform on which it all takes place. That is baffling to me because that awareness of the underlying software is not a thing. That is a hallmark of the modern times that we live in. [00:28:29]

Brian: [00:28:29] Yeah. Software goes to consumer. And I actually think that [00:28:32] what's really interesting about this as well is that this is something that Shopify can do that's a value add to both their consumers and their ecosystem that doesn't eat away at their developer ecosystem. [00:28:47] So this is not something that is infringing on something that any Shopify app developer could have built or implemented that they're like now sort of pulling out of that ecosystem. I love it when platforms find things like that they can do...

Phillip: [00:29:07] New things to solve. Well...

Brian: [00:29:08] New things to solve...

Phillip: [00:29:09] There are plenty of app developers that are also griping right now that Shopify is turning to compete with them at the moment.

Brian: [00:29:14] Right. No, I know that was sort of like where I was kind of headed. With all these announcements, there's got to be some griping. But this particular one is one that I feel is a net win for everyone involved. And I love that.

Gil: [00:29:28] I mean, I'll give you another one. They announced that they're launching native return APIs. And so on the surface, a lot of people probably are like, "Okay, you know, whatever." But if you kind of extrapolate that out into the Shop app land, think of it this way. They'll have native APIs that extend the return behavior. You'll still have to probably integrate like a subscription app, you'll integrate with a return app, but now they're like native into the ecosystem. And so think of a year down the line, you're a customer, you open the Shop app, and you can just return in the Shop app without having to go through all the hassle of going to the brand's website or opening an email, or customer support, like more maybe an Amazon-esque centralized behavior. So I think things like that become possible without necessarily eating the developer side where they're not becoming a return app. They're just facilitating that in a more seamless way in the platform.

Brian: [00:30:28] Hmm. That's super, super interesting. I feel like this, Phillip, to your point. Maybe this is the step towards opening up a marketplace at some point. I mean, I don't want to speculate too far, but it feels like all the infrastructure is being built around it before it happens.

Phillip: [00:30:47] Well, I mean, they have fulfillment now, too. I am very ignorant of what's happening in the Shopify ecosystem, and that's mostly because a lot of my work has been in mid-tier enterprise, which has a very different has not typically reached for Shopify until the last few years. I do want to come back to this point that, Gil, you made earlier around competing or the messaging to compete around open source and sort of what this new era might present. We have true enterprise offerings now. There are certainly a lot of enterprises that have just sort of made it work on Shopify over the last few years. A lot of case studies there. Speed to market seems to be the highest value that any enterprise has right now. And the ability to govern with a small team, to govern eCommerce with an extremely small team, and to be nimble, those seem to be higher value than "It has to be done exactly this way," and the brand team says, "It has to go this way and we're going to try a whole bunch of things." All that said, typically with infinite amounts of flexibility, there comes a lot of complexity. And I'm curious if any of these changes or any of these sort of announcements and roadmap items lead us into a place where Shopify is actually so complex of an ecosystem now or developing for Shopify becomes so complex that in the end it kind of becomes very messy and sort of reinvents some of the problems for a new era that we've all experienced from open source times past. Curious, your take on that?

Gil: [00:32:27] Yeah, no, I mean, that's a really great question. I think that some of that has been a problem already. Apps not playing well with other apps. That's probably one of the biggest issues that have occurred since the beginning of Shopify of the App Store, at least, and they've slowly begun addressing that with some newer ways to develop apps and integrate your app into the storefront or the back end. So I think they're aware of that. And yeah, like you said, Phillip, it's very easy to get stuck in that trap as you open up more areas. There are more possibilities for issues to arise. I don't know. I feel like a lot of the new ways that they're approaching checkout on the storefront it's very smart and methodical and maybe partly why it's taken them so long to come out with some of these things. They've gone back and probably worked multiple times over the same approach. And so I can hear one side of the ecosystem people are like, "It's been a couple of years. Where are these things?" Check out sensibility, Shopify Functions... They previewed a year ago like a content management system. So I think that they're just the kind of company that doesn't come out with something until they're ready. Not to say that everything is perfect. It's far from perfect. There are a lot of small problems. I know the developer ecosystem, like where I come from, there are a lot of complaints about some of the recent changes to the App Store. But overall I feel like, I mean, in my mind they're approaching it as best as they can.

Brian: [00:34:11] Before we move on from like the enterprise side of the conversation, one more trend that we've seen recently is a lot of what Shopify would call third-party marketing apps or tools for Plus. We've seen a lot of consolidation among those tools, and they're increasingly taking a larger piece of functionality and consolidating, you know, text and UGC and ESP and like all of it all coming together, all in several of these big locations.

Gil: [00:34:54] You're talking about the roll-ups.

Brian: [00:34:55] Well, yeah. Technology roll-ups.

Gil: [00:34:57] Yeah. Not not the brand roll-ups. Yeah. I mean, you have like WeCommerce, AppHub, there are a few others. They're wearing a lot of, I guess you could say traditional... I don't know. Phillip, is it smart money? They're pouring a lot of money into purchasing different apps that have done different things. And then, I mean, I haven't seen any... I don't want to like put anyone on the table, but there's still a lot of room for better experiences. You have all these apps, where's the centralized billing or better pricing when you're using multiple apps? I just haven't seen anything truly interesting appear yet.

Brian: [00:35:37] Do you see any of the larger players saying, "Oh, Shopify owns too much. We're going to go work with some of the maybe newer eCom players, some of the ones coming over from Europe that might have potentially less functionality built into the platform and more space for someone to take part of that experience pie?"

Gil: [00:35:57] I think it really depends on like the velocity of those platforms because at least historically in the past several years, the question would always be answered with no because Shopify has always had the velocity on their side, the new customer velocity, which is so high, that kind of building for another platform, often at least for a smaller team, was a distraction. Your time was better spent on Shopify and building out that and capturing the user base there rather than trying to worry about a smaller user base somewhere else. I mean, to answer maybe your question more directly, you have some examples of both approaches. So for example, Yotpo. They're probably one of the bigger players in the Shopify space that Shopify has recently partnered with to I guess I don't know much about it, to build out more integrated solutions. And so where Shopify could have maybe built out native reviews or other facets that Yotpo is building has been partnered. So I think you see investments in partners rather than competition on that side, whereas I mean they do acquire some smaller apps like Dovetail that does things that other apps do. So it's hard to say. There's not a definitive answer. It's I would just say looking on the outside, Shopify tries to partner where possible, but I think if they feel like they can move faster internally or there's like a really pressing need that they see in the ecosystem that they can improve, then they'll acquire or compete. So like Shopify email is one example where they're not competing directly with other players in that space, but I think that they're probably competing for slightly different customer segments of that market.

Phillip: [00:37:42] I guess I would even just ask, why do people hate Yotpo so much? I don't understand the hate. There's an unbelievable amount of vitriol around pricing.

Brian: [00:37:57] There's one center of gravity there, Phillip, that...

Phillip: [00:38:00] But I feel like that center of gravity is becoming more distributed day by day. Sorry. Gil, you were going to say...

Gil: [00:38:06] I don't know. I mean I think every ecosystem you kind of have people rally around something. So I guess Yotpo, unfortunately, became a rallying cry for some folks.

Phillip: [00:38:16] For pricing or unbundling or whatever.

Gil: [00:38:19] Yeah, I think pricing maybe. I've always been a fan of their approach to how they've acquired. They've acquired a number of products that have made the overall product much more convincing for merchants. I guess you could call them like a super app or they have a lot of different offerings now. They remind me of like Twilio, but Twilio is more on the...

Phillip: [00:38:42] Developer side, right?

Gil: [00:38:43] Yeah. So Yotpo has a number of products now. I think they offer like pricing that is, if you have multiple of their products, they offer you good pricing, discounted pricing, although don't quote me on that. I don't know, I'm a big fan of that approach. I understand for some merchants it's definitely more expensive, although I feel like recently someone showed me the pricing and it seemed almost cheaper than some. So I don't know.

Phillip: [00:39:08] Yeah, I think that there's a really interesting dynamic here and maybe this is total conjecture, but Brian wrote a piece about counterfactual thinking and it's broken my brain. So we're going to play a what-if scenario. But there's a world in which Shopify didn't go public six, seven years ago. There's a multiversal outcome where Shopify didn't go public. And I believe is Shopify's IPO was a moment where anyone building on an eCommerce platform could stand to personally benefit from the acceleration and the uptake of that platform. And I almost see Shopify's IPOs being the differentiation point for an entire industry to rally around one platform that could give them a positive financial outcome. And to some degree, developers saw their own fate being tied up in the stock price. And as the stock price moved upward, it created more network effects for people to get behind it. There's a world out there where, you know, Magento IPO'd as well. And they were more direct competitors and they were able to get the capital to build a true SaaS offering. There's a world out there where that would have happened. I have a theory that the app ecosystem only exists as it does today because so many people were able to capitalize on the stock. And I wonder how durable that is, where the stock is not in such a great place. Of course, today's 10 to 1 split day. So who knows? Okay, well, I said all that. There's nothing really to respond to. Let's shift gears. Checkout Promotions. You have a really interesting solve for the type of buyer modality that happens all the time in real-world commerce. What is Checkout Promotions doing in eCommerce?

Gil: [00:41:15] Sure. So, I mean, right now it's very focused on doing one thing and hopefully one thing well. And that is basically post-purchase upsells. So I think that it's almost confusing to some folks that have never either seen or used a post-purchase upsell because you don't really have anything like that in the physical world, I would say. But basically, on Shopify, it's fairly new. Within the past two years, they launched native functionality to essentially show a new step in checkout after a customer is paid to have a chance to upsell them to something without affecting the initial conversion. So you kind of have that initial conversion locked, you know that it's placed, nothing's going to affect that necessarily, maybe branding, but you now can add additional AOV, average order value, or you could even add a free gift to increase the loyalty of the customer. Or there are a lot of use cases, product sampling to introduce them to new product lines, especially if they're a first-time customer. Maybe they're not aware of all the products that you offer, like a beauty brand or for like shampoo you could do travel sizes. So basically it's focused on introducing promotions in checkout, but specifically in post-purchase. And I kind of got lucky because I basically created the app right when using a different API than what they introduced, but I created it right around when they were developing these native APIs. And so I think like everything, the timing worked out really well. And now two years later they've announced checkout extensibility, which is essentially pre-purchase within checkout. And that is where I'm headed next and trying to build out some core use cases there to help facilitate increasing your AOV and also loyalty and customer retention in checkout.

Phillip: [00:43:11] It's interesting. I don't think there's a direct parallel, but I do think that there is a paradigm that maps to the real world. It just doesn't happen from the merchant to the consumer. I have this happen all the time. I'm in line at the grocery store, I'm checking out, and my wife texts me and says, "Don't forget to get X." It happens. It's like without fail.

Brian: [00:43:44] Your wife is Checkout Promotions.

Phillip: [00:43:45] Yeah, I have that. I have that person in my life. I have Checkout Promotions. It's just not from the retailer. You also get it when you're walking outside of the store and the Girl Scouts are asking you to pick up some cookies. You see it all the time.

Brian: [00:44:02] If we're talking grocery store right now, like the garden section on the way in and on the way out.

Phillip: [00:44:08] Yeah, on the way out. That's true. Yeah. Getting a bag of ice. There are sort of modalities that happen. Once upon a time, my mom would buy stamps from the cashier. Yeah, whatever. It's interesting seeing more Internet native use cases around the buying experience. I know Checkout Promotions is really focused on the actual buying experience now you're coming up into the checkout itself pre-purchase. Aren't there other problem spaces where this could be solved? Political candidates get one-click donations all the time via email. I'm curious where else such a modality might take place that's outside of the checkout.

Gil: [00:44:56] I mean, yeah, there are other, I'll say the other apps in the ecosystem that help facilitate post-purchase behavior, whether it's through email, upselling a one-time purchase to a subscription, reordering, like Repeat I think is one in the ecosystem that does some interesting things with post-purchase and facilitating those buyers to come back. So yeah, I think I'm very focused on just a core set of use cases that exist within this one part of checkout. I don't know. I'm a big proponent of focusing really deeply on a problem space and less about going wide. A lot of merchants ask, "Am I ever going to have promotions in the cart?" There are a lot of eCom sites that have the free shipping bar, but I'm just like, I guess I'm just really focused on addressing all of the problems within the specific space and just being the best at that.

Phillip: [00:45:59] Tell us about some of your successes so far. You've sort of been building in public. What's that journey been like? And tell us a little bit about how you've been received in the marketplace.

Gil: [00:46:10] So I guess I'm a child of Twitter. I probably credit a lot of my success to Twitter, for better or for worse. So I started building up a Twitter presence, I guess, in the open source space on the developer side several years ago. I actually think I built one of the first headless, I hate that term, but headless Shopify sites. And then later on I got into app development and so I built up a small following on Twitter and that's really where I actually got my first set of merchants. And then I guess it still drives probably the majority of my revenues actually from Twitter, sadly, or maybe not. I don't know.

Phillip: [00:46:53] What kind of skill set does it require to sort of rise through the ranks of the App Store now?

Gil: [00:47:06] It's hard.

Phillip: [00:47:07] Is it?

Gil: [00:47:08] It's really hard. I mean, look at it this way. I can't remember the exact numbers, but there were no more than maybe 5,000, or 4,000 apps when I first was starting out a couple of years ago. And now we're at eight. And so just from a sheer numbers perspective, it is much harder to stand out. In most problem spaces there is a general solution available. There is always, eCom is such a wide problem set, right? Wherever you are in the world, there are so many different industries. I always find out about new verticals. I'll check out a store that installed my app and then I'll find out that someone actually sells stuff like this. So I don't know, I don't have any good examples right now, but it happens all the time. And so I'm like, "Wow, this stuff exists. I didn't even know about it." And so there's always room for very specific use case apps. The problem is what is the TAM? What is the total addressable market for that? And can you have a whole business or is that a side project? So I think that there are still plenty of opportunities for developers to build an app.

Gil: [00:48:15] It's just that in a lot of the, I guess you could say lucrative spaces, upsells, email, SMS, marketing, things like that, there are probably most of those areas, Shopify apps that exist for those problem sets. So for me, it's exciting when Shopify goes out and introduces a whole new problem space that has no existing solutions. So for example, check out extensibility, maybe Shopify functions, introducing areas of functionality that you just couldn't build out for. And so now you have these new areas that are kind of open for anyone. You might have some existing players build out into that, but it doesn't guarantee that they will be the best or that it's going to be a great solution. And so I think it introduces a lot of opportunities for developers, and that's actually what I did. I mean, two years ago, post-purchase, that was a whole new functionality. So for me as a developer, whenever Shopify opens up these new problem spaces, it's pretty exciting.

Phillip: [00:49:14] I'm assuming that your install base sees a lot of success. It's fairly trivial to uninstall, right? So they don't keep things around if it's not working.

Gil: [00:49:26] Yes and no. So for my app, there's a lot of manual setup. So people that have the app and it works, they typically don't churn. I'll say that churn in Shopify really depends on the size of the merchant. So at the Plus end, not the enterprise end, churn is very low, like less than 2% maybe. And then for the lower end, small stores churn could be above 10%, 15%. There are a lot of stores that just close for larger apps. Some apps will have like 50, 100 stores closing a day on their apps. And I think that that has definitely the velocity of stores closing has increased this year significantly. Maybe just a lot of people open stores in the past two years and I guess costs are going up, and margins are getting thinner.

Brian: [00:50:20] Pandemic surge kind of backing off a little bit, maybe.

Phillip: [00:50:24] McKinsey told them that we had advanced ten years and three months. So they were like, I'm on, let's go. Wow. I'm really the conversation killer today. I don't know how. I've got to get a different frame of mind. I haven't had lunch yet.

Brian: [00:50:41] No, let's end this on a super positive note. I know we have a lot to wrap up here, we need to put the kibosh on Phillip's hangry face. {laughter} Gil, thank you so much. What a delight has been to have you on. This has been a long time coming, actually, and we are huge fans. Thank you for sharing your insight on the Shopify ecosystem and what's going on there and for telling us about what is most exciting in that world right now. I feel like I learned a ton just on this chat.

Phillip: [00:51:16] Let me pop in. I've never done this before. You were closing us up so nicely. I love it. I have an idea. Here's a question for you, Gil. What is the future of commerce to you?

Brian: [00:51:27] Yes.

Gil: [00:51:30] Oh. Okay. So I don't want to plug anything, but I created a side project. It's named something. I'm not even going to name it. It was a side project. Don't need people downloading it and then complaining it doesn't work. But I actually think that the future of commerce is everywhere and that for me the most exciting bits are how that all comes together. And so I don't know, like offline, online, online to online. It's just commerce is everywhere now. It's wherever the consumer is. Actually, Shopify maybe called it with the whole, what did they call it? Consumer to commerce? Commerce to consumer? I don't know. Oh, well, I just ruined your ending.

Phillip: [00:52:08] Oh, I love it.

Gil: [00:52:09]  [00:52:09]Commerce is everywhere. And so I think that wherever commerce does not currently exist, commerce will exist. And you could probably blame NFTs for this. But I think that commerce will kind of enter our lives in all sorts of areas that it doesn't currently exist. And that's really the future. [00:52:29]

Phillip: [00:52:29] I love that.

Brian: [00:52:30] Omni channel for the metaverse. That's what we're talking about.

Phillip: [00:52:33] Webb Smith calls it Omniverse, and I don't think that there's... I don't think there's anything wrong with that. I kind of love a future that is, you know, everywhere. Commerce online, everywhere, wherever you happen to be. I can get down with that, Gil. Thank you so much for joining us. We'll link it up in the show notes. But where can people find you online?

Gil: [00:52:56] Sure. Twitter. I'm @gilgNYC. I'm in NYC if you don't believe me. And then CheckoutPromotions.com. And that's really it. I stay off of you know, the Tik Toks and all those crazy things.

Phillip: [00:53:09] Well, if you ever do a dance, let us know and we'll update the bio. Thank you so much, Gil. Thank you for listening. Commerce is a catalyst for change. In whose world? Your world. The world around you. Maybe if we all did that, we'd have a better world at large. Thank you for listening to Future Commerce.

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