The Shopify Timeline: How Shopify Became a Billion-Dollar eCommerce Platform

The Shopify Timeline: How Shopify Became a Billion-Dollar eCommerce Platform

The brainchild of Tobias Lutke, Shopify started as a solution the founder fixed up for himself when he started selling snowboarding equipment online.

Though a software engineer by profession, Lutke was burnt out by 2004 and wanted to try new things. Selling snowboarding equipment online was his grand idea but little did he know what problems he would be facing ahead.

Turned out, he had to navigate some pretty complex technologies to get up and running. In fact, getting up and running was the best he could manage – customizing the user experience and design was out of the question.

Using Rails to Build Shopify

Lutke decided he had had enough and built his own custom solution using the Rails programming framework. Though the idea was to build the infrastructure for Snowdevil, the online snowboarding shop, something about the Rails framework inspired Lutke and set the path forward for Snowdevil to become the billion-dollar company called Shopify.

Rails was built by David Heinemeier Hansson at 37signals, now called Basecamp, as a framework to build a project management tool for his company. However, Hansson later decided to make it available as a product for other people as well. This inspired Lutke to do the same with Shopify and he made the eCommerce platform available to other merchants.

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The Bare Bones Shopify Platform was Available for Merchants

The first few versions of Shopify didn’t have any fancy features. The bare-bones platform had only enough to let merchants set up shop online. When there was nothing else like it in the market, the ability to upload products, manage inventory, and accept payments online was a whole lot of features for merchants.

The Problem with its Pricing Plan

Shopify gained traction right away but growth was slow. They were making $8000 per month and their initial customers comprised mainly of Rails users and some of their own social connections.

The main culprit was their pricing plan. In the early days, Shopify was charging transaction fees as a percentage of sales. This discouraged big players from opting in as it meant the higher the order amount, the larger the Shopify fee would be.

Shopify soon discovered the problem and fixed it. It switched to a subscription-based model and added a small transaction fee on every order processed. The higher up you go in subscription plans, the lower the transaction fee. This pricing plan was a hit for the company and growth began to surge immediately.

New Shopify Features that Helped Merchants Sell More

Shopify developers started focusing their product development on building new features that would help merchants sell more. The new pricing model had aligned customer success with their own growth. The more orders a merchant would process, the more Shopify would earn in transaction fees.

For example, its analytics feature was an immediate hit with its merchants. People loved how they could get a big picture of where their inventory and sales stood and could make better decisions with that data.

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At this point, Shopify was more focused on building features that helped merchants set up their shop online for the first time. Features related to inventory management, product management, and analytics were the company’s focus.

Shopify’s Growing Bottom-Line

The company nailed their website copy and focused on prospects’ major pain points i.e. the hassle they face in setting up eCommerce websites. They saw the difference in their growing bottom-line. The company was now making $60,000 per month.

Going Big with API and Apps

The founders knew what ultimately made any software product successful i.e. its ability to integrate with other tools. Lutke and his co-founder built the API for Shopify and rolled out the app store. This was the turning point for the company that took it from being a standalone tool to being a software ecosystem.

Launching Shopify Mobile, POS, Conversational Commerce, and so on

Even with all that growth, Shopify hasn’t rested on its laurels for a minute. The company keeps responding to how the market is changing and keeps rolling out new features to give merchants the tools they need to compete.

They are just unstoppable. Shopify Mobile, POS, video commerce, integrations with social platforms like TikTok and Facebook, and Shopify Buy Now buttons that are everywhere on the web are just some of the features it has built recently.

Introducing Shopify Plus

The most notable of its developments in recent years is the launch of Shopify Plus, which deserves a separate mention. Initially, Shopify differentiated itself as an eCommerce software for small businesses. But then thanks to Shopify, those businesses that opted in began to grow. And Shopify noticed that their existing customers now have bigger demands. And so, they created a Plus size of its platform called Shopify Plus, a software for big kids with big needs.

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What’s Shopify Up To These Days?

These days, Shopify is cooking up an eCommerce platform for B2B wholesalers, manufacturers, and distributors. With the pandemic accelerating the adoption of eCommerce in the B2B sector, this announcement from Shopify was only expected. Let’s see what features the B2B offering in Shopify will include.

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