Why I Think Shopify is Great

Published 10 June 06 by Justin French, 5 comments

It’s been a long, long wait for this service to launch, scattered with many teasers and fragments of information along the way, and even though I have absolutely nothing to sell and no need for an online store of my own, I’m quite excited.

But like with any launch of a product with high expectations, there are those that are less impressed. In particular, I stumbled on this thread in the Shopify forums complaining about the 2–3% cut Shopify takes from your sales as a service fee (in addition to the percentage taken by PayPal or your credit card merchant).

Who cares? If your store doesn’t sell anything, you don’t pay any fees. No hosting, no domain names, no SSL certificates, no system administrators, no security audits, etc. When you do finally sell something, Shopify (the service that helped you convert that visitor into a customer and make the sale) takes a small slice of the pie. That’s the cost of doing business through these (and similar) services.

The alternative is to Do It Yourself. Find some butt-ugly open source shopping cart/e-commerce application, pay someone to install and configure it, find somewhere decent to host it, get the SSL certificates, etc. And even then, you’re probably only doing a half-assed job and leaving yourself open to all sorts of security and legal concerns.

Let’s pluck a random number out of thin air and say that would cost $1000 to set-up one of those free shopping cart PHP monstrosities, $20–50/month to host, and probably another $500–1000 every year tweaking and patching the store’s code base as needed.

So before you even open the doors for business, the DIY store has cost $1000 more to set-up. To make that money back, you’ve got to make over $30,000 in sales through Shopify before that 3% even matters.

Then you’ve got to cover the ongoing monthly costs (another $1600+ in sales each month).

For those who actually manage to build an online store and customer base capable of turning over $40–50k a year in sales, the 3% Shopify charges may start to seem a little steep, but for everyone else, it’s a great deal.

I’ve been freelancing and working in this industry since 1996. I’ve built many websites and online stores for clients along the way. Most of them were really bad business ideas that were destined to fail. A few of them were good ideas that had some small success, and only one store made anywhere near that kind of money.

In my experience, most online stores begin as either a part-time hobby, or as an experimental additional revenue stream for an established business. What Shopify does is offer a really low barrier of entry. Anyone can start up a store and dip their toes into e-commerce without any real start-up costs at all.

This allows your store to prove itself in the market place for free. A year from now, if you actually have a good idea and a sound business model, found some customers and started making some serious sales, you now know that you can justify the development and infrastructure costs of running your own store, and doing it well.

Until then, just remember that 3% of nothing is nothing, and that Shopify is probably saving you a truckload of cash.

Whatever you or your client was going to spend on a store can now be spent on marketing, other web-related stuff, buying some more stock for the store, or even just a fancy lunch in celebration how smart you are and how much time and money you just saved.