Memo: Shopify Owns DTC

But what does that really mean? Increasingly, it’s something different than you may think. Let’s face it: October’s Nike Strength launch was underwhelming. Part of the reason was the site’s basic build on Shopify. That’s no Shopify diss; it’s representative of the state of direct-to-consumer retail.

Not only is Shopify’s year-over-year command of the DTC Power List impressive, it’s also indicative of the changes ahead. We are at the cusp of a transformative era in eCommerce technology, shaped in part by Shopify’s growing market share. Shopify’s ascent is a testimony to its robust platform, offering businesses the tools for seamless online store creation and management. While this surge underscores a democratization of eCommerce, providing both enterprise brands and small merchants with a streamlined path to digital sales, it also prompts a critical analysis of investment strategies in the online retail sector.

The convenience of Shopify’s lower barrier to entry may have inadvertently led to reduced investment in bespoke online retail infrastructures, posing a strategic dilemma as omnichannel retail and digital marketplaces continue to dominate consumer interactions. Examining Nike’s launch of Nike Strength on Shopify or True Classic’s expansion into physical stores, we uncover a complex landscape of opportunities and challenges.

In 2022, True Classic partnered with third-party platform Leap to open five pop-ups in Los Angeles, San Jose, Chicago and Washington, D.C. While the pop-ups will remain open, the company said it is taking its physical retail operations in house, enabling it to outfit its stores with an “elevated, approachable branding that resonates with their consumer.”

For a company of True Classics’ size and velocity, Shopify is a great solution that is relatively low cost and infinitely scalable. It doesn’t get in the way of other plans. Today, more than ever, brands see DTC as part of the strategy and in some cases, it’s the least significant of a multi-pronged approach. What does that look like? One recent example is Mars’s partnership with Uber on a Skittles ad.

Mars is displaying interactive Uber Journey Ads and Post-Check Out Ads to consumers taking a ride in an Uber vehicle or waiting for their Uber Eats order. The ads will enable consumers to seamlessly interact with the Skittles website and add Skittles products to their Uber Eats shopping carts. (CSA)

As marketing channels continue to merge with sales channels, we may see less of an emphasis on traditional marketing funnels (Meta or Google > Shopify.com > checkout) and more content-driven online destinations like the aforementioned Skittles site. But without this level of marketing and sales ambition, this architecture is no longer typical of DTC operations.

The Advantages of Shopify’s Market Share Growth

Lower Barriers to Entry. Shopify has revolutionized the eCommerce industry by making online store setup accessible and cost-effective. This advantage is palpable when observing Nike’s decision to employ Shopify for NikeStrength.com. The move suggests a strategic pivot, wherein agility and time-to-market are prioritized for new ventures. By lowering the technical and financial thresholds, Shopify has enabled countless organizations to partake in the digital economy with maximum agility and minimal investment.

Data derived from a recent Shopify study that they plan to use for information distribution.

Omnichannel Synergy. True Classic’s retail expansion illustrates Shopify’s potential to enhance the omnichannel experience. Their stores, armed with digital-first technology, are positioned to bridge the gap between online convenience and tactile brand encounters. This synergy is highlighted in a recent Inc. article, noting that brands like Bark and Bala are abandoning a pure DTC model in favor of a hybrid approach that amalgamates physical retail and online channels.

“We don’t consider ourselves a DTC brand,” said Kislevitz, whose company produces Bala Bangles – fitted exercise weights that strap to the body. “I’ve found that there’s a really virtuous ecosystem in an omnichannel approach,” he continued. (Inc.)

The virtuous cycle of in-store and online interaction creates a comprehensive brand ecosystem that can amplify customer reach and loyalty.

Potential Downsides of Shopify’s Dominance

Underinvestment in Online Retail. Despite advantages, there’s an inherent risk that Shopify’s ease of use could foster a minimalist investment approach in online retail infrastructures. Brands might neglect the development of distinctive and innovative online experiences like the one found at Skittles, leading to a market saturated with cookie-cutter stores that lack differentiation. Leaders must recognize that while solutions like Shopify are instrumental in launching online platforms, they are not a panacea for the competitive digital marketplace that demands uniqueness and brand identity. And while many are pursuing  omnichannel strategies, when DTC-first strategies become popular again, brands may want more sophistication or individuality.

Omnichannel and Digital Marketplace Competition. The omnichannel model’s evolution calls for a reassessment of the direct-to-consumer approach. As noted in the Inc. article, the economic logic behind bulk shipments versus individual fulfillment cannot be ignored. This realization is prompting DTC players to diversify their sales model. Shopify’s ease might initially attract brands, but the demand for a more diversified, omnichannel strategy soon becomes evident, compelling brands to expand beyond digital-only models.

Case Studies: Nike and True Classic’s Strategic Moves

Nike’s Choice of Shopify. Nike’s foray into Shopify for a specialized product line reflects an agile, project-specific strategy rather than a wholesale platform shift. It illustrates that even established brands see value in leveraging Shopify’s simplicity for certain segments, without committing their entire online presence to it. This decision is strategic, targeting rapid deployment and flexibility over the heavy investment and bespoke customization of their main site.

True Classic’s Brick-and-Mortar Strategy. Contrastingly, True Classic’s physical retail venture, detailed in the Chain Store Age article, signifies a strategic pivot to ‘owned and operated’ locations. This move enables the brand to envelop customers in a controlled, brand-centric environment, supplementing their online presence with a tangible experience. The brand’s commitment to immersive, in-store digital engagement reveals a sophisticated understanding of modern retail dynamics, where the physical is propelled by the digital to propel the business forward.

Founded in 2019, True Classic is now focusing its efforts on rapid expansion of brick and mortar retail, a natural next step to engage their customer in person as well as reach a new audience, the company said.

The contrast here is stark and telling. True Classic leans into the value of customer intimacy that physical stores can cultivate, betting on the allure of in-person experiences to strengthen brand loyalty. Nike, conversely, leverages Shopify’s agility to extend its brand reach without the commitment of extensive infrastructure changes. Both approaches underscore a critical strategic understanding: that the future of retail is not a one-size-fits-all, but a tailored fit to brand identity and customer expectation.

These are two businesses at two different stages; both are using Shopify for contrasting reasons. Shopify’s expanding market share heralds an accessible entry point into the eCommerce realm, yet it simultaneously prompts industry leaders to deliberate on the long-term implications of such a model. The convergence of ease and ubiquity must not deter us from investing in distinct, immersive online and offline brand experiences. It’s incumbent upon us to forge strategies that leverage the strengths of platforms like Shopify while pursuing a holistic omnichannel vision. This dual approach will ensure that we not only thrive in the current marketplace trend but also maintain preparation for its future, one that may segue back to one where brands are proud to be categorized as DTC and run their businesses as such.

By Web Smith | Editor: Hilary Milnes with art by Alex Remy and Christina Williams

2 thoughts on “Memo: Shopify Owns DTC

  1. I agree with the message around DTC but the stats are skewed by platform … you should have the view by GMV you would see much bigger platforms like SAP, Salesforce, Oracle, HCL(IBM) have much larger proportion of enterprise retail %

    1. If we measured by platform, custom builds would overwhelm SAP, Salesforce, etc but that is not really the point. The point is that the aforementioned platforms were a greater percentage of enterprise clients last year than they were this year. They were a larger percentage of enterprise clients two years ago than they were last year, and so on and so on and so on. To pretend that the figures are static fails to prepare for the potential reality alluded to in the essay, in my humble opinion.

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