Shopify currently powers over 10% of US e-commerce and facilitates over half a trillion dollars in transactions. However, this journey of redefining retail did not happen overnight. If we look under the hood, these results were achieved by blending flexibility, scalability, and innovation, including artificial intelligence and headless commerce.
As technology continues to race ahead at breakneck speed and customer expectations continue to soar, a new future of retail is beginning to unfold. In my recent discussion with Bobby Morrison, Shopify’s Chief Revenue Officer, we discussed how the platform is tackling the emerging challenges in retail and removing the latency problem with a globally scaled infrastructure of over 150 network edge points worldwide.
About Bobby Morrison
Bobby Morrison is the Chief Revenue Officer at Shopify. Before bringing his 25+ years of experience in transforming multi-billion dollar organizations, he was the Chief Revenue and Sales Officer at Intuit, where he led the Sales, Partner, and Business Development for the Small Business and self-employed Group as well as Sales for the ProConnect and Consumer Group, and focused on the commercial transformation of the business.
Before Intuit, Bobby was the VP of the small, medium, and corporate segments at Microsoft, responsible for growing the global SMC business to $25B+ in annual revenue. He also spent 19 years in various executive roles at Verizon, including leading digital operations, e-commerce, sales, commercial strategy, marketing, and go-to-market. Bobby also serves on the advisory boards for Subsplash and Saviynt. He also served on the board of directors for DocuSign and Panopto.
Shopify’s Ecosystem Evolution
Q: Shopify has evolved from a platform mainly for SMBs to one that caters to enterprise-level retailers. What does it take for an enterprise-level retailer to adopt Shopify successfully?
A: Shopify is built on components, which has allowed us to build the most powerful retail platform in the world. But we spent the last 20 years optimizing the infrastructure to get to where we are today. Over those two decades, we started helping entrepreneurs achieve their dreams and start their businesses. And as those businesses grew, their needs changed.
We wanted to make sure we were building and meeting those requirements. So, we offer our platform in three different flavors to enterprise customers, and we believe choice is the primary driver for their consideration. One is a complete stack offering built and optimized for performance. The next is headless.
So, for those that require some level of customization, we give them the ability to do that. We’ve also launched a composable stack, taking the components I talked about and giving the power to innovate and control every aspect of the customer experience enterprises want to enable. Whatever an enterprise needs, we have all three options available, and we use them all interchangeably.
Customization vs. Standardization
Q: One of the biggest challenges for enterprise retailers is striking that balance between customization and standardization. What role does Shopify play in helping retailers customize while providing a scalable solution that ensures reliability?
A: I think it has gone through a hype cycle. I’ve observed a few of them in commerce. The first was the notion of everything from on-premises to cloud. Then we talked about headless as the next big thing, and I think composability is another one that has gone through a hype cycle.
However, composable comes in a variety of different flavors. You could have a thousand-piece Lego set with no instructions. That’s the extreme version we’ve seen from some of our market competitors. If you have a considerable dev team of a hundred people that can build and put together those Legos uniquely and have clarity of precisely what you want it to look like, that could be a great solution. But, we took a different approach to composability.
We took what we knew about the volume running through our platform today and how to optimize performance. We clustered that thousand-piece Lego set into 20 different components you can still plug in interchangeably, but they’re built intentionally. To perform a particular service or drive a specific outcome, we think that’s a better approach and still provides the tremendous flexibility most of our enterprise clients seek.
When Indigo reached out after a ransomware attack, its website was down. But our approach ensured they were back online with us within three days. So we can deploy composable quickly or go full stack and build a front end pretty quickly to help meet customers’ needs. So it doesn’t matter which of those three you go with. The speed of execution and on time are some of the things we probably do the best.
AI and Data Analytics
Q: Can you elaborate on how Shopify uses AI and data analytics to solve some of enterprise retailers’ most pressing problems, such as personalization or supply chain optimization?
A: I don’t think you can go into a room or talk anywhere without talking about AI. We’re heading into what we see will be a decade of high velocity and massive change. We believe that every business owner, regardless of size, is a hero and needs a sidekick that will help you make better choices.
With Shopify Magic, we provide a suite of AI-enabled features and services across our platform designed to help our customers optimize for running a small business, a midsize company, or an enterprise. It helps managers learn from what we see across our platform on the trends in the industry, what we see in terms of pricing, and what should be adjusted up or down.
How do you file your taxes and manage your accounting? Are there things that you should be doing there? It’s all sorts of things that we’re going to build into this sidekick. Think of it as an expert advisor sitting by your side, helping you make the right decisions for your business.
Q: What is the business value for retailers in adopting a headless commerce architecture, and what hurdles should they be aware of?
A: Headless commerce is what most companies tend to default to. There’s intrigue around composability and, in some cases, poses the right fit. But conversations we hear increasingly sound like, “I need to be able to control the front-end experience that I put in front of my customers, but I don’t want to run all the back end.” As a result, we are seeing a significant pivot in the marketplace.
The number of dev resources and engineers available to maintain and manage a commerce platform has grown, especially if you’re not with Shopify. You’re often running relatively large teams to keep the lights on. And in a world where we’re seeing OpEx compression in the marketplace, we need the ability to take those resources and put them in places where they’re not just maintaining something. But they’re out-innovating and building something new that creates differentiation for their customers in the market. This is where we see most CTOs trying to pivot their resources.
The scarcity of resources is causing more and more problems. People have said, “This composable thing I like, but it takes a lot of work. Going with somebody else has a high total cost of ownership, so maybe there’s an opportunity to do something better like headless.” From what we’ve seen, the number one choice of the three options we offer our customers continues to be headless.
Q: With over 150 network edge points of presence, Shopify’s infrastructure is designed for a global market. How does this unique infrastructure solve the latency issues often plaguing online retail?
A: As our CEO and founder recently said, latency is pollution. I’ve never heard it that way before, but I liked it. And at the end of the day, you must squeeze latency out of everything you do. It drives down your SEO performance. It drives down your conversion as you move from page to page, through checkout, and at the end of your experience.
So, we’ve focused on ensuring that Shopify’s infrastructure effectively mitigates latency issues. Some of it’s in the engineering and design that we put into place, with latency at the forefront of how we think about our infrastructure. It’s one of the significant drivers of why our conversion rate continues to outpace the competition.
The Future of Retail
Q: Considering the rapid technological advancements and changing consumer behaviors, what does the future of retail look like, and how is Shopify positioning itself in this new era of retail?
A: We are seeing enterprise clients of all sizes getting prepared. They’re going out and seeking capital in the market. How can they make sure that inventory is up to speed? They’ve got their contacts set up. They’ve already got their promotional offers queued into their commerce stack.
Since the pandemic, it’s all about omni channels. Ensuring all those experiences are stitched together, not just in their web assets, where they’ll have preferential offerings because of Customer Acquisition Cost (CAC), but also in-store. In our recent launch of additions, we showcased over a hundred new products that we put into the market in anticipation of some of these needs, particularly around omnichannel. So, we think our merchants are set up for a fantastic year.
For an extended audio version of this interview, visit Neil’s Tech Talks Daily Podcast.