Shopify Audiences

The best way for Shopify to grow take rates is to help drive incremental distribution for its merchants. Sure, most of the merchants will get most of their sales by driving their own traffic to their Shopify stores (through their own branding and marketing efforts across online and offline channels), but if Shopify can provide them with incremental... See more

Strengthens the value proposition of Shopify: This makes the value proposition of Shopify even more compelling for merchants getting started or considering switching platforms they use to power their eCommerce operations since it means that Shopify now also helps with distribution more efficient marketing and customer acquisition, as opposed to pur... See more

The first and obvious reason Shopify is doing this is that Shopify’s goal has always been to “arm the rebels”. One of the primary ways it does that is to provide the benefits of scale and sophistication to smaller merchants. And Shopify Audiences is just another way to do that.

However, in aggregate, merchants who opt-in will do better than those who don’t opt-in on their ad spending. In addition, if other merchants opt-in and you don’t opt-in you’re the only one not getting the benefit of the increased marketing efficiency. In this way, opting in will be the optimal decision, especially for small merchants.

In some sense, I believe the answer will be yes (although it will be interesting to see if there are any exclusions).

One obvious question one might ask is “Won’t merchants who opt-in be helping their competitors?”

One way to think about it is that Amazon’s “people who bought this also bought” feature was never available to Shopify merchants since any given merchant only had info on who bought their products, not all the other products that people purchased across Shopify. But now, in some sense, the benefits of this data will be available to merchants.

Recently, the news of Shopify’s first foray into advertising, through their Shopify Audiences product has been making the rounds.