How Harley Finkelstein is trying to recruit more enterprise brands to Shopify
Shopify made a name for itself catering to scrappy direct-to-consumer brands who were looking to build an e-commerce juggernaut with just a Facebook ads account and an online storefront.
But now, more than years after launching, and growing to a market cap of more than $100 billion, Shopify has its sights set on recruiting more enterprise retailers. That’s been a big focus for the company since last year, when Shopify unveiled Commerce Components, which allows brands and retailers to pick and choose which parts of the tech stack they want to use. Legacy retailers that have decades of operating experience and dozens of brick-and-mortar stores likely already have an existing tech stack, which makes migrating its entire business to a new operation a headache.
The idea, then, is that enterprise retailers can test the waters of Shopify by adopting just a few components. Everlane, for example now uses Shop Pay as a result of Commerce Components. And when Banana Republic launched Banana Republic Home, the brand decided to use Shopify’s point-of-sale system in its stores.
Leading the charge to get more enterprise brands on Shopify is Harley Finkelstein, the company’s president. Sometimes, that entails calling out brands on social media that aren’t on Shopify. Othertimes it means moderating panels at big industry conferences and promoting Shopify as a solution for bigger retailers.
At NRF’s Big Show in early January, Finkelstein moderated a panel with Béis founder Shay Mitchell and Glossier CEO Kyle Leahy. Even though the panel wasn’t exclusively about enterprise retail, the subtext was: Shopify is a place for brands to grow quickly, and get even bigger.
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Finkelstein spoke with Modern Retail after his panel at NRF, to discuss how the Commerce Components roll out has been going, and what Shopify’s focus is for 2024. This interview has been lightly edited for clarity and length.
You released Commerce Components a year ago now. What have you learned in that year about what it takes to get enterprise retailers on Shopify? What questions do they have, what things work in recruiting them, and what doesn’t?
Some of that is sort of evergreen stuff, meaning they want to make sure that uptime is super strong –which, frankly, on Shopify is like a non-issue. And not just that, they want to be able to know that if [they’re] going to come to Shopify enterprise, that they can do ridiculous flash sales like Supreme.
A lot of them want to have a true, centralized omnichannel experience, which [means] we don’t want to have eight different systems.
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If you think about Shopify as like the metaphor of a browser window, they want to collapse as many tabs as possible.
The second thing that we often get is how do we [Shopify] work with your existing systems? And I think historically that was challenging for them.
The third piece, which is probably the most important one, is ultimately we had to give them different on ramps into Shopify. So a year ago, Everlane could not have used Shopify just for Shop Pay. But now that Shop Pay is a commerce component and checkout is a commerce component and inventory is a commerce component… [that] means come take any [aspect of Shopify] you want and let’s build a relationship over time.
Ultimately, my belief is that over time, we’ll get more and more of your business.
How much interest are you seeing in Shop Pay specifically relative to other components?
[Commerce Components] is kind of working as designed — which is like, here are our 38 components, pick which ones you want. But to your point, the most popular component is checkout and Shop Pay. Why? We’re the second largest checkout in America, and maybe it’s the second or third largest checkout in the world, if you exclude China. Ten percent of all U.S. e-commerce flows through Shopify.
The biggest one is I think 40% [of U.S. e-commerce] flows through Amazon. And then you go way, way down to like 2% or 3% market share.
With brands that replatform onto Shopify — like Glossier — how do those conversations begin? What percentage would you say is them coming to you or you going out to brands and being like, ‘you should be on Shopify?’
50/50. In some cases, I’m sort of on record for shaming brands on social media [for not being on Shopify].
Yeah, I saw you did that with Celsius recently.
So if you go to BuiltWith.com — I use it a lot to look at [brands]’ tech stacks. Some of it is us going to brands and saying “it doesn’t make sense you’re not using us.” For two reasons: One is total cost of ownership. Glossier had hundreds of engineers running their e-commerce… they are a much bigger company now — they’re leaner, they’re faster, they don’t need to do that anymore.
As President, how much of your time would you say is spent talking to current customers, customers you want to recruit?
My job is mostly making sure that our best customers are happy. I don’t mean size wise — who has been the most influential, the most important customers for the platform? The ones that stretch the platform really well?
One example is Ember Mugs. They’re not the biggest customer, but the way they think about using Shopify is in a really gnarly way. They do some really custom stuff. ButcherBox is a great customer, the way they do subscriptions.
How has the way that you worked with brands changed the longer that Shopify has been in business?
I think that we’re the most important piece of software that most of the merchants use. But with that comes an astounding amount of responsibility. That means that every time they hear something on, you know, Modern Retail about TikTok, they’re like “can I do that right now?”
So the onus is on us to make sure that anywhere that potentially a sale can happen, we make it easy for them via Shopify.
One thing I wanted to ask about was the divestiture of Deliverr [which Shopify sold to Flexport]. What did Shopify learn from that experience?
We believe that failure is the successful discovery of things that did not work. What we learned from that is: There was a time when we decided to go into logistics [because] there was no one out there who was going to build 10 logistics networks for large independent brands, or independent brands in general.
The moment that Flexport moved from just being like effectively shipping container from the factory to the ports to an actual logistics platform — that’s when we should have said, ‘we’re going to go all in on Flexport [rather than building our own logistics network].’
We take our medicine when we need to. Maybe we took our medicine a little bit late then, we could have taken it before we bought Deliverr only to sell it a year later, but it was a great experience from a learning perspective.
As President, where do you plan to spend your time this year? What are your priorities?
The way we think about the leadership of Shopify is: we’re kind of spiky objects. We try to focus on our strengths. My job is to focus on the storytelling of Shopify, both externally and internally to media, to investors and partners.