Retailers   //   November 9, 2021

Shopify is trying to retain merchants by expanding into headless commerce

Shopify is attempting to retain merchants by offering them more ways to customize their stores across multiple access points, from the web to mobile and beyond.

The company on Monday is previewing its new Hydrogen front-end web development framework and SDK. With Hydrogen, Shopify is taking its first true steps into headless commerce. The term denotes an online store that separates the customer-facing features (the front-end) from the functions in its back-end, such as payment processing. Amazon has been using the approach for years to offer e-commerce services across desktop, mobile and smart speakers.

After a period of momentous growth, Shopify’s goal is to ensure that retailers don’t need to look to other platforms for those tools. A number of its rivals, such as BigCommerce and Adobe’s Magento, already claim to offer complex headless commerce tools. As such, Shopify is trying to retain the 1.7 million sellers who use its subscription service, a whopping 700,000 of which joined last year, especially as smaller businesses scale up their online stores.

Shopify’s Hydrogen framework is based on React and javascript, web building blocks that are known for their ubiquity. Previously, developers who wanted to build more unique stores had to rely on Shopify’s existing Liquid programming language and tech stack, or on third-party hosting services, which some developers believe aren’t as flexible as newer toolkits.

Shopify told Modern Retail that the tools will allow developers to build “faster and better” storefronts thanks to the additional components they offer. These include a cart, variant picker and media gallery. The company says Hydrogen — which will be paired with its Oxygen hosting service for bespoke stores — will enable retailers to integrate more innovative experiences, such as augmented reality try-ons and product personalization, natively on Shopify instead of using third-party software. The new tools will officially launch early next year.

“We want to make sure that Shopify is a technical platform where you can go from your very first sale all the way to IPO,” Ilya Grigorik, principal engineer at Shopify, said during a call. Two brands have done just that, he added, pointing to fashionable scrubs maker Figs and sneaker brand Allbirds, both of which began trading on stock exchanges this year.

Over the coming months, Shopify will use the feedback from its test run to burnish the new toolkit. Starting on Monday, developers will be able to set up an ephemeral shop using Hydrogen and play with demo data to get a feel for how it works.

Shopify claims that one of the biggest benefits of the new framework is that it will be located on the server-side to improve the performance of apps. According to e-commerce developer Gil Greenberg, this could also give Hydrogen a competitive edge over rival offerings from startups that do not offer the ability to co-locate data.

“Talking to agencies, they’re extremely interested in having a first-party solution for headless that works seamlessly out of the box,” Greenberg said. Oxygen-hosted apps are co-located in Shopify data centers to ensure applications run fast, which is not something competitors claim to offer, he noted.  Greenberg expects Hydrogen to become one of the “strongest offerings” for going headless on Shopify.

The headless commerce space is home to a plethora of fledgling companies including Shogun, Commercetools, Bold and Spryker — all of which have secured a combined hundreds of millions of dollars in investment. Shopify is aware of the buzz the sector is generating. “We’ve seen headless commerce startups get VC funding as of late, and retailers and developers really ask for this level of control over their stack,” Shopify said in a statement. “But we’ve yet to see a headless commerce solution that is deliberately built for e-commerce.”

While the company claims that it has long offered headless commerce, that is only a “half-truth,” according to Humayun Rashid, co-founder and CEO of Nessa, a product studio building software and apps for Shopify. “You have to use Shopify’s storefront API to go headless and it’s not as flexible as other solutions,” he said. “Hydrogen aims to solve those woes.”