The president of e-commerce giant Shopify says consumers still have a healthy appetite for retail therapy, but are ditching random, unplanned spending as cost of living pressures bite.
Harley Finkelstein said last year’s Black Friday and Cyber Monday sales weekends show that “the state of the consumer is incredibly healthy”. However, data on Shopify’s platform, which powers 25 per cent of e-commerce transactions in Australia, show shopper habits are changing towards fewer, more intentional purchases.
“There is far more intentionality right now — buying from brands that you really, really love. That’s different from indiscriminately buying a bunch of random things,” he told this masthead.
“I think that theme of intentionality will be around for a long time – that is the new paradigm of how we shop. I may not buy twelve different products, but I may buy three from brands that are personal to me.”
Shopify, which has a market capitalisation of $US44 billion ($64 billion), makes tools that power the operations of e-commerce businesses – including online checkout and point-of-sale systems for stores.
Shopify’s stock, which is listed on the New York Stock Exchange, has been hammered over the past year as investors sold off tech stocks and the COVID-fuelled e-commerce boom slowed. Shares have declined by close to 75 per cent over the past year.
But Finkelstein said the group is now expanding its focus beyond small and medium-sized retailers, with Shopify about to launch new software offer for larger retail clients.
Called ‘Commerce Components’, the product will let big businesses, many of whom have built their online retail systems internally, gain access to Shopify’s product tools and build the elements they want, like Shopify’s checkout functions, into their offers for customers.
Finkelstein likens the approach to that taken by Google, when it opened up its cloud computing tools to business clients.
“We’re doing something very similar here, where you can use the components you want from Shopify.”
Larger Australian retailers like JB Hi-Fi already use some of Shopify’s products, but Finkelstein said other larger local brands will be attracted to the new product because it will give them flexibility to change their e-commerce offers and pivot when new shopping trends emerge.
Barbie manufacturer Mattel will be one of the first larger businesses to use the enterprise product offer.
Finkelstein said that Shopify’s focus on the bigger end of town did not come about because growth was slowing among smaller retailers, which he said still have the potential to expand.
“This is not a substitute for the small business segment, which frankly we think we are the dominant player it,” he said.
But the company’s expanded focus comes ahead of an anticipated spending slowdown in 2023, with pure-play online retailers tipped to be particularly vulnerable.
Against this backdrop, retailers are fighting to drive customer loyalty at a time when shoppers might only pick a handful of companies for their shopping.
“What we’re seeing is consumers are very much voting with their wallets to buy from the brands that they absolutely love working with,” he said.
Source: Thanks smh.com