Last updated on 5th October 2023 at 13:53 by Alex Nicholas
Shopify is a leading e-commerce platform with a significant presence in the online business world, and according to Shopify's own statistics, 81% of their merchants remain active after two years. But this doesn't mean they're profitable, far from it in fact, because the hard truth is that between just 5% to 10% are successful after their third year.
Now don't get me wrong, although that 5-10% figure is very low there is still a lot of potential for success with Shopify, it's just not guaranteed.
In terms of retail statistics, eCommerce platforms like Shopify are transforming the retail space. Online sales have been steadily increasing over the last year, with many people turning to online shops due to the COVID-19 pandemic. In the United States alone, eCommerce sales accounted for 14.3% of total retail sales in 2020, a significant increase from previous years.
But don't lose yourself in those headline figures thinking that e-commerce is easy, because it's not. The success of a Shopify store depends on several factors, including:
- How well you know your niche
- Are your products the right fit for your customers
- How well thought-out is your marketing strategy?
It's important to note that as a Shopify SEO expert, I can tell you that a successful Shopify store requires significant effort and planning, as well as investment in the store right from the beginning. You can't simply build a website, add a product or two and expect to build a brand within your industry without significant financial investment.
There's a learning curve within every space on the internet, and eCommerce is no different! The problem is that there are virtually no barriers to entry.
eCom requires project leadership, performance marketing, strategic decision-making and consumer focused research.
How many Shopify stores are there?
In terms of market share, Shopify is a major player in the United States and the United Kingdom, with over 1.7 million Shopify stores currently in operation. Shopify merchants have generated over $200 billion in gross merchandise volume, with an average order value of $72.
And whilst this might sound impressive, in all honesty, it's not, because the vast majority of these sales will have been made from the top 10% of all Shopify e-commerce stores, meaning that the majority make very little money and ultimately fail.
The financial results of successful Shopify stores are impressive, with the average store that makes over $100,000 in annual revenue considered to be doing well. Stores that make over $1 million a year are even more successful, indicating the potential for significant revenue generation.
How to build a successful Shopify store
Building a successful Shopify eCommerce website takes time, effort and money, but in all honesty, when it comes to what will make a successful Shopify store, there is no definitive answer.
You can look at some of the most profitable and popular Shopify stores including Blue Apron, Gymshark, and Fashion Nova, but by using them as a comparison you are doing yourself a bit of a disservice because these stores have implemented effective strategies for social media marketing, SEO, PPC, excelled at their customer service, and customer retention over years, resulting in sustained success.
What the top brands do very well is integrate omnichannel strategies, including social media marketing and marketplaces like Instagram and Amazon, these are also crucial for the success of Shopify stores because you're reaching massive amounts of people that wouldn't otherwise know you exist.
These strategies allow for and promote increased visibility and accessibility, as well as providing alternative channels for customer acquisition and retention.
To succeed with your Shopify eCommerce website you need a defined business strategy and a process that gives potential customers a reason to buy from you.
Reasons your Shopify might fail
The reasons for a Shopify store failing could end up being a very long list, so I'll keep the primary reasons for failure to the top 12.
- There's no real reason for your site to exist and you have no USP (unique selling proposition). There are already countless stores selling what you sell and they often have bigger budgets and are more established.
- Your marketing sucks and you have very little knowledge of where your customers hang out.
- The user experience of your Shopify store is poor and your customers get frustrated and leave and never come back.
- You haven't differentiated your products from your competitors, meaning you're effectively a “me too” brand that's fighting for the scraps left over by the big names in your niche.
- You don't have enough products in your range to satisfy your users and their needs.
- There's no cross-selling or up-selling, which means you aren't maximising the potential you do have.
- Poor images that don't portray your products in the best light. Remember that people are visual shoppers and images are the 1st thing they'll notice, so if you don't have good product images your customers will think that you don't care too much about your products.
- Your pricing doesn't match expectations. This is especially true for day-to-day consumer goods, less so with bespoke or desirable products.
- No reviews or social proof that give customers the confidence they need to buy from you.
- A small pay-per-click budget that's stopping you from performing targeted advertising.
- No investment in SEO because you either don't have the skill set yourself or don't have the budget. SEO is one of the most powerful resources a website owner can invest in due to the sheer amount of traffic Google Search can provide.
- Your conversion rates are too low meaning that not enough people think you're attractive enough to buy from. And with an average Shopify store conversion rate running at 1.8%, it's easy to see that your profit margin can quickly rise or fall depending on how well your site converts browsers.
This is by no means an exhaustive list and it only touches on each point, but you can quickly see that not getting these points right will result in a higher chance of failure.
At the end of the day, you're not just a product seller, you're in the digital marketing game so you need to think like a marketer and understand brand engagement.
What about Magento or WooCommerce?
In terms of competitors, Shopify faces competition from platforms like WooCommerce and Magento. However, Shopify's success rate and app store offer significant advantages over these platforms. Shopify's overhead costs are also relatively low, making it an attractive option for small businesses and entrepreneurs.
For example, Shopify is a website builder that handles lots of things “out of the box”, unlike open-source platforms like Magento and WooCommerce which require development.
But ultimately, the success of a Shopify store depends on your business model, products, pricing, and how well your marketing strategies are implemented.
And whilst there is no guarantee of success, the potential for revenue generation and growth on the Shopify platform is significant. With the right tools, planning, and investment, a successful Shopify store is within reach for many online retailers.
How does Shopify work?
The Shopify e-commerce platform is straightforward. It's essentially an eCommerce website builder that gives you all of the tools you need to sell directly to the public.
Shopify handles everything from the hosting of your site to the payment processing and everything in between, all you need to do is to choose the Shopify plan that suits you best, load up your domain name and choose your theme.
Is Shopify perfect? No, but no platform is unless you're prepared to spend hundreds of thousands of pounds or dollars on a custom build with expensive developers with a never-ending stream of problems.