Shopify’s almost-marketplace Shop app is approaching a $1 billion GMV run rate. It’s not a shopping destination but drives sales as a by-product of the Shopify ecosystem.
“In Q4, the Shop app nearly reached $100 million in GMV in a single month, underscoring the immense value we can bring to our merchants, a feature that is only available if you are on Shopify,” said Harley Finkelstein, Shopify’s president, said when discussing 2023 Q4 results.
That’s less than half of a percent of Shopify’s nearly $250 billion GMV run rate. Yet it’s meaningful volume given the company’s passive approach with the app so far. Over the past two years, Shopify has added all functionality to complete the Shop app as a fully-fledged marketplace, including adding universal search, recommendations, social videos from brands and expanding to the web. It even allows brands to acquire shoppers through Shop Campaigns ads. But it didn’t try to position or market it as a shopping destination, going as far as to say they “have no plans to be a marketplace” in 2021.
The Shop app inverts the Shopify ecosystem. Instead of discovering brands through ads on, say, Instagram and then going to buy on the individual brand’s website, the app allows shoppers to find brands and products from all of the millions of Shopify-hosted stores. It solves discovery and allows the entire shopping journey to happen in-app. Only checking out from multiple merchants at once is missing.
Shopify’s most notable marketing push for the Shop app was the campaign with YouTuber MrBeast in December 2023. Viewers could go to the MrBeast store on the app to request a free holiday gift. The campaign made it the #1 most downloaded app in the U.S. It has been one of the most downloaded shopping apps for years because everyone checking out on one of Shopify-hosted stores is advised to download it. However, few think of the Shop app as a place to start shopping – given the app’s install base, it is by far the least monetized shopping app.
Rewards drive a lot of Shop app’s sales. Shoppers earn 1% back on purchases made using its Shop Pay online checkout service. These rewards can be redeemed on future purchases but only through the app. Shopify has started hosting yearly sale events that promise higher rewards. On June 3-9rd, Shopify is hosting Shop Week. “Shop Week is our Shop app’s biggest shopping event of the year. All week long, Shop app users can earn up to 20% Shop Cash on over 100 Shopify brands in beauty, apparel, fitness, and more.” In April, Shopify hosted Shop Beauty & Wellness Week with a similar pitch but focused on beauty and wellness brands. Last year, it was a single-day Shop Day.
The Shop app is not the first place shoppers interact with the Shopify ecosystem — that first place is one of the Shopify-hosted stores. Shopify is a software company invisible to shoppers. However, once they check out with Shop Pay, get nudged to download the Shop app, and get Shop Cash rewards, Shopify breaks the fourth wall and becomes a consumer-facing brand.