Since the early 1800s people have been farming other people’s land and paying land owners for the privilege.
There are countless examples of businesses achieving success on a platform’s user base, only to be wiped out by opportunism, circumstance, or malice. For those of us that play in the ecommerce space, unless you *are* the platform, you’re beholden to it. Most successful companies on Shopify have launched integrations with multiple platforms. Taking on a new platform is no small task and it shouldn’t be an impulsive decision, but it’s a requirement for building resilience into your business.
Since the early 1800s people have been farming other people’s land and paying land owners for the privilege. Sharecropping, the name for this rental-style of relationship has lead to highly sustainable businesses but it hasn’t lead to the creation of any empires. At least not among those farming since the absence of land ownership puts a very real ceiling on farmer’s value.
Unpredictable harvests, landlords displacing their tenants, and the lack of lasting-asset accrual together make for a risky endeavour for the farmer. Meanwhile, even the benevolent landlord is insulated from risk as they allow their land to make them money. In 2019, land is still being rented with the same risks, but instead of farmers pursuing bushels and barrels, some are tilling digital land and deal in bits and bytes. Regrettably for them, the risks are just as real. We know these landlords as platforms.
This parallel between servicing a platform’s audience and sharecropping has been made before, but when we see the downsides happen, the communities always seem caught off guard.
Apple (predictably) released Sherlock in the early 2000’s and supplanted Watson, the third-party app. This year, Apple’s launch of Sidecar puts companies like Duet Display in the same boat. Twitter tightened restrictions on third party apps in 2012 and locked down key APIs in 2018, cutting the lifeline of household names like Tweetbot. Facebook kneecapped Zynga’s growth and revenue and they’re still a fraction of their IPO price (although survival might be worth celebrating in and of itself).
There are countless examples of businesses achieving success on a platform’s user base, only to be wiped out by opportunism, circumstance, or malice.
There are countless examples of businesses achieving success on a platform’s user base, only to be wiped out by opportunism, circumstance, or malice. For those of us that play in the ecommerce space, unless you *are* the platform, you’re beholden to it.
If that describes your business, there are ways to be protected and the best first step is to spread that risk across multiple platforms.
The Shopify Risk
The startup graveyard is littered with the rotting corpses of companies who said their landlord was different.
There’s an important preface here: Shopify has historically been a fairly altruistic landlord. The company places immense value in the platform play and they’ve been good stewards of that platform. This has enabled an insane amount of growth in the ecosystem, but remember, they’re a $40B business. They have shareholders with priorities and product teams with priorities; a relationship with your friendly neighbourhood Partner Manager won’t mean much when those immovable priorities crash headlong into your business. The startup graveyard is littered with the rotting corpses of companies who said their landlord was different.
So how can your platform kill you? Let me count the ways.
Shopify has yet to have a true “Sherlock” moment. When Shopify released Shopify Shipping back in 2015, apps like Shipstation continued to thrive. This seems obvious in retrospect – Shipstation serves a very different type of merchant than Shopify's in-house solution with things like bulk order processing and multi-channel fulfilment. However, even apps like Shippo that are much simpler products and more in line functionally with Shopify Shipping also continued to do well.
A lot of this is attributable to Shopify "shining a light" on the problem. When Shopify releases a solution, it does a great job of surfacing that corresponding problem as a "job to be done" for merchants. Some of those merchants will be happy with the solution Shopify builds, but some will go looking for other options.
That being said, it's naive to think that a Sherlock won't happen eventually. The announcement of Shopify Email caused sideways glances in the ecosystem. It’s likely closer to Shopify Shipping in terms of how comprehensive it is (or rather, isn’t), but if it does achieve a certain level of functionality, it could make life exponentially harder for existing ESP solutions on Shopify.
Platform integrations by their very nature depend on APIs from the parent platform. Everyone who's built on Shopify knows that changing APIs make seamless integration a moving target. A subtle API change to Shopify can mean substantial work for an app, up to and including the need to rebuild the integration. What if that delays your own product roadmap enough to let a competitor move in?
Worse, what if an API is completely deprecated? Data stops flowing, and there's no path forward. This kills the app.
Shopify has gone through a few mindset shifts over the years.
A couple of years ago, Shopify got themselves worked up about Checkout replacement. They still treat it cautiously, but back then it felt like there was a very real risk that any app replacing Shopify's checkout with their own was at risk of dying. Consider the impact of this:
- Subscription billing apps? Dead.
- Some digital download solutions? Dead.
- Completely customizable generic checkouts? Definitely dead.
App Store Changes
When the new App Store launched in 2018, almost everything about the merchandising experience changed. Being one of the more popular apps in the App Store used to mean prime placement in a couple of high-traffic spots. This advantage almost completely went away with the new front page and ever-amplified focus on categorization, search, manual curation, and automatic recommendations.
This is scary because it's not even a problem that can be solved with engineering. This means either completely changing how you market your app in the App Store, or finding new growth channels outside of it.
Core Platform Changes
What if the way Shopify interacts with apps broadly just ... changes? Currently, you have the option to acquire customers outside of the App Store and bypass some of the rules and terms that come with being a published app. For example, there are apps like CartHook that have thrived by leaving the drama of the App Store behind them.
There have been rumblings that this option may go away. What would happen to these players if Shopify got rid of the option of not listing your app, especially if your service does something that isn’t compliant with the app store in the first place?
Diversity beats Dependency
The word "platform" is used to describe these ecosystems for a reason, even beyond the relationship between technologies; it extends to the relationship between businesses. Shopify’s platform is the foundation many have built their technology businesses on, but you wouldn’t build a house on a foundation that could decide your house shouldn’t be there anymore. Why should your business be built under the same conditions?
Building a business is – or should be – as much about resilience as growth.
Building a business is – or should be – as much about resilience as growth. Changing market conditions can help you to grow, but they can also cripple your business. In our particular example, the best way to counter this is to rely less on a single platform. This isn’t to say that you abandon the platform model – the benefits are too strong – but to distribute that risk across more than one of them. Resilience is the key benefit, but there are other reasons too.
From a growth standpoint, the Shopify tide lifts all ships but the inverse could also be true.
Although Shopify may be the dominant platform right now, other platforms have customers too. BigCommerce has tens of thousands of merchants, and they're on average more successful than Shopify merchants.
Building an additional integration on a platform like Salesforce Commerce Cloud exposes you to enterprise class merchants that rival the Shopify Plus user base. On top of getting access to that market, there's certain halo effects of having an integration there. Because it's a more enterprise platform, it can help show the legitimacy of your offering, even to users that aren't on that platform.
Skills across platforms are mostly transferable with minor tweaks. You'll find most of your marketing and sales strategies that worked on one platform generally work on others as well, so from the perspective of user acquisition, there's not that much more to learn when you decide to ask a new platform to dance.
The Risk Asterisk of Adding Platforms
My mother always told me ‘if it were that simple, everyone would be doing it.’ This is especially true when it comes to taking on new ecosystems and their platforms as there are inherent downsides to taking a multi-platform approach too.
Learning the technical and bureaucratic intricacies of a new platform is a labour of effort and development time – especially for a first integration. Your best case scenario is that you're swapping out one API for another (to oversimplify things). In other cases, 1:1 API compatibility will be hard to find and limits on functionality will force you to make decisions around which features to make available on which platforms.
Supporting the integration can also be a struggle – any developer that values support will know that on top of issues in their app, they spend quite a bit of time dealing with how that app interacts with its platform host. Multiply this issue by the number of platforms you're on, add a little bit for context-switching overhead, and it becomes easy to see that support debt can leave you exposed. We haven’t even talked about maintaining separate sets of documentation for each platform, which can be a herculean task in and of itself.
Companies Outlast Apps
Most successful companies on Shopify have launched integrations with multiple platforms. Even the poster-child of the Shopify ecosystem for years, Bold Commerce, has started to launch product on BigCommerce's platform. Some, like ReCharge, have managed to hold out and stick to Shopify 100% for years.
I don't know of any extremely small companies – think just a few people – who have successfully moved to a multi-platform approach. Taking on a new platform is no small task and it shouldn’t be an impulsive decision. You do need resources and it needs to fit a plan so that your team remains aligned when it gets hard (and it will). This isn’t a low hanging fruit and you’re not simply reaching higher on the same tree; you’re digging out another ladder so you can start to harvest from an entirely different farmer’s orchard. When winter comes (and for some of you, it will) you’ll be glad all of your apples weren’t from one basket.
Footnote: Your moral duty to derisk
If you employ 20, 30, 50, 100 people, you’re betting their livelihood on the platforms you work with. What’s harder than adding platforms? Wishing you did if you have to lay your team off because you didn’t.