Harley Finkelstein is looking to future-proof fashion and retail.
If that sounds like a big job, it is. But he’s backing up the ambition with the sprawling and technologically savvy platform Shopify.
With Finkelstein as president, Shopify has helped shift the landscape in fashion and grown rapidly, providing e-commerce services to a range of companies, but especially championing smaller independent businesses. Last year, the platform powered sales with a gross merchandise value of $120 billion — a nearly 100 percent increase from a year earlier as the pandemic sent more shoppers to e-commerce.
In a conversation at the Fairchild Media Group Tech Forum with WWD editorial director James Fallon, Finkelstein laid out how Shopify is still powering e-commerce for the little guy, but also looking at so much more.
“If you have $29 a month and can use email you can easily build a store on Shopify in under an hour,” Finklestein said. “What people don’t necessarily realize is that Shopify has grown far beyond just e-commerce. We now have an offline commerce product that powers physical stores.”
The company also helps brands sell all over the web, including through Instagram and Google, and offers a variety of services and expertise to optimize along the way.
Finkelstein described Shopify as “the world’s first retail operating system” and said it’s a system that is helping companies break down traditional online/offline barriers as the focus sharpens on consumers.
“When you use Shopify, you want to sell a product no matter what channel you use,” he said. “That vision lines up with the future of retail, the future of commerce, which we believe is going to be retail everywhere.”
It’s a very post-omnichannel take on the industry.
“This idea of ‘omnichannel’ as a term will be very similar to saying ‘color TV’ in a couple years in that it’s just going to be obvious that everyone is selling anywhere they have customers. And we really want to be the entrepreneurship company, but also want to provide a product that future-proofs brands’ businesses for what retail will become later on.”
Shopify already helps a long list of big-name brands selling through its platform — including Allbirds, Dior, Comme des Garçons, Kith and many more.
“You would have no idea that they’re powered by Shopify,” he said. “We’re a brand behind the brand.”
And a big one, too.
“When you double click on the backend, you begin to realize that Shopify is the brand powering the stores of consumers’ favorite brands and right now that would make us, if we were a retailer, the second largest retailer in America online,” Finkelstein said. “We’re about 9 percent of all e-commerce.”
To get to that scale, and to keep moving forward, Shopify has tried to stay ahead of the curve. So far, it’s been successful, lending more weight to Finkelstein’s take on the future.
“We have an integration with walmart.com because we see some of our merchants might want to sell on Walmart,” he said, referring to the giant discounter’s push to take on Amazon with an online platform business of its own. “It’s being cutting edge [at Shopify], because we don’t know exactly what every merchant is going to require. The idea is to always be one step ahead of where the trend is.”
By bringing so many brands onboard and cobbling together such a big e-commerce business, Shopify can bring economies of scale that smaller merchants could never realize.
“We’re trying to level the playing field by leveraging these economies of scale, but instead of keeping them for ourselves, giving them directly to the small businesses and the brands,” Finkelstein said.
About 7,000 people work at the company. Among them are 2,000 people who act — online, over phone calls and through chats — as business coaches. They help merchants, for instance, see they’re getting traffic on Pinterest and then ramping up advertising there, via Shopify.
So at Shopify, Finkelstein is thinking big and looking at how the industry at large is evolving while its business coaches are working one-by-one, helping small brands find and connect with customers in new ways.
Business has been good over the past year as the pandemic had so many locked down at home and clicking away the hours online, but Finkelstein said businesses in general had two types of reactions to the tidal wave of disruption.
He said some merchants rushed to shore, while the “resilient entrepreneurs…grabbed their surfboards and surfed the tidal wave because they saw there was opportunity. They completely rethought their business model.”
The online rush, which is expected to stabilize as the pandemic eases in markets with access to vaccines, saw e-commerce go from about 15 percent of retail sales in the U.S. to 25 percent in a matter of months. Just where that tops out is still anyone’s guess, Finkelstein noted China is about 50 percent e-commerce now, excluding grocery.
But that’s a view that might put the emphasis in the wrong place.
“I don’t think percentages actually are the right way to think about it,” Finkelstein said, pointing to new companies such as Allbirds that run their online and offline businesses as one single operation instead of worrying about one taking from the other.
“Channel conflict does not exist for modern retailers, modern brands, but it does for legacy brands,” he said, adding that needs to change. “Channels don’t matter, what matters is deep empathy for what your customer wants and I think companies and brands, the ones that deeply understand that, they’re the ones that are kicking butt right now.
“The pandemic has taught customers that we can buy however we want to,” Finkelstein said. “I don’t think we need to get attached to one particular channel. I think we need to be attached to how our consumer wants to purchase.”
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