Shopify Launches Marketplace to Compete With Amazon, Others

By Ranjit Mulgaonkar and Maya Mulgaonkar

For the longest time, I wondered when Shopify, the most dominant e-commerce platform would launch its own marketplace. Last month, it happened: Shopify launched an AI-driven, web-based marketplace — Shop AI — that competes directly against Amazon at shop.app/search.

Some Facts About Shopify

• If all its merchants were treated as one, Shopify is the second-largest e-commerce retailer in the U.S.

• Globally, Shopify is used by 4.36 million online stores in 175 countries, with 2.6 million stores in the U.S.

• Shopify Plus, a higher end version of Shopify specific to larger brands and large-scale businesses, has 32,181 Shopify Plus stores across 175 countries — 18,767 stores in U.S.

• More than 700 million consumers shop in the stores on Shopify platform, generating more than $200 billion in gross merchandise value. Some of the top brands on Shopify Plus include Kylie Cosmetics, Skims, Sephora, Red Bull, Heinz, WWE, Allbirds, Lindt, Fitbit, Hasbro, Netflix, and Tesla.

Shopify Marketplace

How Is Shopify Marketplace Different From Amazon?

There are a few differences between Amazon and Shopify marketplace implementations. Amazon sellers list and sell products on Amazon Marketplace, and if the seller has a trademark, they get a storefront on Amazon. The consumer can buy individual products from the product listing or by visiting the seller’s storefront. If the consumer clicks on any products within the storefront to buy, they are taken to the individual product listing on Amazon to buy.In other words, Amazon Marketplace keeps the consumer within Amazon platform throughout the search, browse, and shopping experience.

Shopify's consumer search shows products from multiple merchants.

Products from any Shopify stores are available to any consumer on the web by visiting the individual stores online. The brands can also sell products on marketplaces like Amazon, Walmart, eBay, Etsy, and social media platforms Facebook, Instagram, TikTok, and Pinterest where Shopify sellers can generate incremental revenue.

Shop AI is an overlay on all the Shopify stores where the consumers can buy products from multiple sellers (merchants) seamlessly in a single shopping-cart transaction. The consumer can search, browse, and shop across all stores with a unified shopping cart. The consumer can also visit the merchant’s Shopify store and purchase products from individual merchants.

Shop AI incorporates all products sold by stores using Shopify’s e-commerce platform. The user interface contrasts Amazon’s cluttered and busy UI. Its minimalist and simple design will allow shoppers quickly find and purchase products. Shopify is also using AI to provide personalized product recommendations based on customer’s past browsing and purchase history.

Consumers can visit a merchant's store to view all products.

The feature that truly makes it unique and is part of the marketplace’s name is its AI shopping assistant, which appears as a sidebar and can be used to refine the product search. The AI shopping assistant can be turned off if the consumer wishes.

A universal shopping cart allows shopping from multiple Shopify stores.

What Does This Mean?

Even with the marketplace functionality, Shopify does not become a retailer but simply an easier way to shop across millions of brands with universal search and shopping cart. On the other hand, Amazon is a combination of retail and marketplace, since Amazon sells products as a retailer from brands (wholesale) as well as 200 of Amazon’s private label brands.

If you’re interested in hosting an online store with Shopify and having your products appear in its new web-based marketplace, their plans start at $5 per month including a free-trial opportunity.

Ranjit Mulgaonkar is founder and CEO and Maya Mulgaonkar is vice president of account management at Flatworld Group, a full-service Amazon agency that helps brands to be successful on Amazon. They can be reached, respectively, via email at ranjit@flatworldgroup.com and maya@flatworldgroup.com. For more on Flatworld Group, click here.