Shopify is working to encourage more physical sales for merchants that don't have physical stores.
The Ottawa-based e-commerce software and payments hardware company has agreed to work with Vancouver-based thisopenspace, a marketplace for short-term retail space for brands or entrepreneurs to establish pop-up shops. In addition, Shopify is offering a Chip & Swipe card reader in the U.S. as a means of further enabling sales in physical settings.
"It is the physical space needed, without the high overhead costs and investments that have previously been the main factor keeping merchants away from selling their product and extending their brand into the real world," IBK Ajila, director of retail engineering at Shopify, said of the new arrangement. "We know that today's consumer is looking for a multichannel experience. They may find an item online, but want to see it in-store, and may ultimately purchase it online."
That's a pitch that Shopify hopes will resonate with merchants that test thisopenspace to gauge the success of venturing offline.
And it could work, considering between 80% and 85% of new businesses opening within the last couple of years started online, said Steve Mott, principal of BetterBuyDesign, a Stamford, Conn.-based consulting firm.
"It makes perfect sense, because about half of those merchants have actually gone into or tried POS," Mott said. "It is a great idea for Shopify to offer a de facto available infrastructure on a temporary basis."
While Shopify has created "a clever way to reduce the cost for a merchant to move into a physical presence," the challenge for Shopify e-commerce merchants will remain the same as any merchant faces, said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group.
"It's all location, location, location," Sloane said. "Malls are going belly-up with fewer traditional merchants or bedrock stores, so if the Shopify merchant has a product associated with people in a mall, it could be a good place for them to try."
Conversely, Shopify also serves merchants with a strong brick-and-mortar presence who decide they want to expand market share by establishing an online presence.
The company recently opened Shopify Payments, its own payment gateway, in New Zealand. The system gives merchants a payment gateway to accept credit cards, but also to use other payment options like Shopify Pay and Apple Pay. More than 300,000 Shopify merchants worldwide use Shopify Payments.
"Physical retail is not going to go away," Ajila said. "Merchants are realizing that offline selling is all about the experience."