Rising tech adoption among small businesses a big opportunity: Shopify

The pandemic has compelled small businesses to build their own online stores, which has thrown a big opportunity for e-commerce technology provider Shopify.

Bombay Sweet Shop had a retail-focused strategy with its store and kitchen at Byculla in southern Mumbai. 

When the lockdown took effect, it reached out to Shopify, which gave it a platform to quickly go to market in a digital manner and create a service experience that it was in control of. 

“I think what Shopify does really well is to understand the ecosystem of start-up brands,” said Sameer Seth, partner at Bombay Sweet Shop. “It is taking the pain points of website and e-commerce management to allow us to focus on what we do best — focus on creating delicious products and creating a memorable experience for our guests.”

Bombay Sweet Shop is among thousands of small businesses that are adopting Shopify’s technology to build online stores. Shopify is at an inflection point in India, as the market opportunities for online commerce in the country are expected to touch $200 billion by 2028 from $30 billion in 2018, according to the analysts. 

Covid-19 has accelerated the shift to e-commerce, with an increasing number of consumers shopping online at a higher frequency.

The number of new Shopify stores in India increased by 123 per cent in the first six months of 2020 compared with the same period last year. There was a significant growth witnessed in a number of small businesses and entrepreneurs from key urban centres and tier 2 and 3 markets.

“Covid-19 has accelerated ongoing changes to the traditional retail landscape, and there is a shift to online shopping,” said Sandeep Komar­avelly, director of international relations at Shopify. 

“After the lockdown, groceries saw a spike for a few months. FMCG (fast-moving consumer goods), fashion and apparel are also among top categories, followed by cosmetics and electronics. In the wake of the lockdown, consumers started looking for hyperlocal buying options and started supporting independent businesses.

Unlike online marketplaces like Amazon and Flipkart where customers buy products, Shopify which is headquartered in Ottawa, Canada, is a software platform visible to merchants. It processes payments, calculates shipping rates and creates an online storefront and mobile application. 

Its market cap surged from $43 billion in September 2019 to as high as $136 billion in September 2020. This is larger than retail firms Target Corp. and eBay Inc. combined.

“We act as the retail operating system to manage, run and grow their (merchants) business,” said Komaravelly. “With Shopify, they can operate and grow their business across their own direct-to-consumer website, online marketplaces, and social networks, while remaining in full control of their business.”

Brands such as Blue Tokai, Nush by Anushka Sharma, Heads up for Tails and McCaffeine are using Shopify’s technology to sell directly to the consumers.

Keeping up with the changing consumer behaviour, one of the businesses is New Delhi-based Claro Agro which decided to create direct-to-consumer arm Sunny India. The channel was set up for supplying products directly to different societies across Delhi, Haryana, Uttar Pradesh, and Bihar. Sunny India reached out to the people of resident welfare associations across Delhi and National Capital Region (NCR) to validate the need and demand the market. After securing their customer base in colonies that agreed to purchase from them, the brand launched its direct-to-consumer online store on Shopify. 

Through Claro Agro’s network of over 25,000 farmers in 16 states and with Shopify, they were able to take their products online in less than a week. This enabled them to start taking orders almost instantly across multiple channels— their native online store, Facebook Shop, and WhatsApp— and fulfil them in a streamlined manner.

These 25,000 farmers in 16 states have been able to sell their produce at fair prices and earn income even during Covid-19 through Sunny India’s delivery channels. The company plans to expand its operations to other states as well in the following months.

Delhi-based coffee brand Blue Tokai was a two-member team when it started. The long-term goal for the company was to make great coffee available to everyone as only so many people could visit their cafes. It chose Shopify (long before covid) as its e-commerce platform to take the business online and be able to make its coffee a household name across the country. Blue Tokai’s entire in-cafe, the coffee range is available on their online coffee store. 

“With the ability to start an online store easily, Shopify has given the Blue Tokai partners more time at hand to find better ways to work together and with their roasters,” said Matt Chitharanjan, co-founder at Blue Tokai. “They are focusing on what matters the most to their brand’s vision and mission - turning a cup of coffee into an experience with carefully roasted beans and slow-brewed coffee.”

Shopify powers over one million businesses in more than 175 countries. It is used by global brands such as Allbirds, Gymshark, Heinz and Staples.

In India, Shopify’s partner ecosystem is rapidly expanding. It now has about 37,400 partners referred as merchants to Shopify over the past 12 months, compared with 23,000 over the 12 months ended September 30, 2019. The Shopify App Store also offers more than 5,300 free and paid apps.

About 86 per cent of Indians have adopted online shopping indicating accelerated adoption of e-commerce across age-groups, according to Shopify’s first annual ‘Future of Commerce Report.’ They have said that Covid-19 pandemic has changed the way they shop.

“Although we have seen the greatest shift online among young consumers, the other key segments including middle-aged and older consumers are also seeing significant numbers starting to go online for their shopping needs,” said Komaravelly of Shopify. “We expect such habits to persist in 2021 as Indian consumers increasingly prefer to support independent brands and local businesses.”