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What Shopify Is Doing to Help SMBs Online and Off

More than half a million businesses, many of them small outfits, operate on Shopify’s e-commerce platform. To better serve their needs and grow its own finances, Canadian tech star Shopify is rolling out several new features aimed at strengthening an end-to-end commerce platform.

Shopify’s latest earnings, which preceded a flurry of product and services announcements, signal that the company is already on the right track. First-quarter revenue of $320.5 million represents a 50 percent increase over the comparable period in 2018, and Shopify reported 46 percent growth in gross profit dollars to $180.3 million. The firm credited its Shopify Capital and Shopify Shipping offerings as the twin pillars supporting the 58 percent growth achieved in merchant solutions, pointing out that 40 percent of eligible U.S. and Canadian users took advantage of the shipping feature in the quarter.

One of the ways Shopify is “making commerce easier, more accessible, and better for everyone, everywhere,” as CFO Amy Shapiro said when the company released its first-quarter financials Tuesday, is by enhancing its suite of point-of-sale tools, in a nod to the increasing number of retailers playing in the offline space in addition to their online presence. The Shopify Tap & Chip Card reader is EMV and PCI compliant, supports Visa, Mastercard, American Express, Discover, Apple Pay, and Google Pay, and requires users to accept Shopify Payments in store. It’s an update from the Shopify Chip and Swipe Readers the company first debuted in 2017, and similarly integrates with Shopify POS. The new hardware enables Shopify merchants to accept contactless, NFC-based payments inside their stores.

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Mobile payments options, like Apple Pay and Google Pay, haven’t been widely embraced, and the U.S. lags global peers in acceptance, usage and availability of contactless cards, though that could be changing this year. More than 20 percent of in-person transactions are contactless in Australia, Canada, South Korea and the U.K., according to a 2018 A.T. Kearney report, whereas just 5 percent of cards issued in the U.S. were contactless at the time the report was published.

However, A.T. Kearney believes this year American banks will launch “large scale” contactless card rollouts and by 2022, 56 percent of U.S. cards issued won’t need to be dipped into a payment terminal. Taken together, these global and North American trends could be behind Shopify’s hardware upgrade. Plus, tapping a card to a terminal processes payments more quickly than the alternatives, meaning retailers can reduce queues by shuttling customers through checkout more quickly.

Shopify rounds out the POS experience with a dock that can support the reader on a countertop or decouple to serve customers anywhere in the store. The stand accessory, on the other hand, is designed to live on a countertop setting for the “fixed” checkout display that serves as a visual prompt to consumers that it’s time to pay.

In a statement detailing the new hardware, Shopify chief product officer Craig Miller acknowledged the growing number of young online brands making the leap into the physical world.

“Digitally native brands want to build loyal audiences through retail locations, and we’ve designed the best products to help them achieve this success,” he said.

As it invests in ways to improve the physical experience for its users, Shopify is also strengthening its ecosystem around advertising and marketing. In October, the company first debuted native advertising integrations with Google and Facebook, which offer the greatest—and more granular—reach. Now, users are able to build and deploy dynamic Facebook ads and create their own campaigns for the Snapchat Story format, showing consumers anywhere from three to 20 individual “snaps” that highlight specific products.

The advertising push on social networks could help brands better connect with younger consumers target the right prospects, all while managing their out-of-pocket costs.

In the statement announcing Shopify’s earnings, CEO Tobi Lütke said, “The information age is rapidly changing how commerce is done and by whom.

“By harnessing these changes to empower entrepreneurs, Shopify is meeting a need that is not only global and growing, but that is likely to continue growing for the foreseeable future,” he added.