Shopify Changes Revenue Sharing Model

Shopify is set to launch a new revenue-sharing model for developers and speed up transactions, as the COVID-19 pandemic continues to pit the Ottawa-based company against online retail giant Amazon.com.


Tara Deschamps
Canadian Press

from 1he is août, Shopify ne prendra aucune part du premier million de dollars de revenus que les développeurs réalisent chaque année sur la gamme de fonctionnalités de réservation, d’outils d’abonnement et d’autres produits produits logic de leçél’ils E-Commerce.

Shopify previously had a 20% share of all revenue generated by each of the approximately 6000 developers who create and sell tools that can be integrated and used with Shopify systems It only takes 15% once you cross the first million dollar bar.

“We think developers can build great businesses on Shopify, so we hope to report that the potential revenue is over $1 million,” said Ian Black, General Manager of Canada, Shopify.

Shopify unveiled its new revenue-sharing model at its annual Unite conference, which was held virtually due to the COVID-19 pandemic.

The health crisis has opened a window of opportunity for Shopify, which helps small businesses and big brands like Netflix, Kylie Cosmetics and Budweiser run their online stores.

But with dozens of businesses temporarily shutting down due to the online pandemic, competition has intensified and Shopify has been increasingly promoted as a competitor to e-commerce giant Amazon.

Mr. Black shrugged off the competition, saying, “I don’t know if that was really the goal. But he also admitted that the revenue split announcement was designed to attract more developers.”

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“We know that a lot of the innovation that happens online is attributable to developers and built by tech entrepreneurs,” explained Mr. Black.

“It’s a place where there are a lot of options, but basically Shopify wants to be the company that allows the most innovation in commerce.”

Amazon announced in June that it would take a 20% stake from developers who made up to 1 million in the previous calendar year. Those who earn less than $1 million in revenue from the Amazon App Store will also receive credits worth 10% of their earnings, applicable to the company’s web service offerings. Previously, Amazon held 30% of the shares.

Apple and Google also reduced their share of the first $1 million developers received, from 30% to 15%.

faster transactions

In addition to changes to the revenue-sharing model, Shopify announced on Tuesday that it will process payment processing twice as fast and will now be able to process seven times the volume of concurrent purchases.

This means that individual stores will be able to process tens of thousands of cases per minute, which is equivalent to the sales volumes Shopify saw on Black Friday and Internet Monday in 2020.

Payment tenure is critical for merchants, as research generally shows that customers are more likely to abandon their purchases if the transaction takes too long.

Shopify will also allow developers to create apps that can be used directly in the checkout process, to enable overselling and donations, more options to change the look of storefronts, and integration for third-party payment providers.

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Starting Thursday, its API will be able to facilitate international pricing, estimate the cost of products with taxes and discounts, manage pre-orders, and schedule local pickup.

“The announcements we’re making this year are truly the biggest set of infrastructure innovations in Shopify’s history, as well as an overhaul of most of our developer tools,” Black said.

“Together, it’s all about giving developers and marketers the creative power and flexibility to control their brands’ online experience.”

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