A couple weeks back, Sezzle leadership attended Shopify’s Unite conference in San Francisco. Conferences have largely represented positive opportunities for us to network with other industry players and learn more about consumers in the payments space. Despite missing out on a meet and greet with incubator visionary Erlich Bachman due to a city-wide power outage, this trip was a valuable one. (For those of you who don’t watch Silicon Valley, start catching up!)
The Unite conference marked the introduction of Shopify Pay, a new feature intended to speed up the checkout process, thus increasing conversion for Shopify merchants. Payments related news typically accounts for the majority of my open chrome tabs, and the Shopify Pay announcement is especially relevant to what we’re doing at Sezzle, so this blog post will explore some pros and cons of the Shopify Pay product.
What it does
Shopify Pay lets consumers save their shipping and payment information to speed up the checkout experience on Shopify-powered stores. It’s nearly identical to Amazon Pay. The central goal is to reduce cart abandonment, a figure that is generally accepted to be around 69% across eCommerce.
Users must opt-in during checkout in an online store that has enabled Shopify Pay. They are identified by their email address during subsequent purchases on any Shopify-powered store that leverages Shopify Pay. Once an email address is entered, the purchase is completed by entering a 6-digit verification code that reaches the consumer via SMS. They’ve essentially streamlined the checkout process by reducing the required fields from 16 to 2.
Shopify has already made several bold predictions for this product, including that tens of millions of consumers will use Shopify Pay in the next year. Other claims include an expected 18 percent increase in mobile conversion and a 40 percent decrease in checkout time. Shopify Pay will be available to merchants at the end of May 2017.
What we like
More than anything else, we like Shopify’s approach to improving the checkout flow, especially for mobile. We’ve written a lot about the mobile experience, an area that every payments player is working to improve due to high rates of cart abandonment on mobile. We think Shopify does a good job here. In fact, Shopify Pay’s SMS verification and reduction of information fields is strikingly similar to the user experience we created for Sezzle.
We’re also behind Shopify’s efforts to add value for all the players involved in the checkout process. Merchants want increased conversion, which grows sales. Consumers want a faster checkout that makes the shopping experience better. Shopify Pay works to accomplish both.
In conclusion, designing Shopify Pay as a way to increase its merchant customers’ sales may lead to a strong competitive advantage. However, there may be holes to Shopify’s approach as well.
What we don’t like
We have a degree of skepticism about the willingness of consumers to opt-in to Shopify Pay. I would argue that the majority of consumers don’t know what Shopify is. Even less know which stores are powered by the Shopify platform. Without a consumer-facing brand like Amazon, users may be spooked when their payment information is saved on another merchant’s site that they may not have shopped with before. In addition, while Amazon Pay’s ability to store customer information is relevant to its repeat users, we’re not convinced repeat users across Shopify merchants are nearly as common.
More importantly, Shopify Pay does very little to reduce costs for merchants. The product is designed to facilitate sales growth through increased conversion, but the bottom line also relies on a merchant’s ability to control costs. Managing expenses to grow less than top line growth will amplify returns for store-owners. Payment processing represents an enormous cost for merchants, and payment companies aren’t doing enough to solve this challenge.
What do you think of the Shopify Pay announcement? We would love to hear from you.