From SNOWBOARD shop to one of the biggest commerce platforms in the world

A breakdown of the growth strategies used to propel Shopify’s exponential growth

Most of us today know what Shopify is, however not everyone knows how they started. So before we break down their successful growth strategies, here’s a quick intro on how it all started.

The Beginning

It all began in 2004 when founders Tobias Lutke and Scott Lake wanted a simple and user friendly tool to build an online store for their third party snowboarding brand called Snowdevil. In the early 2000’s there weren’t many good user-friendly and simple e-commerce platforms to build an online store, so they did what any entrepreneur would do, and solved their own problem!

With a computer programming background, Lutke decided to build the online store infrastructure from the ground up, using an open source web application framework called Ruby on Rails. They launched their Snowdevil store 2 months after developing it and had a profitable winter season selling snowboards and gear in 2004.

After they got a lot of inquiries about how they built their website, they saw an opportunity to help more people sell online. They noticed far more interest in helping other merchants develop their own online stores than the interest in their snowboard store. So they refocused on creating a product that would help people easily set up their own online stores. In June 2006, the founders launched this platform as Shopify.

Here's a basic timeline:

Growth Strategies

Growth Strategy 1: Subdomains (2008)

In 2008, Shopify focused on building individual tools to solve problems for store owners. They targeted keywords of common questions searched when setting up ecom stores, and created tools/content to help. So while they were becoming a platform to conveniently develop online stores, they were focusing on developing a brand that helped solve many problems to make the lives of ecom founders easier. 

Their subdomains dominated google’s first page, and generated tons of organic traffic. 

Their first subdomain was called “Burst” by Shopify, which was a website helping startups find free stock photos for their stores. "Free stock photos" at this time, got almost 40,000 average monthly searches, for which they were able to optimize their site to rank first on Google.

Their next site was called Exchange, which was a subdomain marketplace helping entrepreneurs buy and sell ecommerce stores. This page also ranked first on Google under the keyword “website for sale”, which got around 4000 monthly searches at the time

At this point Shopify was getting HUGE organic reach

Shopify went on to make 21 other tools, including their business name generator, which was their most successful tool. It isn’t a separate subdomain, but is a free tool that is ranked first for the search “business name generator,” which is searched over 33,000 times/month. Today this site has done so well that it’s Shopify’s 5th most popular organic and paid keyword, making it one of the few non-branded keywords to crack the list.

Here’s a list of Shopify’s top tools.

A key takeaway from this is that all of Shopify’s subdomains had Shopify branded footers. So while people were searching the internet for common questions or help, they started to stumble upon a brand called Shopify with a variety of tools and helpful content. It was at this point that many noticed who Shopify was. 

The snowball effect was all of these subdomains working together to provide value by solving problems and ultimately increasing Shopify’s brand awareness and SEO performance. This is how their brand took off.

Another key takeaway was the strategic effect or business value this all had for Shopify. Shopify was positioning themselves as a key resource for helping ecommerce founders. So when it came time to build an online store, Shopify presented themselves as a trustworthy and reliable brand for store owners to use.

This was Shopify’s effective strategy for skyrocketing organic growth and mass market top of funnel brand awareness, while boosting their SEO.

They truly took content marketing to another level, and is a HUGE factor that propelled their rapid growth.

Growth  Strategy 2: Viral Contest (2010)

In 2010, Shopify launched their first build a business competition, rewarding $100,000 to the winning teams. The background behind the contest is that Tim Ferris (a tech startup investor) and Shopify CEO Tobias Lutke wanted to collaborate on something. So they came up with the idea or a contest

Here's how the conversation went

“Tim said, ‘Yeah. We should do a contest. How about we give away $100,000?’ 

I almost fell off my chair. [That was] a lot of money. Then you’re thinking, that might work. It’s strange to many people; we’re a start-up giving away $100,000 in prizes.”

And just like that, their famous build a business competition was formed!

They decided for the contest to be successful, they needed to generate 600 new accounts. It was a massive hit, turning out better than expected, doubling their goal with 1378 new signups.

The contest generated $400,000 in revenue for Shopify and $3,543,191 for store owners in year 1. This was the big push Shopify needed to boost signups and encourage customers to try their product

The contest takes place every year and acquires thousands of new customers.

The real power behind it was the impact that the competition had. In Lutke’s words

“These people have built life-changing businesses using Shopify and wouldn’t have done so without the extra motivation from the contest.”

The contest motivated many people, helping them acquire new customers that they would have never been able to do without it

Tke key takeaway is that they weren’t afraid to think big and take the risk.

 Strategy 3: “Sticky” 14 day free trial (2010)

Free trials are a well known growth hack and customer acquisition strategy - truly nothing new. However the way that Shopify's product is set up and the ability to work with no restriction in their free trial, led to Shopify’s trial being particularly effective in converting customers.

The catch - by the end of the trial, owners likely invested a lot of time and work developing their “dream business” and possibly making their first sales. They actually achieved something tangible and made good progress on the trial. By the time the trial was over, owners had likely set up their store, selected a domain, uploaded products, photos, product descriptions, possibly even started running ads, and maybe making their first sales. The excitement of starting your online store led excited founders to put in a lot of work right away. By the end of the trial it was so hard for users not to opt into a paid plan.

After all that work, owners weren’t going to just close up shop and walk away.

You can also see Shopify’s main CTA was to try the free trial and only later hope to get owners to commit to a plan. The big blue button made this really clear, with the text showing there is no commitment to give it a try. They were confident that if they can get you to commit to the trial, they could convert you to a paid plan later.

The key to this process was getting their users to start using their product, invest time and energy into it, making progress using their product and acquiring them as paid customers later once their dream is up and running on the internet.

Strategy 4: Affiliate program (2012)

Shopify built a highly generous partner program, with 3 ways to become a partner.

Shopify gave generous incentives; 20% monthly commission for referrals, 70% commission for building and selling a theme (on the theme store), and 80% commission on shopify apps sales on their marketplace.

These high paying incentives were key.

However the program was limited. To become a part of it, you had to have worked in ecom and have design skills. So they developed an affiliate program, where if you get others to sign up with your affiliate link, you can get paid.

The purpose of the affiliate is to reach people outside of shopify's current/normal audience.

It also gives Shopify a wide range of ways to promote their product/service.

It had two main growth components: 

1. Turning their users into an external marketing team 

2. Encouraging people to innovate and create new things that make Shopify even better.

These programs had big potential to reward their users, while it helped Shopify in becoming a more valuable and helpful platform.

The key was their very generous incentives/rewards.

Shopify Today:

- Total global platform sales are round $100 billion

- 800,000 stores powered by shopify

-Valued at $150bn 

Keys to growth success:

- Knowledge of content/organic marketing

- Company wide growth perspective

- Thinking big

End Notes

I hope you enjoyed this thread and were able to learn something new! 

Comment below!

Do you run a shopify store? If you do, comment the link to your site below!

If you don't, what's your favourite store powered by shopify?

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