7 Ways Agencies Are Reacting to Continuing Rise of Shopify
Having had a perch in the last 20+ years to eCommerce, it's been interesting to see the (primarily) Magento and formerly-Demandware agencies adjust to the rise of Shopify.
How has the rise of Shopify affected the agency market in North America?
Reduce Cost of Implementations:
Shopify moves things that used to be coding to configuration. The cost of new implementations in the old regime from routinely lower-middle six-figures, to routinely middle five figures.
Reduce the Need for Maintenance Agreements:
Maintaining a Magento or Demandware installation is more time-consuming. Shopify is not. Virtually anyone can install a new app. True multi-tenant SaaS has helped this decline.
This is the real killer. Most agencies were happy to give up build sizes in exchange for maintenance agreements. Many brands don't understand why these are needed when Shopify does all the hard work.
Why is it challenging for agencies to adjust to the rise of Shopify?
This has put significant pressure on the business models and staff of many agencies and has accelerated consolidation. Agency life is a game of expertise. It's hard to afford and capture expertise in more than 1-2 specialties.
What strategies have agencies adopted to adjust their business models?
There have been a few strategies I have seen to adjust business models.
Restaff and move to Shopify Entirely
In other words, stop fighting the tide and follow the growth. This means lower margin and higher volume.
Add App Development As a Service
Each of the eCommerce platforms, even Shopify, need new apps. Brands need apps that are not available publicly for all kinds of reasons - mostly to interact with custom data and internal workflows - particularly acute in the European market with GDPR continuing to disrupt the app ecosystem.
Specialize in B2B
While B2C eCommerce is very competitive, B2B is more open and still nascent. Plus, workflows can get very custom. A lot of the action in North America not on Shopify is in B2B.
Add Strategy, CRO, and other Digital Marketing Services
This can work if you have expertise and credibility in the space. I do not believe this is a viable approach if you are a simply reseller.
Specialize in Headless
Essentially this is moving up-market to more complex installations of Shopify, or other headless-oriented platforms: upper mid-market and Enterprise. Viable, but the space is already beginning to get crowded.
Ride Multiple Horses
Most agencies I know that try to work in the Shopify world and SFCC/Magento at the same time are really still just Magento agencies relying on maintenance agreements trying to grab the occasional Shopify deal. This usually does not work too well.
Sell out
Many agency owners don't recognize the world they used to inhabit any longer and are seeing this as an opportunity to sell. There is a changing of the guard.
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