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- Shopify Editions '24 - Everything You Need to Know (Week 2)
Shopify Editions '24 - Everything You Need to Know (Week 2)
I read through hours of documentation and distilled it down so you don't have to...
Alright, we’re back for Round 2!
Time really flies. Felt like I just hit publish on my first send. As I gathered my thoughts this past week, I realized I have way too much to say to condense my commentary into a single weekly push. I’ll do my best.
Table of Contents
The chief focus this week is recapping Shopify Editions (Winter ‘24) which just released on Jan 31. Shopify delivers updates at warp speed and with volume that could sink you. I’ll snowplow the driveway for you so you can see a clear road on which updates will drive the biggest impact for DTC brands. If you’re any form of marketer serving DTC brands, you better pay attention to Shopify updates. Yes - it directly impacts you.
Before we dig in there, I’ll be giving you a quick update on macro.
Without having a pulse on what’s happening in the world, I don’t know how anyone can effectively navigate their job or their business. Super dry stuff - I apologize if this bores you - but necessary.
Consumer spend growth and confidence index are my favorite indicators of DTC category strength. If consumers are generally spending less than the year prior and are unconfident in their financial situation, it may not actually be your bid strategy or creative that’s dragging your brand’s performance. 😉
1. Macro Update!
Consumer Spend Growth YoY:
Consumer spend YoY was mostly negative in January, marking the worst month in over a year! This has a direct correlation to store revenue.
December finished super strong…maybe a ton of spending was pulled forward at EOY and caused January to suffer? Just a thought.
We still have negative headwinds for the consumer: resumption of student loans, weak consumer credit, high-interest rates, employment condition risk, and geopolitical uncertainty.
We’re not out of the woods yet. Keeping a close eye on this.
Eye on the Fed
Why does Jerome Powell (the man below) matter?
He’s the chair of the Federal Reserve. His policy literally dictates if we’re in a tight or loose economy.
This directly impacts consumer confidence, spending, and retail performance.
Jerome Powell, Chair of the Federal Reserve (& currently Grim Reaper)
This past week, the Fed met...the main takeaways:
No immediate interest rate changes
Base case is NO rate cuts in March (as was previously expected) unless a catalyst presents
1st rate cut expected in June now (March ~40% chance)
Slowing pace of Fed asset sales could begin in April
What does this mean?
Not great for the consumer - Behavior likely to remain the same for longer
If you're invested in the stock market, this isn't great news as there may now be delayed gratification. BUT, if the Fed slows the pace of asset sales in April, that is a positive tailwind.
If you're in the money market, you are likely to get your beautiful yield for longer.
ALRIGHT, now on to the more exciting stuff… 😍
2. Shopify Editions (Winter ‘24) - Distilled!
I’m going to be breaking this down for you in 3 Categories:
Conversion Optimization
Marketing
Operations
Sorry devs- I’m not going to be covering more boring stuff today.
CONVERSION OPTIMIZATION
Combined Listings - you can now combine products that have multiple colors/styles under one parent listing - each with its own description, gallery, and URL via the Combined Listings app. Exclusive to PLUS merchants.
Combined Listings App (Shopify Plus exclusive)
Easily Access All Shopify Media Files - images, vids, and 3-D models can now be accessed in a single file picker. Create or edit products without having to re-upload media. In the past, not having this drove me nuts.
Smart Search - AI-powered storefront search expands the capability to understand the intent behind a customer’s search. Customers can use more natural words and phrases, and describe what they’re looking for contextually & get more relevant results. Exclusive to PLUS merchants via Shopify Search & Discovery App. Example: “Something to wear on the beach” would yield apparel in this category!
Shopify Subscriptions - Self-explanatory and free. I haven’t dug in yet, but I imagine this is a rudimentary version of the 3rd party apps we all know. Not necessarily a bad thing, if so- not every brand is at the stage of needing complex subscription software that carries high fees.
Shop Pay Loan Amounts Displayed on PDP - Customers can now directly review estimated loan amounts on product pages without having to wait deep into checkout. This should help increase the conversion rate as many customers may be hesitant to spend time initiating checkout only to find out their loan terms aren’t going to cut it.
Shop Pay on non-Shopify Stores - We all heard about Everlane implementing Shop Pay even though they aren’t on Shopify. We all know Shop Pay offers the most efficient and convenient checkout on earth. Big win for Shopify as they’ll now rake in merchant processing fees with a larger TAM (total addressable market). This is a smart way to dip their toes into the enterprise market and potentially lure more business over if these brands end up wanting to do even more with Shopify. Big opp!
Web Performance Dash - Now you can easily access your core web vitals across Loading Speed, Interactivity, and Visual Stability in Shopify’s new website performance dashboard. Easily identify if you have any issues.
Website Performance Dashboard
MARKETING
Shopify Audiences 2.2 - Enhanced algorithm with a focus on the Retargeting Boost audience. Reportedly stacking this in your existing retargeting ad sets will more than double your pixel retargeting audience sizes. I expect this to be equivalent to a Website Visitor retargeting audience (ppl who visited the site but did not purchase). We all know why retargeting audiences generated from the Pixel have shrunk in recent years… we don’t need to rehash that. But, first-party data to the rescue. 😉
Shop Cash offers Rebranded as “Shop Campaigns” - Shopify’s affiliate program that will acquire you new customers via the Shop app, the web, and now Meta & Google! Sounds like Shopify will be buying media to push brands that opt in for Shop Campaigns. Shop Campaigns have already acquired Shopify brands over 1 million new customers within the Shop App alone. This is an absolute no-brainer for Shopify brands to opt-in. Determine the highest CPA you’re willing to pay, set it, and forget it.
Shop App Updates:
Native email signup unit is now present in the Shop app for brands to incentivize users to provide their email addresses.
You can now syndicate product reviews to the Shop app from 3rd party review providers Yotpo, Loox, Judge.me, Okendo, and Stamped. Before, only reviews from the Shop app were permitted. This will help elevate social proof on brands’ Shop listings.
“Verified by Shop” badge - Shop app-generated reviews in your online store now include a Verified by Shop badge to build trust with customers.
“Verified by Shop” badge.
Marketing Data Aggregation - you can now sync data from 3rd party sources like Klaviyo, Mailchimp, and Pinterest. Soon you’ll be able to pull in ad cost and impression data from Google, Pinterest, Snapchat, and TikTok. HOWEVER- Meta is not in the immediate pipeline. Was disappointed to hear this. If you can’t integrate all paid media pipelines into a central reporting source, that reporting solution is fairly useless. To calculate holistic performance and measure things like the Marketing Efficiency Ratio and contribution margin, you need all paid sources integrated. IMO- Shopify should have held off on launching this feature until it was ready for comprehensive activation.
Cohort Analysis - you can now measure and predict cohort LTV natively within Shopify reports.
OPERATIONS
Shopify Magic (early ‘24) - Transform product photography with new AI-enabled image editing features. Seamlessly generate, match, or remove the background of existing images. Shopify Magic is also a copywriting copilot. Leverage it for SEO-optimized product and blog pages, FAQs, and the About Us page.
Shopify Magic in action w/ AI-powered creative editing.
Shopify Lending - Hallelujah! Line of Credit (LOC) is now available. This is a far better option for most brands since you only pay interest as you draw on the line of credit. The main benefit vs. a typical loan is that you owe interest on a loan the second it hits your bank account, even if you’re not using the funds. It’s unclear what the rates for the new LOC product are, but it’s likely based on the business type and history. These are also generally tied to the Fed funds rate, which isn’t exactly cheap right now.
Shopify Mobile - You can now generate 3D product models in minutes that you can place on your product pages.
FINAL VERDICT: 6/10; Not Blown Away.
Some interesting and useful updates, but nothing truly groundbreaking. My favorite update is Shop Campaigns expansion outside of the Shop app to Meta and Google. This should help get brands more volume in their campaigns, which has been a limitation for the Shop Campaigns previously. Every brand on the internet should be leveraging fixed cost acquisition, period. This is the easiest possible affiliate campaign you could set up.
This version of Shopify Editions felt kind of similar to an NFL team that stacked 5th round picks in an NFL draft. No single one is going to elevate the team to another tier, but stacking depth is important to build a broader foundation. Of course, one of these picks (features) could be the next Puka Nacua (IYKYK- I had him in 2 leagues this year), but likely not. If I had to pick which update is the Puka of the bunch, I’m going with Shop Campaigns.
Flat Rate vs. Performance Agencies? 💸
Ah, this is a good one. DTC Twitter is always good for a debate. I’ve seen both sides of this. I side with Jess here - and it simply comes down to human nature. Incentives are the main driver behind the human desire to achieve results. If a brand is unwilling to reward upside if interests are aligned, that’s small thinking. Brands, agencies, and employers everywhere should be happy to pay an incentive out if it leads to them making more money.
As an employer, when you give employees incentives to hit certain goals, don’t they put a little extra steam and effort into the job if the incentive is attainable?
As an agency, if a brand is giving us incentives to hit - we’re more likely to add extra resources and tactics (at no cost) to unlock that new level of scale. Why not throw in the kitchen sink if we have the conviction we could unlock a new scale for a brand? This would not happen on a flat retainer - wouldn’t make sense for it to.
As a brand, wouldn’t you want to align goals with your agency to find a win-win? Agencies don’t just scale up ad spend recklessly because they collect a % of ad spend in their service agreement. Agencies can scale ad spend when they’re achieving a client’s KPIs, which are generally centered around profitability. If an agency doubled its spend, revenue, and profitability, why wouldn’t you be ok with doubling its bill? In reality, if that scenario just played out, your contribution margin just doubled as well (even after you subtract their now doubled fees).
Just out of pure human psychology, a flat-rate agency is more likely to go through the motions than an incentivized agency that has reason to scratch and claw its way to success and upside. The same goes for a flat-rate employee vs. an incentivized one.
There will always be the risk of a brand “taking things in-house,” but agencies can’t necessarily always operate out of fear. A brand runs tremendous risk of trying to “build in-house” or change agencies to save a fraction of what the agency just printed for them in profit.
What I’m Listening to 🎧
Beats of the Week: Antdot (a little part of my pendrive #37)
Antdot burst onto the scene. I’ve been a huge fan for the past year. I’ve listened to all 37 of his “pendrive” episodes multiple times. He’s been focused on the Brazilian market for live shows but anticipates that to change soon. His style is mostly Afro and Latin house. Unique, vibey, and melodic. Put this jam on next time you need to grind through an hour of deep work!
I welcome all feedback. Good, bad, and everything in between.
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Yours truly,
Jonathan Snow
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