Why I’m leaving the Shopify Apps business
Why I’m leaving the Shopify Apps business
Introduction
I’ve spent the last 6+ years building Shopify apps:
One got Hijacked by Shopify ( they never paid me my payouts )
One got Banned by Shopify - after generating millions of dollars in revenue ( read the story )
One got Acquired ✨
With that being said, I have a love-hate relationship with Shopify. On one side, all my entrepreneural success was founded on their ecosystem. On the other side, I’ve seen the short end of the stick, so trust me when I tell you Shopify is not your friend - they are a business, just like any other, and there’s nothing wrong about that.
There are tremendously successful companies that were built entirely on top of the Shopify ecosystem ( Klaviyo, Yotpo, TripleWhale etc ) and the hype for building Shopify apps is well justified - there’s a vibrant community, millions of potential customers ready to pay and a solid foundation built for developers.
To be super clear, I believe there are still a ton of business opportunities in the Shopify Ecosystem. I feel entrepreneurs like @DSMatie, @gilgNYC, @zero2exit, and others do a great job of showcasing the opportunities that the ecosystem provides - if you don’t follow those guys - check them out to get the “positive perspective”.
However, a lot has changed in the past 6 years, so I’ve felt it’s time to leave the Shopify app building business. Here’s why I believe you should stay away too:
Extreme competition
At the time of writing there are over 8,000+ apps on the Shopify App Store. Split that on the number of Shopify stores ( 1.7M ) and you get 213 stores per app.
A recent study made by The Growth Department, shows a couple of discouraging trends for new app developers:
There are 82 new apps added to the Shopify App store each month
Only 12.5% of apps generate more than $1000 per month
Only 11% of apps reach 100+ reviews
The Shopify app store is a red ocean:
To swim in a red ocean you need to be outstanding, you need to beat the competition, but who are you competing with? These are main types of competitors you’ll face:
Indie Devs
Indie devs come in different shapes, but in general they are either a solo developer or a small team that develops Shopify Apps for a living.
🙋
( If you identify as an indie dev I recommend joining @DSMatie’s facebook community )
Those folk bootstrap their businesses and don’t need to make millions in ARR to be happy - they generally want to make a sustainable business that brings them income.
Problem is - the indie devs community is growing exponentially so it’s essentially a race to the bottom. There’s always someone that will offer similar features at a lower price.
VC-backed unicorns
With the great opportunities that the Shopify ecosystem provides and the success of companies like Klaviyo, there’s been no-shortage of VC-funding going into the space.
A couple of Shopify apps and their funding:
ReCharge ( $227M )
Loop Returns ( $125M )
Gorgias ( $72.5M )
Triple Whale ( $52.7M )
Rebuy ( $21.4M )
The thing about VC-funding is that it comes with a constant pressure to grow. Those companies have raised millions in order to take as much as possible from the market and unless you have a secret weapon to beat them you’ll be left fighting for their scraps.
App conglomerates
Yes… there are now Shopify App conglomerates… those have money to spend and growth targets to hit. How do they plan to achieve it? By horizontal expansion - acquiring / copying successful apps and bundling them together.
Just look at Afterships’s app portfolio - It includes 11 apps which cover: Product Reviews, Referral&Affiliate, Email & SMS Marketing, Shipment tracking, Page Builder, Returns, Ads, SMS Marketing ( two SMS Marketing apps?!? ), Upsell & Cross-sell, Tiktok feed, Shipping…
Other examples of such companies are Yotpo, Bold, HulkApps and more.
Imagine the advantage they have when launching a new app compared to you. Even if you beat them to market, they have more dev power, more experience and an existing customer base that they can market to.
App aggregators
Similar to Amazon brand aggregators like Thrasio, there’s a trend to create Shopify app aggregators → companies that raise a bunch of money and buy a bunch of apps in order to create an app portfolio.
While most of them are probably aiming to sell the portfolio to a bigger fund in the future, their financial models rely on their apps to continue growing, so you can expect similar bundling and exchange of resources as with the app conglomerates.
Shopify
In recent years, Shopify is also slowly cannibalizing its own ecosystem by either developing free app alternatives or obsoleting apps by making a feature part of it’s core product.
Obsoleting apps Check this tweet by @gilgNYC
Sure, you could argue that LOOP’s and Aftership’s products are much more sophisticated, but nonetheless, they’ll have to deal with a new competition that comes native and free.
There are multiple other examples of Shopify expanding the core functionality offering at the expense of apps.
Competing with apps directly
The other way Shopify competes with app developers directly is their own collection of 38 apps, which include functionalities like Support, Emails, Affiliates, Reviews, Automation and more.
There’s the common belief by many app developers that Shopify’s apps are nothing to worry about as they are targeting the lowest-tier of customers. I believe that’s completely wrong.
A recent study by Shop Reviews shows that Shopify’s apps are some of the most popular apps for Shopify Plus stores, with Shopify Reviews & Shopify Collabs dominating their categories, and tools like Shopify Inbox also taking a significant market share.
IMO, from what we’ve seen from Amazon, Apple & others - the direction is clear - Shopify needs to grow at all costs. They can either grow by:
Getting more customers
Charging their existing customers more
The harder it gets to acquire more merchants, the more they’re going to focus on milking their existing customer base. Similar to how Apple is focusing more and more of their effort on Services - Shopify will certainly be growing their apps business in the future.
No defensibility
Let’s say you’ve found something 💎 unique, you’ve created a lucrative app with a lack of competition. Congratulations 👏! Now brace for the army of copycats coming your way.
Defensibility is one of the foundations of a sustainable business. There are multiple components to a defensible company, the main ones being:
Branding
Economy of scale
Network effect
Know-how / Proprietary tech
✉️
I plan to write an article on defensibility and foundations in the future, subscribe to my email newsletter and get the article directly in your inbox.
Most B2B SaaS companies don’t benefit from economy of scale or network effects that much, so their main defensibility traits are their brand and their proprietary tech ( rebuilding their product is hard and/or expensive ).
With Shopify, the bar to develop an app is set super low - building is easy and most of the heavy lifting is done by the platform. That’s great to start, but it also means that the majority of apps can be easily replicated by a solo developer somewhere in the world. ( Bonus: Their copycat will probably be promoted on your App page 😘 - more on that below )
Sure, you still have your Branding ✨ and superior product to guard you, but each new copycat/competitor is going to chip a piece of your potential customer base.
Lack of control
Over your distribution
The App store is a black box
The Shopify app store is the main acquisition channel for most apps, yet nobody has any idea how ranking / featuring is being done. One day you’ll be up, other day you’ll be down. You’ll see apps with less installs & reviews ahead of you, you’ll see big notable apps behind you on the ranking. You’ll see fake reviews, you’ll see keyword abuse, you’ll see a lot of 💩.
Point is, most apps depend on the app store for growth, and when the algorithm is on your side - you’ll be growing steadily. When they change, you’ll be crying on Twitter. To no avail.
🤔
Wondering how you can become independent from the App Store? One of the best strategies I’ve used over the years is influencer marketing. Feel free to reach out for tips regarding how to employ it for your Shopify app.
You’re forced to use your Shopify App Store page
Last year Shopify changed their rules to force all app installations to happen through the App Store:
To help facilitate merchant trust and security, we require that all apps, including public and custom apps, be installed or otherwise initiated directly on or through applicable Shopify surfaces (e.g. the Shopify App Store or the Shopify admin).
You can promote your app however you want, but in the end you need to send the customer to your app store page, meaning:
You can’t track conversions - there’s no option to connect proper conversion events on the app store page since you don’t have control over it.
Shopify is going to actively promote competitor apps. Even for the paid traffic you’re pulling in.
You’re a slave to reviews
Remember how I said the app store was a black box? One thing that most people agree on is that reviews are the most important factor in app ranking. ( Nobody knows for sure, but seems to be true ).
You need many 5-star reviews and you need to do everything possible to avoid bad reviews. Each bad review is going to tank your ranking. Guess what? Merchants know this.
We’ve had multiple merchants, using the app for free, actively threatening us to leave a bad review if we don’t add a new feature that they want.
Imagine that for a second…
Someone that never gave you a cent, that’s not even in your target group can FORCE you to do whatever they want and you have to drop everything else and please them…
I’ve honestly had nightmares of someone leaving a shitty review and having to do damage control.
On the other side, the only meaningful way to get reviews is to stimulate merchants to contact support with tasks that will have a happy resolution so the support can ask them for a review.
🤫
In other words: Add unnecessary friction to your app, create support problems that you can resolve fast and easy and you’ll get your reviews up. Hooray for the merchant.
Don’t get me wrong, review systems are one of the best human inventions. They work and they produce quality. Shopify’s review system has flaws. It still provides value for the merchants, but it’s gonna be a major pain in the 🍑 for you.
Over your core technology
Remember, you’re always building on top of Shopify. And they ain’t perfect. But merchants trust them. They don’t trust you.
Majority of the times you’ll have to hack things around because the API doesn’t support something, you’ll have to change feature design to just make it work and make a ton of compromise just because the API is limited.
But the API is not only limited, it has legacy, it has bugs and you inherit those in the moment you start building. The catch is - customers will always blame you when something breaks. Shopify support will also blame you in front of the customers. If there’s an app involved - it’s always the app’s fault.
And the bigger point is not who’s to blame, but that you’ll always have fundamental issues that just aren’t fixable. You’ll always have something to shrug your shoulders on and say - it’s just the way it is 🤷♂️.
You’re one-click away from losing your business
If you have a live Shopify app, you’re always a single support agent / automated bot away from losing your business. Think about that for a second.
Shopify has full power over your business. All they need to do is press a single button and all of your hard work, sleepless nights, investments, customers can be gone. Poof 💨
I’m not saying they will do it. But they can do it. And they’ve done it to me.
Shopify banned my app - Checkout X without it ever breaking their ToS ( they updated their ToS later on ). We just built a superior checkout, it started threatening them and they decided it’s gonna be easier to just get rid of us.
They also locked me out of my first app - Upsell X just out of spite. The app had nothing to do with Checkout X or broke their ToS in any way. They even continued charging Upsell X merchants, but those funds never made it to me. Not sure if they just stole it or are still on hold somewhere.
They kicked out Mailchimp. Got rid of Beeketing. They’ve delisted hundreds apps with or without justification. A simple twitter search shows a mountain of stories.
There’s a reason many apps try to get Shopify on their cap table ( at a substantial discount I imagine ) - Shopify poses an existential risk to any Shopify-based business.
Conclusion
We all get to choose our pain. If competing with thousands of other companies, being copied, hacking around unsolvable tech issues and operating at Shopify’s mercy are pains you can live with - Shopify Apps development still offers a mountain of opportunities.
None of those issues are unique to Shopify either, iOS is a similar ecosystem with similar issues that still gives birth to numerous unicorn startups every year.
For me personally, I feel it’s time to try something new.
But you never know… Maybe I’ll come up with a killer Shopify app idea and you see me sneaking back into the ecosystem, like none of this ever happened. 🤫
I hope my view of the Shopify App Ecosystem was useful to you.