Shopify has announced that it will lay off 20% of its staff and sell its logistics and order-fulfillment operations to Flexport as a result of the slowdown in the pandemic e-commerce boom and the consumer goods economy.
In an interview with CNBC, Shopify’s President, Harley Finkelstein, revealed that the company, which represents 10% of all e-commerce sales in the U.S., needed to focus on its core strengths, which were building software for e-commerce.
Finkelstein also shared his firsthand experience with running his side hustle, Firebelly Tea, and advised small business owners against chasing big-name influencers on social media platforms such as YouTube, Instagram, and TikTok. Instead, he suggested that business owners spend time learning about micro-influencers across social media, including those on subReddits and Pinterest boards, who are driving engagement in niches relevant to their business. Finkelstein explained that this would be a cheaper and more effective way to grow a new business.
The creator economy is changing the way business success is generated, Finkelstein said, with the old “Field of Dreams” model — “If you build it, they will come” — no longer being sufficient. However, this doesn’t mean that every small business owner with a great product should be chasing after big influencers like MrBeast or Emma Chamberlain for product endorsements.
Instead, Finkelstein advised business owners to look across the entire market of internet personalities to find the small, engaged micro-influencers that are building online communities. To track these influencers, Finkelstein suggested observing how often they are responding to tweets and comments, as well as the frequency of their posts across platforms.
Finkelstein cautioned that business owners should not downplay the importance of big influencers and platforms like TikTok, which has a hashtag called “TikTok Made Me Buy It” that has 50 billion impressions.
However, he stressed that entrepreneurs should be focused on an omnichannel sales strategy, especially at a time when the U.S. government is threatening to ban the Chinese-owned social media giant.
Finkelstein also warned that after the pandemic boom that pulled forward five years of e-commerce growth into one year, the rate of growth is back to 2018-2019 levels, with the lasting difference being a much higher baseline.
To ensure success in this climate, business owners have to try to be everywhere consumers are, whether online, offline, or on social media platforms. Shopify is thinking about itself today as more of a retail operating system than an e-commerce company specifically.
To find out where their customers are, business owners should go back to basics and just ask them, Finkelstein suggested. He emphasized that as consumers become more discerning with their dollars, having a great product is critical.
He also stressed the importance of reducing friction across all sales channels, as customers today may want to buy in a store, online, or at a farmer’s market. Finally, Finkelstein recommended that entrepreneurs take advantage of the “hyper-real response” that is available by asking customers what they want to see more or less of, which is the easiest and least expensive way of marketing.