Relationships = Revenue

On Monday, March 1st, 2021, Shopify sent an email to all Kit app users about the impending shutdown of Kit and Ping. To some this was a non-issue, but to many merchants it was annoying. This post is for those merchants who want to know why Shopify would shut down Kit and a reliable alternative they can use for some of its features.

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Kit was Shopify’s small business chat-bot assistant. It was designed to help single-founder merchants run their store better, specifically when it came to Facebook marketing. When a new product was added to the store, Kit would ask if you’d like to run Facebook ads for it. And with the Facebook Pixel integration, Kit could identify how many site visitors you had the past month and run a retargeting ad campaign to bring those customers back. However, as cool as these advertising features are the most popular feature was the personalized “thank you” emails sent every morning.

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In this post we will ruminate on why Shopify has decided to shut down this app and alternatives to the popular features Kit offered (hint: it’s our own app)

Why Shopify is shutting down Kit

There are likely a few reasons but in our opinion it comes down to one overarching reason which is Shopify’s opportunity cost. As cool as Kit and Ping were, from our merchant conversations those who were using Kit were underwhelmed by the functionality. Automated marketing is a great idea for beginner entrepreneurs but we believe with the increase in competition for social ads, increase in bid costs, and increase in targeting sophistication, an auto-pilot type bot isn’t able to handle all these complex variables. And even if it could, we aren’t sure the effort required to build such an intelligent bot would meet Shopify’s high standards for returns for merchants.

The time, people, money, and effort it would require would be better spent on other projects and merchant tools Shopify thinks will have a higher return on their investment.

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Another sign of this is Shopify’s hiring frenzy. Shopify is currently looking to hire over 2,021 engineering roles in 2021, this tells us they must have several dozens of building opportunities in front of them at least. And if they are having trouble finding the right people for these roles, it would make sense in the meantime to divert existing high effort / low returns brain power to higher return projects.

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Shop Phone as a Replacement to Kit

As fans of Kit and developers of Shopify Apps we decided to adopt the fan favourite feature from Kit. Our merchant conversations kept telling us of the personalized thank you emails. As explained in the introduction of this post, Kit would send automated thank you emails to customers (that looked personal, sent via merchant’s personal email addresses). 

As Shopify merchants ourselves we can attest to these emails yielding great 2-way conversations with customers, and helping in retaining customers to place new orders in the future. So we added this “skill” to Shop Phone as well.

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But we didn’t stop there. We also decided to add personalized abandoned checkout emails. Having built several abandoned checkout recovery tools for Shopify we knew unequivocally that the 1-on-1 conversation gets a far greater recovery rate. As email gets more and more saturated, customers care less and less about being added to automated email flows. And while the 1-on-1 WhatsApp, Email, Phone call or Text message yields incredible recovery results (Our first case study, and our second, and this one too) we understand sometimes you’re too busy to send these manually. And so we’ve added the ability to send a personalized looking automated email from your own merchant email address, with your name as the sender. These plain text emails aren’t flashy, there are no images or logos, or any links to other products. They are simply thank you emails designed to show appreciation and spur a conversation.

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What Shop Phone can do

Shop Phone is a native mobile app for iOS and Android, designed to increase your 1 on 1 sales. There are lots of stores, products and customer groups that require the 1-on-1 sales channel to close the sale. For example, furniture stores that prefer speaking to their pre-sale customers to make sure their customers get the right pieces, a bespoke custom built product where the merchant needs to call the customer after a sale to make sure they have the right requirements, or a demographic like senior citizens who prefer a phone call.

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Shop Phone alerts merchants about these special cases. As seen in the screenshot below, the app can send alerts about high valued Abandoned Checkouts, VIP Orders, New Customer alerts, and Follow-up Reminders. But it can also send Low Inventory alerts, and Product specific alerts in the event a specific product is purchased.

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You can find Shop Phone through the Shopify app store, or checkout www.shopphoneapp.com to learn more about it.

Our theory as to what Shopify will replace Kit with

We think Shopify will replace the personal assistant type marketing automation application with a more sophisticated Shopify Email solution, and more self-serve marketing integrations with social channels like TikTok, Instagram and Snapchat. Instead of asking merchants to throw money into a blackbox of Facebook and Google ads, Shopify should enable merchants to better use the organic audience lists they already own, like their email subscribers, existing customers, and social media followers.

However, staying involved in the paid acquisition game is very lucrative. We think it’s also very possible Shopify plans to launch a paid advertising platform that integrates with Facebook, Google and other major advertising platforms. A report by WebFX indicated businesses spend on average $200 to $800 per month on Facebook ads, if we average this to $500 and multiply it by the conservative figure of one million merchants on Shopify, the rough estimate would put it at about $500,000,000 spent on Facebook ads per month. If we were Shopify we would be thinking about how to carve out a piece of that spend. If Shopify could increase our collective advertising efficiency or ROI by 30%, why wouldn’t we pay 20% to them as a fee? That 20% could translate to $100,000,000 in additional monthly revenue, or $1.2 billion per year (based on 2020 merchant figures). That’s almost half of Shopify’s total revenue in 2020. And so shutting down Kit that does this service for free makes sense.

Although these predictions could age poorly and may turn out to be completely wrong. Time will tell.

Source: Header image taken from https://medium.com/hi-kit/level-up-your-shopify-app-integrate-with-kit-your-virtual-employee-34a709f554b4

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You can contact Ahmad at a@hmscommerce.com or text/WhatsApp him at 1-833-600-0071.

Shop Phone is a mobile app for Shopify stores owners designed to alert you about important customer events. Merchants can configured alerts such as high value abandoned checkouts, low inventory, VIP and repeat orders, follow-up reminders and specific product purchases. This gives merchants the ability to be alerted about any customer behaviour they want, with action buttons they can take to resolve or connect with customers.

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