The Problem

Shopify Shipping currently simplifies shipping for merchants with <50 orders per week, saving them time on fulfillment and money on shipping labels. We believe that Shopify Shipping can grow with merchants and extend to serving larger merchants over time, but we haven’t yet proven that belief. The result is that Shopify Shipping is a flat to shrinking business. If Shopify Shipping continues its current trajectory, we will not be able to justify continued investment.

The Two Existential Problems for Shopify Shipping

1. Win label volume from larger volume (350+ orders/wk) merchants
2. Fix churn for medium volume (50-350 orders/wk) merchants fulfilling orders in admin as measured by net label retention

What does solving these problems entail?

Low adoption and retention for large merchants (350+ orders per week)

• How do we know this is a problem?
• ~0% net label retention (merchants leave us over time)
• ~5% label adoption (we don’t power most labels)
• Why do we think this is a problem?
• In general, we do not understand the fulfillment problems for large merchants
• This is a problem for us because these merchants represent ~70% of eligible label volume
• What does success look like?
• By end of Q1 2023
• Have a clear hypothesis on what problems Shopify Shipping can solve for large merchants that are important enough to drive adoption
• Deliver something to validate our hypothesis about those problems
• By end of 2023
• 10% label adoption

Poor Retention for medium volume merchants in admin (50-350 orders per week)

• How do we know this is a problem?
• ~80% net label retention (merchants leave us over time)
• 25% label adoption (we don’t power most labels)
• Why do we think this is a problem?
• Our pricing with carriers is not competitive with what these merchants can get by negotiating directly with carriers
• Our admin is inefficient for purchasing and managing large quantities of labels
• There could be other hypotheses
• What does success look like?
• By end of Q1 2023
• We have proof that addressing the hypothesized causes of churn leads to increased net label retention
• By end of 2023
• On track for >100% net label retention
• 40% label adoption

The Opportunity

We have an opportunity to retain merchants, increase label volume, increase revenue, and to expand our footprint as a shipping solution for merchants outside of Shopifys' environment, while becoming a source of truth for our merchants.

Next Steps

• Consolidate any existing user research findings related to the two segments of users affected
• Propose new qualitative and quantitative research efforts based on any gaps within the existing research
• Assess the project roadmap to prioritize projects with immediate impact towards our end goal
• Propose new projects that will address the problem while helping to acheive the ultimate goal

Current Project

Medium Merchant (50-350 orders/wk) Retention

We start from the problem of uncompetitive pricing. Because we believe that is causing merchants to churn, we believe if we allowed merchants to bring their own pricing, we would see increased retention. Therefore, we are building Bring Your Own Account (BYOA) for Canada Post to allow merchants to have competitive pricing for our Canadian merchants. After we offer BYOA, we should see increased retention for 50-350 merchants that use Canada Post.

IMPACT

• Developing Bring Your Own Account (BYOA) gives us the confidence to further invest in BYOA for all other carriers
• Creating a scalable solution for carrier registration will decrease merchant churn