Shopify (TSX:SHOP)(NYSE:SHOP) has launched a series of product enhancements and partnerships aimed at expanding its merchant reach as the Canadian tech giant grapples with shifts in pandemic shopping habits and a recent drop in inventory.

Shopify Unveils More Than 100 New Features

Shopify provides software and services to independent retailers. The company will focus on business-to-business (B2B) commerce, introducing tools to compete with Amazon (NASDAQ:AMZN).

Shopify unveiled more than 100 product updates on Wednesday, at a new semi-annual showcase called Shopify Editions .

Shopify, which helps businesses build their online stores, saw its stock boosted during the lockdowns as global brands and mom-and-pop stores shifted to selling directly to consumers online while their stores were closed.

With the economy reopening, however, investors are beginning to question Shopify’s future, sending the company’s shares tumbling 70% this year and wiping out much of its pandemic gains. The Ottawa-based e-commerce giant also reported a decline in overall sales growth, with the total value of goods sold also down.

Shopify’s response to the downturn extends to the wholesale market, an avenue far broader than direct-to-consumer sales and with “billions in untapped revenue,” according to President Harley Finkelstein.

Companies are looking to shift from direct-to-consumer to “connect-to-consumer,” making it easier for people to shop on social media platforms and pay with their phones, Finkelstein said in an interview.

“This is the next phase of retail … In many ways, shopping has become a vote with your wallet to support that brand … And that’s what I think connect-to-consumer is all about.”

Big Tech Partnerships and NFT Adoption to Boost Sales Growth

Glen Coates, Shopify’s vice-president of product, core, at a media roundtable ahead of Editions, said, “At the beginning of the direct-to-consumer revolution 10 (to) 15 years ago, it was enough to just make it easy to buy online and complete the transaction, but today, things have changed and just getting the transaction is no longer enough.” 

“It is absolutely essential for a commerce business in 2022 to build those lifelong connections, lifelong fans, and deep relationships with their customers in order to make the business work, frankly.”

Shopify will work to facilitate these connections through a Twitter partnership that will display products prominently on profiles, making it easier to facilitate sales through social media, and a decision to sync merchants’ local inventory with Google, so that they can automatically notify nearby customers when a product is available in store.

Shopify didn’t give an estimate of how much the Twitter deal will boost sales for its customers. However, the tech company said orders placed with Shopify merchants through other online partnerships quadrupled in the first quarter of 2022, compared to the same time a year earlier. It also said shopping-related tweets reached around 40 billion views last year.

The company will also launch a tap-to-pay offering, allowing US merchants to process transactions through their iPhones.

“This is a really big deal for merchants who want to test offline retail with things like pop-ups or people who are just getting started and want to wet their feet with a farmer’s market,” said Kaz Nejatian, Shopify’s vice-president of product, merchant services.

“It’s going to be super easy for them now to experiment with in-person selling without having to invest in buying more hardware or carrying this faceless dongle around that just takes up space for no reason.”

When asked if the feature would eventually launch beyond the United States, he said, “we want to expand it as quickly as we can.”

Global Shopify merchants will now be able to manage operations as well as direct-to-consumer and business-to-business (B2B) sales on the same platform. This will eliminate much of the complexity and outdated technology businesses face when pursuing both streams. 

“The world of wholesale traditionally is a nightmarish world of spreadsheets and order forms and fax machines and just super old school stuff,” said Nejatian.

“The world of B2B commerce software isn’t much better. It’s usually apps and plug-ins that are kind of off to the side of the main product and don’t really integrate that well. And so with B2B on Shopify, we’re changing all of that.”

Shopify will also extend the reach of its merchants through non-fungible tokens (NFTs) – data stored via blockchain technology that provides proof of ownership of a digital asset such as an image, audio clip, or tweet. Shopify shoppers will be able to connect their NFT wallets to a store using the Shopify software to validate that they have an NFT. This will then unlock benefits such as exclusive access to online stores, products and collections.

The announcements intended to bolster Shopify’s value proposition come as retailers grapple with whether the surge in online shopping seen during the COVID-19 pandemic will be sustained and how to respond to those who have returned to in-person shopping now that the masking and other health measures were dropped.

With economists fearing a coming recession and many businesses trying to offset extended shutdowns and cover debts from the past two years, maximizing sales has never been more important for Shopify merchants.

Shopify’s decline has been more severe than that of many rivals like Amazon, as high inflation and supply chain uncertainty have been hitting hard on retailers.

Shares of Amazon, Shopify’s biggest competitor, have fallen about 35% this year. The company is still taking an important place because it is considered the reference in online shopping and delivery platforms. It is bolstered by earnings from Amazon Web Services, its cloud computing arm.

Global tech companies are implementing hiring freezes and making layoffs as the exuberance around tech stocks wanes and some predict a market correction or recession is forming.

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