2020 Trends Overview
4 min read

2020 Trends Overview

2020 Trends Overview

As 2019 comes to a close, companies around the world are or should be making plans for where they want to be – and in what capacity – in 2020.

Here are a few trends we expect to encourage or force moves in 2020. We'll be expanding on a couple of these in dedicated posts over the following weeks.

Bundling

“There are only two ways to make money in business: one is to bundle, and the other is to unbundle.” – Jim Barksdale

Since inception, Shopify has by-and-large been an unbundled solution, arguably to a fault. One of the most common complaints about the platform has, for years, been the number of individual apps and solutions you’re required to build a fully functioning business. This situation has only become more pronounced as we’ve seen the average number of apps per store creep up over the years.

A natural solution to this problem is bundling more solutions together to reduce the complexity, dependencies, and total cost to the merchant. Different entities are tackling this in different ways.

The largest players in some verticals are starting to acquire smaller companies in tangential areas and incorporating their solutions in to their product. Yotpo, for example, bought a loyalty provider last year in an effort to own the entire post-purchase customer loyalty segment.

Other companies like Privy are expanding their footprint by developing new features in house – what started as purely a list building tool has become a tool that helps you to organize that list and take action on it through email campaigns.

The last year has also seen the establishment of a number of holding companies like WeCommerce and Assembly who have come on to the scene with no solutions but deep pockets, looking to provide an exit path for established, profitable companies, and unify them under a single banner where they can cross-promote, deeply integrate, and dominate parts of the ecosystem through their numbers.

Platform Expansion

The risk of platforms encroaching on third-party developer territory has always been there, but recent moves by platforms – Shopify in particular – might indicate additional future risk to third-party developers in 2020.

Let's look at Shopify releases over the last few years. Although not all necessarily compete directly with "apps" in the traditional sense, they do all compete with partnerships generally:

2013 – Shopify Payments (all payment gateways)

2013 – Shopify Point of Sale (all POS systems)

2015 – Shopify Shipping (all shipping label printing services)

2016 – Shopify Capital (all merchant cash advance services)

2020 – Shopify Email (all commerce-focussed ESP providers)

2020 – Shopify Fulfillment (all 3PL services)

On top of Shopify's own in-house developed apps like Product Reviews and Digital Downloads, Shopify has also become more active overtime in the acquisition of apps from it's own ecosystem:

2016 – Kit

2017 – Oberlo

2018 – Return Magic

2019 – Stocky

When merchant growth slows, as it has for Shopify, the market still demands growth. The straightest path towards continued revenue growth in the face of slowing merchant acquisition is to capture more value from the merchants that you do have as they grow. Increasing the LTV of merchants is best accomplished by offering more and more services to them. As Shopify's new merchant growth continues to slow, expect more and more competition from the platform itself.

Headless

For the past few years, headless has been increasingly a topic of conversation. What has for the last few years only been accessible to the largest direct-to-consumer brands and enterprise will trickle down to more merchants as more companies jockey for position as the go-to headless experience for the masses.

Platforms have made their thoughts on headless clear through their actions. We’ve even seen these positions shift, often subtly, over time. Shopify for years viewed “Online Store”, as they call it, as a fundamental piece of the platform. Eventually, this gave way to “Online Store” the channel, one of many channels that a store may sell through – and not a mandatory one.

This initial focus on “Online Store” enabled the first wave of makers and creators to come on to the platform and easily build their brand. Ecommerce has evolved, though, and the focus these days is on an increasingly professionalized and well-funded segment of Direct-to-Consumer brands, who care deeply about offering completely custom experiences and have the resources to execute on that vision.

Will these merchants stick with Shopify, the tried and true solution? Or will they look toward new challenger platforms that have had headless bred in to their DNA from the start? If the former, get ready to re-think how your app interacts with the front end of a merchants shop, if that front end is completely decoupled from Shopify. If the latter, where do you need to be to capitalize on the shift?

Increased Funding

Investment attention on the ecommerce space and Shopify in particular increased throughout 2019, and will really hit its stride in 2020. When we worked inside Shopify on the App Store, it was big news when a startup in the ecosystem raised a round – this has become commonplace, and large companies are being built inside Shopify's semi-walled garden.

Whether it's brand-new startups getting in to YC and immediately raising seed rounds or the companies raising their Series A and beyond (of which we're familiar with a number of cases), investors are taking the ecommerce space seriously.

What does this mean for startups in the space? If you're not raising money, expect well-funded competitors in the near future. Raising money isn't mandatory for success – there will always be sustainable, profitable businesses making their own dents in the universe – but having deep pockets to pursue revenue and product growth can make things a lot easier.

Onwards and Upwards

Planning for the year ahead is inherently stressful. The ability to see around corners is a rare gift, and in a fast moving market the ones who will succeed are the ones who can identify and accurately guess what’s around these corners.

Trends are often visible to people who are paying attention, but determining which ones are the most impactful is harder. We’re excited to look back on these next year and see how impactful they really were. Our hope is to shed a light on them at a high level in this post, and to dive deeper throughout the series to share exactly what impacts we expect and how you can best prepare for their prominence in 2020.