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I have said for the longest of times that Shopify was a platform, right. That’s all it is. If you don’t know how to get traffic, you’re up the creek. You’re not going to be able to make any money on Shopify. Any seasoned internet person knows this. If you’ve been on eBay, in ecommerce, or Amazon for four, five, six seven years or more, you know this. You aren’t seduced by the Shopify claims that you will become a millionaire.
Shopify’s stock price is burning up the road, right? Shopify is an $11 billion-dollar company and they’re losing money. Shopify goes overboard on the rosy picture they paint for customers. Where it gets dicey is Shopify gives away affiliate commissions for signing up someone for the platform.
There’s this guy who says, give me 45 seconds and I’ll show you how to sell this mug. Now let’s say he starts a store. Let’s say he has enough sales to show you. “We’re doing $20,000 a day or $30,000 a day,” but maybe we only have a 5% margin. That’s not a problem because they are making enough money with the game to pay for the store, products and traffic to still make some money.
This is where the real money is made. It is made on the course sales and it is made on the affiliate links.
FCC law says if you are an internet celebrity or blogger or whatever and you’re selling a product that is not your own product, you must disclose that relationship. That’s going to be really big thing that is coming. Facebook got in trouble for this same type of thing. Anyone that is selling something that is not their product has to let it be known that they are an affiliate or they’re getting paid.
This is the Shopify business model. You get the subscription fee. You’ve got the $25 store and the Shopify Plus and that’s like $89. Then they also get percentages of sales, right. If you have 470,000 people who are paying $25 a month, there is no way that those 2500 people are going to equal or exceed that income.
This is the harm in saying that. Fifty percent of their revenue is from subscription fees and let’s say the other half of their revenue is from merchant services. The Chief Operating Officer, Harley Feickenstein readily admitted that many of the businesses on the platform fail. But he said the point of the company is to make it easy and cheap for merchants to experiment with new ideas and eventually success.
The problem with Shopify is they are misrepresenting what the platform can do. Essentially most of their customers are going to fail. Shopify is not closing.
Once again, if you are a seasoned online player, Shopify is a great tool. It can be great because it can take a lot of traffic. The scammy marketing practices and the “You can become a millionaire” practices are a little unsettling. I didn’t even know about all this stuff.
Let’s be clear, Shopify is not going out of business but they are more than likely going to get some regulatory action. They’re going to get investigated and they’re going to have to change their marketing practices. What’s probably going to happen is they will go from a user base of 500,000 to 100,000.
Shopify is good if you know what you’re doing. But if you have no clue about the marketplace or what a landing page is, you are in trouble. You’ve got to understand, you’ll have people who will stay on Shopify for a year or something, just long enough to get some good screenshots. Then they immediately go into coaching, and they immediately go into selling products because they’re not making a lot of money on Shopify.
Let’s say you have this guy named Russell who works on Shopify. He finds a product he can sell and pays $10 for it. He sells it for $99. Russell is not telling anybody about what he’s doing, he’s going to keep collecting that cash. He’s not going to go on YouTube and tell everyone how he is doing it.
Let’s say Suzie has a Shopify store and she’s selling handkerchiefs. She won’t give out her secrets because she does not want to disturb the groove. That’s just the reality.
Essentially Shopify is doing some scammy stuff. It’s the marketing they are doing. Is Shopify the platform a scam? No. It provides a platform where you can place your products and collect the money when they sell. That’s it. That’s what it is supposed to do. For probably 30,000 people, it does that very well.
Long story short, Shopify can be good if you know what you’re doing. It can be a nightmare if you don’t know what you’re doing. You have to know what you’re getting into with Shopify.
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