Merchandising finds new digital channels

November 9, 2021

Man and woman in white shirts podcasters interview each other for radio podcast
Jonathan Bennett, Chief Commercial Officer

Jonathan Bennett

Chief Commercial Officer

The latest collaboration between eCommerce platform provider Shopify and Spotify breaks fresh ground in online shopping, marketing, and advertising by giving musicians, bands, podcasters and others more options to quickly and easily monetise their brand via the audio streaming service.

Shopify will now allow artists that use its service to sell their merchandise directly to fans through the Spotify app, similar to previous integrations with third-party providers including Merchbar, BandPage and Topspin.[i]

Shopify said that it already powers the websites which thousands of musicians and bands around the world use to sell associated merchandise, with estimates suggesting the “creator” economy is worth over US$100bn.[ii] The ‘Spotify for Artists’ channel is currently in beta mode – artists in all markets can link their Shopify stores where Spotify is available. However, only listeners in Canada, the US, the UK, Australia and New Zealand will initially see what they contain, said the company.

Partnerships key to GMV growth

Shopify recently announced financial results which missed analyst expectations but still saw third-quarter revenue expand 46% year on year to US$1.1bn, with customer gross merchandise volume (GMV) up 35% to US$42bn.[iii] Shopify makes it easier for small businesses to set up eCommerce websites and partner with other providers to handle digital payments and shipping (though it has recently expanded into business lending).

The company is arguably only as good as the number of merchants it can attract to its platform. Around 48k were added during the third quarter, significantly below expectations of 83,700 though subscription revenues rose 37% year on year to US$336m.

Therefore, finding new routes to market for those merchant subscribers is critical to Shopify’s business, and the Canadian company has proved adept at exploring new and innovative channels on their behalf. It appears set on redefining the relationship between social media and shopping. For example, earlier this year announced the trail of TikTok in-app shopping with a select group of merchants (read more analysis in DOCOMO Digital chief commercial office Jonathan Bennett’s blog here).

Partnerships with Facebook and Instagram, which allow merchants to sell through the two social commerce platforms, have both performed well for the company, with Shopify executives citing social GMV as gaining a share of total GMV during the third quarter. Management hopes the same impact will help them keep Spotify artists, which already sell through Shopify while attracting new ones.

Amazon Prime and Netflix already onboard

Partnering with Spotify could also help Shopify compete with rival Amazon, integrating artists’ merchandise sales with its Prime Music streaming platform. The company revamped its app to allow customers to discover new music, watch live streams and browse a curated selection of goods eligible for Prime delivery in March this year.[iv] The app debuted with products from high profile artists including Lady Gaga, Billie Eilish, Jack Harlow, and King Princess, with merchandise appearing side by side with their songs, albums, live streams and music videos.

Similar collaborations have also come about between eCommerce providers and OTT video streaming platforms. Netflix recently created an eCommerce channel aligned with its video streaming service. Launched in June this year, offers exclusive limited editions of clothing and lifestyle products tied to its TV shows. These include streetwear and action figures connected to the Japanese anime series Yasuke and Eden and clothes and decorative items inspired by the French crime drama Lupin[v].

China shows live commerce potential

But it is celebrity and artist live streaming which is attracting particular attention from the retail industry. McKinsey believes that blending entertainment with instant purchasing (dubbed live commerce) offers retailers, brands and digital platforms a new channel with significant scope for value creation in the future following the runaway success of Alibaba’s Taobao Live in China.[vi]

After launching in 2016, the platform generated US$7.5bn in total transaction value in the first 30 minutes of presales ahead of its annual Singles Day shopping festival in October 2020, according to press reports[vii]. Live commerce remains at an early stage of its development elsewhere in the world. But if China’s experience is replicated in other countries, McKinsey estimates that live commerce sales could account for 10-20% of all eCommerce as early as 2026.

What is certain is that the retail landscape is undergoing a radical transformation as innovative eCommerce platforms find new ways for shoppers to make on the spot purchases aligned to their favourite brands using digital payments and smartphones.

[i] Spotify partners with Shopify to add merch to artists’ profiles, TechCrunch, 20th October 2021

[ii] Listen up: Shopify brings entrepreneurship to Spotify, Shopify, 20th October 2021

[iii]  Shopify Stock Reverses Up Amid Earnings, Revenue Miss, Investor’s Business Daily, 28th October 2021

[iv] Amazon Music Launches New Shopping Experience, Making It Easier for Fans to Find Merch from Their Favorite Artists, Amazon, 10th March 2021

[v] Introducing A New Way for Fans to Connect With Their Favorite Stories, Netflix, 10th June 2021

[vi] It’s showtime! How live commerce is transforming the shopping experience, McKinsey, 21st July 2021

[vii] Alibaba’s Taobao Live hits US$7.5 billion in first 30 minutes of presales for Singles’ Day, South China Morning Post, 29th October 2020

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