It’s fair to say the game has changed for Shopify merchants in 2022. While ecommerce was never “easy,” many brands find it much harder to grow in 2022. The pandemic led to rapid growth for many Shopify stores, with many expecting ecommerce to become the new norm.
This didn’t happen as in-person shopping has come back due to eased pandemic precautions. While ecommerce is still growing at a healthy rate, it’s not the rocketship it used to be.
With the fear of an upcoming recession weighing heavily on the minds of Shopify store owners, it can seem like the hype around ecommerce is dead.
We don’t agree. We think Shopify stores can continue to drive rapid and profitable growth thanks to the opportunity provided by Cross-Store Selling.
What we mean by Cross-Store Selling
The biggest advantage of creating a Shopify store is the ease at which you can begin selling products online. It’s why we love Shopify’s messaging about “arming the rebels.” To compete with giants like Amazon, eBay, Nike, and others, Shopify and its partner ecosystem make it easy to launch a store that can compete with billion-dollar brands.
And there’s no better way to compete as a “rebel” than by leveraging Cross-Store Selling.
When we say Cross-Store Selling, you might think of it as creating a marketplace similar to Amazon. We mostly agree. Where Amazon is full of thousands of brands competing for attention, Cross-Store selling is more about helping your brand build a highly curated suite of products designed to serve customers' needs.
To give an example of Cross-Store Selling in action, here’s an example of the marketplace for Blendjet. They sell a blender, but the protein powders shown below are from other brands. With this setup, they’ve managed to increase their AOV by 80%.
Let’s say a customer wants to buy workout clothes on Amazon. They might also be interested in supplements, water bottles, and gym accessories. In that case, they’ll get recommendations on similar products, and suddenly, their search for workout clothes turns into a high-value shopping cart worth hundreds of dollars.
By having a suite of products focusing on the gym lifestyle, Amazon ensures that customers are happy and more likely to return to buy future workout products. This is because the customer knows that Amazon has the products best suited for their workout lifestyle.
But if you want your Shopify store to have the same experience, you’re (mostly) out of luck. You could spend hundreds of thousands developing new products, buying wholesale inventory from other brands, and setting up a logistics network. But as a “rebel,” you probably don’t have the necessary cash flow and time to do this.
This is where Cross-Store Selling comes into play.
With Cross-Store Selling, your brand can sell products from other brands (and they can sell your products too). With this kind of sales channel, your brand suddenly becomes the go-to destination for products similar to Amazon. Turning your store into a digital mall keeps customers returning and lets you build a high-quality marketplace with products that Amazon doesn’t have. Cross-Store Selling has you covered if you’ve ever wanted your store to become the lifestyle brand for your niche.
What Cross-Store Selling isn’t
Cross-store selling has another name that brands might use: brand partnerships. We don’t want to use this term because brand partnerships are also used by influencers working with brands.
Another thing we want to mention is that Cross-Store Selling is not the same as dropshipping. Whereas dropshipping focuses more on selling products without holding your own inventory, Cross-Store Selling is all about working with other brands to sell each others’ products.
The problems with new customer acquisition in 2022
The big focus for brands this year has been on customer retention. We all know it’s cheaper to retain existing customers than to acquire new ones. We love this focus, but no Shopify store can retain 100% of its customers.
You still need to acquire new customers at a healthy rate. But customer acquisition in 2022 is the most challenging it’s ever been.
Ad costs are rising
It sounds like a broken record saying this, but Facebook and Instagram ads aren’t the acquisition powerhouses they used to be. Facebook ads still work for brands, but the higher ad costs reduce margins. And when you’re competing with established brands that can spend millions of dollars on ads every month, it’s hard to win a sale.
Brands are getting some temporary relief through TikTok ads. But creating video ads is much more expensive than image ads, and we expect TikTok will eventually become as oversaturated as Facebook and Instagram. You should leverage TikTok ads as part of your marketing strategy, but the gold rush is happening now and will likely dry up within a year or two.
Ecommerce is commoditized & customers have options
Customers are spoiled for choices when it comes to buying products online. If your brand sells workout supplements, you’ll compete with thousands of other brands that sell the same products. While your products might be better than the competition, customers will make their own decisions on what to buy.
Things like low review scores, slow shipping options, referrals from friends, and more can cause a customer to research other products and reduces your chance of making the sale.
The next recession has many brands terrified about their business
There was a golden age for VC funding in D2C brands. Companies like Allbirds, Casper, Warby Parker, and others raised millions in capital, got amazing press coverage, and managed to IPO by becoming publicly traded stocks.
And what happened? Those stocks tanked by 75%-85% within a year. This doesn’t mean that Shopify stores will fail if they IPO, but investors like to play the long game. With the fears of an upcoming recession, rising interest rates, and lackluster results from other D2C IPOs, your chances of getting lots of VC funding are low. VCs are pulling back on ecommerce investments, and angel investors can only provide so much capital to help you.
This affects acquisition because it limits how much you can spend to acquire new customers. If you can’t rely on spending six figures a month on ads, you need other ways to drive brand awareness and sales.
The upcoming iCloud private relay will mess up attribution
iOS 14 hit personalized ads hard. And iOS 15 effectively reduced the performance of email marketing. iOS users are happy, but Shopify stores are struggling to adapt. And Apple isn’t done with its privacy changes. So what’s next? Tracking user activity.
Apple will make it harder to track user behavior with the upcoming iCloud Private Relay.
What is the iCloud Private Relay? Currently in beta, the iCloud Private Relay masks the IP address for iCloud+ users resulting in last-click attribution being the only attribution model that works. This means you can’t track the user journey for individual users. This will make it harder to see what’s working for your campaigns and leaves brands with limited data on which acquisition channels are working best for them.
Customers expect 2-day delivery at a minimum (thanks, Amazon)
If your Shopify store doesn’t have 2-day delivery as a shipping option, you can expect to lose a lot of sales. You can thank (or blame) Amazon for setting 2-day delivery as the standard. But not every brand can afford to fulfill orders quickly.
Shipping costs are high for 2-day delivery. Customers are willing to spend money on fast delivery. Still, customers are likely to stick with Amazon when Amazon offers 2-day delivery as a free service as part of a one-time payment to Amazon Prime.
Your Shopify store can counteract this with a paid loyalty program like Amazon Prime, but Shopify stores have limited options for setting this up. Not to mention, fulfilling the actual orders within a day or two is time-consuming and expensive, requiring a warehouse, labor, carrier negotiations, and more. You could outsource to a 3PL, but that cuts into margins even more.
How Carro solves the awareness, acquisition and retention problems
We mentioned earlier why we think Cross-Store Selling is a game-changer for brands. The biggest reason we’re investing in Cross-Store Selling for Shopify brands is that it’s the best brand awareness, acquisition, and retention strategy your store can implement to drive long-term growth.
Get discovered by customers from other brands
With Cross-Store Selling, your products become part of a highly-curated marketplace, but unlike Amazon’s bloated SKUs, your products are much more likely to be seen. You can work with other brands to co-market each others’ products to create a win-win situation.
For example, Blendjet teamed up with The Original Green Pan on Instagram to promote each other’s products. Don’t you wish your Instagram posts had over 11,000 comments?
"In addition to a nice contribution to the bottom line, it was also one of the most highly-engaged social posts for the year."
David Krimper, Director of Ecommerce, Manduka
Fulfillment is handled for you
The beauty of Cross-Store Selling is that you don’t have to house the products for other brands in your warehouses. Orders are automatically sent to the brands so they can handle fulfillment themselves.
“Before we joined Carro, we had put our company on the market. We thought we needed capital to expand our traditional wholesaling. Now, we’re able to meet our goals without having any cash come out of pocket. We’re tripling and quadrupling the numbers of units that we move because we have access to so much more inventory.”
Amy Richardson-Golia, June & January
Grow AOV, LTV, and retention
Perhaps the most exciting reason to leverage Cross-Store Selling is that it’s the best strategy for growing your Shopify business in the long run. By working collaboratively with other brands, your brand will set itself up for success. Your Shopify store will become THE destination for your niche. If you sell beauty products, Cross-Store Selling allows you to grow your product listings so your customers will keep coming back for more.
One of the best reasons to shop on Amazon is convenience. Being able to buy everything you need in one place is a powerful motivator. Wouldn’t you love it if your Shopify store was the go-to place for your customers’ needs?
"Take my word for it, if you install Carro, you are going to see what I’ve seen. Which is a dramatic increase to average order value, especially on orders that contain Carro products, which for us is over 80% increase to AOV. "
Ryan Pamplin, Founder & CEO of Blendjet
To sum it up, Cross-Store Selling is the future of Shopify. Cross-Store Selling presents an opportunity to grow your Shopify store without having to spend millions on inventory or ads to keep up with the competition.
To learn more about how Carro can help your Shopify store grow, check us out on the Shopify App Store.