Building an eCommerce marketplace, like shopify, using the hippest tech

Background Story

My friend, Stephen, is a small business owner selling aftermarket auto performance part and accessories.  He used Magento for his online store, but Magento will stop his product by Feb 2015.  He asked me to build a eCommerce web site, I told him to use Shopify and help him to setup his store in a weekend.

Shopify - Cheap to start, expensive to make sales

$14/month - Starter Plan

25 Items

The package just provide enough feature to have the brand display 25 items online.

NO real time carrier shipping

Unless most products are small and light items which can easily absorb shipping cost into its sales price (Free Shipping), most buyers abandon shopping carts when seeing high flat rate shipping fee. 

2.9% + 30¢ credit card rate

When buyers abandon shopping carts, the above rate is meaningless.

$29/month - Basic Plan

Unlimited items

If most visitors are window shoppers, this package will allow the brand to disclose the entire product catalog for price comparison.

Still NO real time carrier shipping

For auto performance part and accessories, items size and weight varies.  Free shipping for big and heavy items lose money; while flat rate shipping makes shoppers feel unfair and dishonest - abandon shopping carts!!

2.9% + 30¢ credit card rate

A lots of window shoppers ...

Discount Code Engine

I have not use it, so I don't know how complicate a rule can be setup.  To be discovered ...

Fraud analysis tools

These tools show the risk level of each transaction base on the credit card information.  Oversea credit card has a higher risk level than domestic ...  Base on the information, seller can do additional verification or just refund the buyer before the card owner charge back.  This feature is only available for transaction using shopify gateway, at the basic plan tier.

$79/month - Professional Plan

Still NO real time carrier shipping, really!

$50 premium and still no real time carrier shipping, what a rip off.  Easypost only charges 5 cents per shipping label.  However, there is no option to integrate external shipping calculator with shopify checkout workflow.  Let's see what are the other useful features offset the $50 premium.

2.5% + 30¢ credit card rate

Without real time carrier shipping, there are still lots of abandon carts all over cache.

Gift Cards

Gift card strategy does not apply to many merchants, especially small online retailer.  One requirement is the product can be given as gift.

Creating gift card and take 2.5% + 30¢ profit from seller, for a $100 gift card, shopify profit $2.80 from seller and seller received $97.20 cash and $100 liability.  I like this business model.

Professional reports

I have not try the report feature, so no comment and to be discovered.

Abandoned cart recovery

This is a must have feature ☺ when abandoned shopping carts are all over the cache after seeing unfair shipping rate.  Anyway, I have yet to see how this feature work, to be discovered.

$179/month - Unlimited Plan

2.25% + 30¢ credit card rate

Some merchants has already negotiate a better rate, less than 2%, with local bank directly.  Some banks use authorize.net or other third party payment gateways.  I have setup authorize.net with Shopify for Steven's shop.

Advanced report builder

Sure, it is really useful ... for high volume sellers.  Anyway, to be discovered ...

Real time carrier shipping, finally

Let's assume all additional features above Basic Plan are unessential, the cost for getting real time carrier shipping is $150/month.  Base on EasyPost rate, a merchant need to ship over 3000 packages to offset the difference.

There are $100 difference when comparing with Professional Plan, a merchant need to ship over 2000 packages to break even.  I would care less about $100 when I am shipping 2000 packages a month, but what does 2000 packages a month really means?

Online retail store opens 24/7, assume there are 30 days month, the site need to have a average 66.666... sales per day volume to justify upgrading from Professional to Unlimited; and 100 sales per day volume to justify upgrading from Basic to Unlimited.

However, for some online retailer, to make a successful profitable conversion, it is necessary to provide real time carrier shipping to customer; and making the 7 - 10 daily online sales volume is already very successful.

New Project - A small business marketplace that make sense and money

I want to help small businesses, like Stephen's auto parts store, to operate a low cost eCommerce channel to archive better profit margin.  I will leverage the project on cloud platforms from IDE to deployment to realize my idea of how a web site should be built.