Shopify launched Product Network, an app that enables merchants to cross-promote each other's stores and earn commission on sales. Here's how Shopify describes it:
“Shopify Product Network gives you instant access to products from thousands of brands across Shopify. When customers visit your store, they see personalized recommendations that complement your products—powered by data from hundreds of millions of shoppers. You don't research, stock, or ship these products. You just earn commission when customers buy them. Plus, because shopping stays on your store, you own every customer relationship.
Here's how Shopify Product Network works:
- Shoppers discover products from other merchants on your site via search and recommendation widgets.
- The shopper can then purchase items from your store and from 3rd party stores at the same time on your website through one consolidated checkout.
- You earn a commission on 3rd party items purchased in the transaction, which you can receive as cash or Shop Campaign credits.
- You own the customer interaction and obtain their customer data in the case of mixed carts, just as you normally would if they were only shopping from your store.
- The 3rd party merchants receive the order and are responsible for fulfillment and returns.
- Note that if the customer adds only a product from a Shopify Product Network seller to their cart, and doesn't purchase an item from your own store, then they're redirected to the store selling the product to check out. An order is then created in that store's Shopify admin, and you're paid a commission, but don't obtain the shopper's data as if they were your customer.
Shopify began testing Product Network earlier this year with select merchants, and now it's made the app available to all U.S. stores.
Wait, didn't Shopify already offer the ability to carry products from other retailers in your store?
Yes, that's called Shopify Collective, which was introduced in July 2023 as part of Shopify’s Summer ’23 Edition and also allows merchants to list and sell items from 3rd party merchants through one checkout — however there are a few key differences:
- Collective works on margin. Suppliers set the product cost and then Retailers set their own list price, pocketing the difference.
- Product Network works on commission. The products are sold at the same price on both the original merchant's website and on any other store that sells them, with the other merchants earning commission on the sales.
- With Collective, the Retailers must apply to join each store whose merchandise they want to carry and hand-select the items they want to add to their stores.
- Whereas with Product Network, the recommendations are algorithmically generated. Basically it's “opt-out” instead of “opt-in” when it comes to selecting brands and product categories. Shopify is relying on its AI recommendation engine to do the heavy lifting for a more hands-off process.
Shopify Product Network effectively expands the company's three-year-old ad format called Shop Campaigns, which were previously only available to run within the Shop app and website. Whereas now, merchants can run Shop Campaigns across other participating merchant stores.
Amanda Engelman, director of advertising product at Shopify, told ADWEEK:
“One of the things that we were thinking about as we were building this product is the fact that we have all of these incredible merchants—we have an incredible catalog [and] we have really great data. The best asset that we have at Shopify is to figure out how to get merchants working really well together.”
Shopify's not becoming a marketplace. It's instead turning the entire Internet into its marketplace.
Product Network is one of many steps the company is taking to connect its vast product catalog to various touchpoints across the web — in this case other stores. But now let's talk about how it's connecting its product catalog to AI.