Shopify President Harley Finkelstein told investors on the latest earnings call that “to be clear, LLMs do not bypass Shopify's checkout,” and that “the complex back end of commerce will always flow through Shopify.”
However I've got to push back on one part of that statement: Is checkout really that complex anymore? It seems that everyone from Visa and Mastercard to PayPal and Stripe (both which partially power Shopify's checkout), are creating agentic checkout experiences.
Actually let me push back on two parts of that statement: LLMs do not bypass Shopify's checkout… for now. What's to stop OpenAI, Google, or any AI-powered commerce platform from inviting Shopify merchants to sync their product catalogs and inventory and managing the checkout experience in-house, just like many other omni-channel platforms?
I sync my Shopify product catalog with Amazon on several stores, which handles the checkout (and is developing agentic commerce capabilities). Why couldn't I sync my Shopify products with ChatGPT, especially if it offered me an incentive to do so?
Finkelstein went on to say:
“If you think about shipping or payments or inventory or analytics, that is really the stuff below the surface that every merchant requires, and that’s where Shopify shows up. Just in terms of the monetization of agentic, the focus like any other channel is driving both merchant and then consumer adoption and then ensuring it’s done really, really well.”
Again, I'm going to challenge that — and not to hate on Shopify or Harley Finkelstein, but for the sake of presenting the thesis that Shopify's moat around its merchant relationships may not be deep enough to entirely hold back the advancing threat of AI-driven commerce to its business model, especially over the long term.
Shipping, inventory, and analytics… would any merchant say Shopify really shines in those areas? Or does Shopify simply provide a connection to third-party platforms that actually do those things really, really well?
Shopify has first-mover advantage, I'll give them that. But what happens to that advantage when OpenAI begins building those connections directly with the same third-party platforms that currently serve Shopify merchants? Because they will.
None of this is to say that Shopify won't continue to develop its platform's competitive advantages in the area of agentic commerce. It's also yet to be determined how big of a role agentic commerce will even play in consumers' shopping habits, while Shopify continues to add value in other areas that currently carry more weight.
However, I think it's important to realize that once there's a real agentic commerce market, there will be pathways to connect to that market that bypass Shopify. Saying otherwise is short term thinking.