In this inaugural podcast episode, Ben and Joel dive into their shared obsession with subscription eCommerce. While Ben comes from a background of deep Shopify expertise and Joel has spent his career on custom builds, both entrepreneurs are passionate about creating a stellar experience for brands and customers alike. In the world of subscriptions, the landscape is particularly interesting. Ben and Joel discuss everything from the birth of subscription DTC tools to recent changes at Shopify to what the future of subscription eCommerce may hold.
- Shopify’s first-mover advantage
- Flexibility as a must-have for subscription platforms
- The impact of Shopify changes on the subscription landscape
- Deciding whether to build or buy a subscription platform
- The difference between CPG and tech companies
- Check out 1-Click Pony
- Connect with Ben Fisher on LinkedIn or Twitter
- Connect with Joel Van Horn on LinkedIn or Twitter
7:46 - Shopify’s first-mover advantage
Ben describes how Shopify’s app ecosystem was the key to its success. But today, that ecosystem is getting overly complicated leading to operational issues.
“On one hand, the positive is that Shopify has a thriving app ecosystem. That was one of the big reasons that Shopify has been able to be so successful. They didn't have to build or take into account all of the nuanced use cases. They were able to enable third-party developers to build apps to fill in the gaps. They were able to layer in the initial base funding personality, and then let apps fill in the more complicated use cases. But the criticism now, understandably, is someone might need like 15 apps to run their business. And so what was at one point an advantage, or it enabled people to do things that if they had relied on Shopify to build all that stuff...the platform would be so far from where it is today. But the problem now is you have a lack of interoperability between these different apps.”
14:28 - Flexibility is a must-have
When Joel started working in the subscription world in 2015, he immediately ran into issues with subscription program Cratejoy. The issue? Extreme limitations on the user side.
“This is true for any platform, but once you get into nitty gritty user experience aspects that we want to do, as well as some of the logistical and in some cases really relate to the fulfillment constraints or needs that your business has, you start running into flexibility issues, right? So in early days, it was the calendar, right? Choosing your next subscription, renewal date, and things like that. And the cadence and the frequency and so on, so forth. That was extremely hard to make user-friendly. And you know, Cratejoy, I think was the worst of it. It was so limited and kind of unintuitive. It was really built for what you said, it was like that sample box. It's the thing that you just get once a month, the timing doesn't really matter, you know, just once a month. Because it's like the thing you do with your kids or the thing you do to experience a new thing. But you know, there's obviously business models that aren't really just about discovery, but like, you want to get something at a certain time because you want to replenish something that you're getting on a weekly basis.”
16:36 - A sheriff has arrived in the wild west
Ben said that the Shopify model changed dramatically at the end of 2020, when Shopify started enabling brands to offer a subscription on the platform using an app.
“So right now, part of the frustration is that subscriptions, up until fairly recently, were built outside of, we’ll call it through like the wild wild west. Where basically there was no way to natively offer subscriptions on Shopify. That has changed as of November. And so you are seeing Shopify go in down this direction of they are starting to provide some of the tooling themselves. They're not enabling you just to offer a subscription - you still have to use an app. And I think that's an important thing that a lot of people don't necessarily, unless you're technical, don't necessarily understand is that you can't just go in and start natively offering subscriptions. Shopify, it's certainly a thoughtful move. I don't know whether or not it's the right move. I don't know. But they've really framed it more around, like, there's gonna be a lot of different types of ways that people will pay for things in the future...you have the ability to create price rules or payment rules around what you sell. And that might include replenishment. It might not.”
Ben said that while Shopify’s native integration is a step in the right direction, the challenge of apps not communicating well may persist.
“What I have gleaned from just their general policies and what they've said about subscriptions and just talk about post-purchase upsells and whatnot, is it's important to the platform to be able to provide native ways to integrate with that. And then I do think part of that really does make a lot of sense from a design perspective. Which is when you have 20 different apps, if a merchant’s relying on 20 different apps, there has to be some sort of center we’ll call it contract, where these different apps can interact with one another. And otherwise like it's chaos. But I mean, I think even still today with brands relying on six different apps, the criticism is, and rightfully so, that the apps don't necessarily play with each other.”
21:05 - Will apps consolidate?
Ben envisions two paths to greater functionality in the subscription app world. Either Shopify will further enable smooth integration, or new streamlined apps will arise that perform multiple functions.
“I think there's a few different ways to approach it. One of which is consolidation of apps around use cases. So rather than requiring five different apps, you end up designing apps for specific use cases….if it requires 15 apps to run your business, in some of those apps, part of your problem is that the apps aren't talking to each other. My guess is that in some of those apps where it's important for them to talk to each other, either there needs to be a more cohesive contract for integration through Shopify itself so that you don't have that much pain, and/or maybe it's an opportunity for there to be a single app that does both those things. So that's a new, we'll call it a native integration. I think where things get slightly dangerous is when the apps themselves - because right now the solution would be integrate with Shopify and then the apps themselves maybe try to integrate directly as well. And that can work. But what you end up with is a web of integrations, some of which are through Shopify, some of which are app to app.”
23:35 - An app builder’s greatest fear
Ben said that while consumers look forward to updates that streamline technology, it can be nerve-wracking for individuals who work in the app business.
“I remember going to Shopify Unite. And you know, you're in this auditorium of people who built businesses and built apps. And you're sitting there. On one hand, you're super excited to find out what's the new stuff that's being released. On the other hand, you're like, are they going to natively release something that kills my business overnight? I can't think of any examples of businesses that were we'll say outright killed by something that was announced. I think there's plenty of examples of Apple though, or even maybe LinkedIn. More Apple. I think Apple captures a similar classic. It's kind of like all the consumers are excited, but like if you were a vendor working with Apple or if you have a popular app in the Apple app store, you're also thinking, dear God, please don't take this in house.”
32:40 - Build your own platform if you need flexibility
Joel reiterated that his custom-based career was driven by need. There simply weren’t platforms out there that did what he needed. That said, if starting today he would test out Shopify first.
“When I started this path of building custom I think there were very limited options there. Obviously no subscription option there either, right. So I think if I were to do it again, I might actually use Shopify. But in my experience previously choosing not to use another platform, it's usually been around the scheduling and flexibility of the frequency, and the user experience around optionality with when you want to get your order, if you want to get more orders. Really the user or the customer facing control over the subscription, which I think to this day is still one of the challenging areas in terms of the existing platforms like Recharge and so on. So I think that's a good reason to build custom, as long as you don't have too many SKUs and you keep things as simple as possible in terms of business logic around pricing and discounts and shipping and all this kind of stuff.”
37:16 - Know when to outsource
Joel thinks that you should always integrate before you invent. Outsource whatever pieces of the business that you can until you hit a wall and need to invest in custom pieces.
“I actually defer to integrating with as many things as I can to offset any kind of development costs or investment, at early stages at least. It does limit the types of discounts you can create or at least early on. There's a lot of things like free shipping at a certain threshold, or combining different products and then you get this free or that discount or whatever. And you know, there you end up keeping it simple. And in many cases you can develop a discipline for how to use the limited number of promotions you can. And usually it's not something that limits the business. It's just kind of rethinking the strategy a little bit, until you get to a point where you really have an opportunity to try something new and then invest in improving those kinds of features.”
39:10 - CPG brands are not tech companies
Ben said that building your own technology doesn’t equate to your company having a higher value.
“After leaving CartHook I was effectively a fractional CTO for a number of subscription e-commerce brands, both on Shopify as well as custom. And in most situations they might, these brands will have someone technical on their team, maybe a junior developer or one developer. But they're not a tech company. And I think you and I have had conversations around this. Like the truth is as far as I understand it, CPG brands are not like building a tech resource in house because it improves their valuation or their resale value. I would say the argument for using a platform, whether it's Shopify or something else, is you're not going to be able to sell for a higher multiple simply because you built your own stack. The reason people are hiring or building out entire tech teams in house, like in your cases, I would assume is because the platforms themselves aren't flexible enough to enable you to build the business you need in order to have a successful company that you can resell.”
41:15 - Look at app economics
Joel agreed that with subscriptions, the value is in the product. It’s important to leverage existing technology until the costs outweigh the benefits.
“Most of these businesses are valued based on the product they sell, not the technology. I think in some cases, maybe there's strategic alignment with investors or other partners or merchants or wherever there is value in building that tech. Maybe there's a slightly different business model where there's again, the next frontier that just isn't facilitated by existing platforms that there's an opportunity to know about. But I think the trend is typically, like you said, leverage what’s out there to get the business going, build up that customer base, optimize in all the other areas of the business. And then I think some businesses get to a point where they do want to optimize on the technology costs, whether it's, like you mentioned before, it might have 15 or 20 different apps. Well, they're all charging some sort of fee, maybe even a percentage. And you might look at the economics and say well you know what, based on what we need, it could be cheaper for us to build our own thing here or there, or replace the whole thing entirely.”