Shopify for B2B: What You Need to Know Before Migrating

Follow Us On LinkedIn!

• Caleb Schmitz, CRO at Anchor Group
• Michael Mueller, eCommerce Account Executive at Anchor Group
• Anchor Group (Company Page)

Podcast Transcript:

Michael (00:00)

Hey everybody, thanks for joining episode 28 of the Anchor Group Podcast. Today, Caleb and I are going to be chatting about Shopify. Shopify is a very popular e-commerce platform and working at Anchor Group, we work a lot in the NetSuite space, ERP space, and e-commerce space. We run into Shopify and we develop on Shopify. So today we're going to talk about that. So stay tuned.

Caleb, thanks for joining today. I know you have worked a lot in the e-commerce space and the ERP space, kind of where they intertwine with one another. Now today we're going to talk about Shopify. So as we get things kicked off, what are your quick high level thoughts on Shopify as an e-commerce platform?

Caleb (01:18)

I've said this many times on other e-commerce episodes that we've had here, but Shopify is one of the best e-commerce solutions and there's a reason why people default to it. It's a safe option, but more specifically it's a safe option when you're a direct-to-consumer brand or a B2C brand only. When it becomes less of the safe option, it's going to be on the B2B side. My opinion is probably going to change over the next few years and it's going to evolve over time because Shopify has a lot of initiatives on the B2B side, but what I also know is that Shopify is primarily a payment solution. If you think about it, they're really a payment processor that is disguised as an e-commerce solution, but happens to be one of the best e-commerce solutions too. So they have a real true place in the market. The B2B side is where there's often more focus on the functionality for B2B consumers.

They just behave differently. Their needs are different than direct to consumer customers in most cases. And there can be a lot more variety in the way people do business in the B2B side. It's more customized and tailored to them specifically. And a lot of the times e-commerce solutions like Shopify have a lot more locked down functionality within the My Account and the checkout. And those are areas that unless it's pre-built and pre-configured in Shopify, that's where some of the functionality for B2B is not always a great fit. And it's just good to acknowledge that at its current state, where it's good and where it isn't good. It is by far the best B2B solution or B2C solution.

Michael (02:55)

And I agree with that. As we dive into this, Anchor Group is a Shopify agency. At Anchor Group, we migrate websites from other platforms like WooCommerce, Magento, onto the Shopify ecosystem. Now, I know, Caleb, as you mentioned, we see a lot of the success in the D2C space doing those migrations. But here's what I've learned after working with a couple of multiple companies going through these Shopify migrations. What I realized is B2B can mean wildly different things depending upon who's saying it. For example, if a company is just trying to get their feet wet in the e-commerce space, technically they're a B2B company, but they're just trying to figure it out for the first time, that can look very different than maybe some of the more established companies you and I have worked with that are running NetSuite as an ERP and have been really ingrained in the B2B space or using NetSuite My Account. When you say B2B for a company like that, that is a whole different meaning, buying portal, managing quotes, invoicing, sales rep masquerade, stuff like that. I know we've built out a lot of functionality like that on different types of websites. That's one thing I've noticed is that B2B in this ecosystem can be totally dependent on who you're talking to and what it means.

Caleb (04:18)

And the requirements can surface during the course of the project when we're implementing. They can surface or this may be your first B2B e-commerce site and you don't really know what your B2B customers want in an e-commerce solution until they start asking. And that's when there is risk on the B2B side to go with a solution that's less flexible on my account and checkout because of those future customer asks that you just might not know would happen.

I've been really impressed with Shopify's roadmap though with their B2B. They have a strong roadmap, but let's be honest though, there's still some relatively standard B2B features that they're just now adding like ACH, pay by ACH. That's been around for in the B2B space for a long time, but they are thriving and they do have a big focus on it. So I think my opinion is going to rapidly change on it on the B2B side over the next few years.

And it actually is a really good B2B solution for some businesses. If your B2B business is really just direct to consumer e-commerce experience, but the only difference is they get customer specific pricing. Shopify handles that pretty well. And you get the rest of the benefits of a direct to consumer experience, some of the best checkouts in the space. You might not be able to negotiate your payment processors and be agnostic as much there. But you do get a lot of that basic functionality. So if you're really a website and I do come across B2B companies where the way they interact with their customers online is most similar to a B2C. And those are the types of B2B customers that are actually a really great fit for Shopify. Really that are just pricing differences.

Michael (06:07)

No other ERP data being serviced to the my account or any checkout functionality on invoice payments. If you just strip it all the way down and that's all it is, is price levels and customer specific pricing. Shopify can still be a great fit.

And I think to summarize, the more basic a B2B website needs to be fit, if it feels like that direct to consumer experience, Shopify can be a really good fit for it. A quick two other things that I find very valuable about the Shopify ecosystem is first off, all of their templates that they have for Shopify themes. And this is one thing that is a little bit different. The Shopify ecosystem is huge.

And a lot of different agencies, different development partners have pre-made themes that companies can get. Some of them are B2B focused. So if you want special features, for example, catalogs or different partnerships within a B2B space called out, there are pre-made themes to do that. Now, the reason I call this out is because sometimes B2B businesses, when they want to get into e-commerce, they're looking for a low total cost of ownership for those first one or two years. And Shopify can give you that. Now, Shopify is not going to blow you out of the water on what it can do from a functionality and features perspective, especially if you need custom, like Caleb, what you've said. But that's where I see Shopify being an actually a good play and a value play for many companies is maybe older companies that have been running for a long time and just now want to start modernizing little by little Shopify could be good. Another element that I like about the Shopify ecosystem is their app ecosystem. From all the different platforms I've worked with, it's one of the most robust app ecosystems. Think about a feature you might want on your website. You usually are going to find a low, medium, and a high tier option within that ecosystem.

Caleb (08:13)

Especially with direct to consumer apps.

Michael (08:17)

With direct to consumer. And I anticipate that if Shopify's push for going more B2B and trying to make that more prominent in their product, if that starts to really stick, I would anticipate that the app ecosystem will follow in time. So right now there might not be as many B2B focused apps, but over time, who knows? That could change.

Caleb (08:41)

To some extent, I think that they'll always have some type of limitations on their checkout customizations because they are effectively a payment solution at the end of the day. They're always going to have some form of that lockdown, but hopefully they add enough features with the volume of requests on the B2B that it kind of solves itself. That's how I see it probably playing out.

Michael (09:01)

Now for anybody listening to this Caleb, you've mentioned Shopify payments. Let's go into a little bit more detail there just to explain why Shopify is so closely tied to Shopify payments, to being as people say, a payments provider. Do you want to touch on that and kind of dig into that a little bit?

Caleb (09:28)

The pricing model is largely based on a transaction fee using the payment processors and the payment options on Shopify. That's where a lot of your costs. So at low volume, when your total transactions are sub $1 million of revenue through the website, Shopify clearly wins in the total cost of ownership. It is simple there.

But once you start being at scale, it becomes more noticeable, especially when you're getting a percentage of a B2B sale, that percentage amount still exists that you're giving up rather than just a per order fee, is usually a per transaction. There's a transaction amount associated to it. And then usually at that level, you're dealing with subscriptions for the software and enterprise Shopify plus too. So you've got a combo that you're navigating. That's kind of the con is that it becomes less favorable as you grow and scale as a business that pricing model, but it consistently helps you. It has great marketing features and apps to help marketing scale it in the first place. The revenue scale that revenue in the website. So you kind of play this game about which is going to be better, making it easier for marketing so that they can scale it in the first place, balancing that revenue on the other side that that per transaction fee that you're dealing with. So I think that that is a constant balance that companies will face. And there's a reason why there's other e-commerce people in this space first, especially on the B2B side, because these are real pricing model adjustments that they're navigating.

Michael (11:12)

Definitely. Hopefully that provides some clarity for people who weren't quite sure about how that pricing model works and especially the scalability. I like how you said, really once you get to that 1 million in annual revenue, you're going to want to rethink your tech stack and going with Shopify payments and that sort of thing.

Caleb (11:35)

And it can still make sense to be on Shopify. Don't get me wrong. I want people to not just default it as always the best option because that is not always the case. It's easy just to decide that and accept that as true. But there are real benefits to calculate on Shopify. And even if you're paying, even if you scale your business to where Shopify costs you three hundred five hundred thousand a year in transaction fees and you're dealing with that, that can happen, by the way, certainly can happen.

But at the same time, your revenue is getting to a certain point. If Shopify's features and having a great checkout and marketing ability, if those are the core reasons why you're even achieving that revenue metric in the first place, and those aren't replaceable by anything else, then it's a fair trade. You're able to have a solution that helps you scale and get that revenue in the first place, and you're sharing that along the way. And you know what? In the beginning, they probably, it costs more on them to have smaller businesses running on Shopify and the sub one million. So you're playing this game constantly and balancing what is best. But I always like to come into it, be as agnostic and objective as possible. At this given point in time, is it the best for me? If yes, why? If no, why? And just be objective.

Michael (12:54)

And being able to ask those objective questions is incredibly important. That's, I know one way Anchor Group really, we help our customers and our clients understand different options that are out there for e-commerce.

Caleb (13:13)

So what would be your, sorry to interrupt here, what would be one of your favorite distinctions between Shopify and let's say BigCommerce? If you were to say what do you like about one and what do you like about the other and maybe let's call it a direct to consumer.

Michael (13:32)

Comparing Shopify and BigCommerce for a DTC business, direct to consumer, a couple of things come to mind. First would be the app ecosystem, which we touched on earlier. With a direct to consumer business, those can look very, very different. Now, a Shopify website might get you 80 % of the way where you want your website to be. Having an app ecosystem allows you to essentially tack those onto your website to build out the functionality and features you want for your D2C business. Now, BigCommerce, for example, is great. It can be good as well in that space, but it doesn't have quite as many apps in the ecosystem. So we'll see some merchants who are on that platform say, hey, I need this. Well, unfortunately, that app doesn't exist specifically for BigCommerce. So what a lot of these app companies do is they have a hero product where the main elements of their product that they've developed are set up for Shopify. But then whenever they get these one off requests for something like BigCommerce, they try to kind of in a one-off capacity, take what they have made for Shopify and implemented on a BigCommerce website. And you don't always get the same functionality and features you would on the Shopify website since that app was originally made for Shopify. So that's one example that I would give. Another example is going to be ease of use. Many people in the industry think that Shopify, even from a UX UI administrative perspective, has just a better ease of use to it. There's less of a bell curve at the beginning of learning how to manage a Shopify website versus a BigCommerce website. From my perspective, you're kind of splitting hairs on that one because from my experience, if you've learned how to work on one, you can easily work on another. Now, of course, the layout is going to be a little bit different, not extremely different. Some of the functions in the admin portal are going to be a little bit different. But nonetheless, if you know how to work on one, you'll figure out pretty quickly how to work on the other. But as a kind of an industry expectation, Shopify is easier to learn for the average person versus some of these other platforms, BigCommerce being an example of that. And that's why Caleb, I think Shopify has so many new companies on it. First off, their branding and their marketing. Come on, you watch YouTube these days and don't be surprised if Shopify websites or Shopify advertisements show up. And maybe it's just the algorithm targeted at me, I guess, now that I say that out loud. But nonetheless, Shopify advertisements seem to be all over the place. And maybe it's just the algorithm chasing me around. I don't know.

Caleb (16:17)

You know, it's funny is I think I like the BigCommerce admin dashboard more than Shopify's. I think Shopify had simplified it down to the average user and they're so less technical that they dumbed it down so much that sometimes when you dumb something down too much, it becomes a harder user interface. I don't know if you've ever experienced that. It's just a little bit slightly harder to grasp. And I like something a little bit more plain. And that's what I like about BigCommerce's interface. It's a little bit more simplistic.

Michael (16:32)

And Caleb, that's where I think we would differ on that because I know just from working with you, our minds work different ways. You're much more technical than I am. And I can understand how a BigCommerce admin dashboard, in my opinion, feels more technical. You can get into more of the nuance of a business just from the native admin dashboard. Whereas what you're saying Shopify is much more watered down where for somebody like me, when I go in there and in my role, spin up a development site or at one point I was managing a Shopify website, I felt like the ease of use was just better. I could get to the places I wanted to better. The routing made sense to go into the pages I wanted to. And so that's why I say I really think it does depend on who's looking at it, who's working in it. But as you're saying, for the average user, Shopify is a good base level to work off of, especially for people who want to learn e-commerce for the first time, Shopify is a great place to start.

Caleb (18:01)

I think that if I'm thinking through this, Shopify often favors the marketing team the most. And then BigCommerce favors marketing team less than Shopify, but it starts to tilt it into the IT departments, favors them a little bit more. It starts to push that in their direction and balances it out. And you go into NetSuite e-commerce, that side of things, it's definitely favoring the IT department. It kind of the total opposite direction. And that's why I think that I typically think of Shopify as the direct-to-consumer leader because in the direct-to-consumer side, you're dealing with high volume, you need marketing to be able to really exceed better than the IT department in a lot of cases. Then in the blend between direct-to-consumer B2B, that blend, you kind of start needing to bring in the IT department because you're dealing with integrations with your ERP a bit more, dealing with invoices and other payment methods, all of that. So where you need to give a little bit of that extra flexibility to IT and take a little bit from the marketing. Now, let's be fair, you could still connect all your key marketing, like email initiatives and whatever, all of that is still going to be the same for that marketing team. And then you get into the suite commerce side that NetSuite e-commerce, it pretty much strips it away from the marketing team favoring them and really favors the IT, which is interesting that maybe that's part of why I think the IT and the B2B favoring kind of seems to mirror who the different departments and the staff who would be managing the site.

Michael (19:47)

I agree. And that's a, as I envision that, that's a great sliding scale of those three platforms. And I think even just that image itself is going to help people understand and kind of recognize where they are on that. Are they more marketing minded, more IT, more operations minded and what solutions can work in the immediate future and the longterm. Now, as we start to wrap things up, one thing we have not talked about is integrations. So Anchor Group is a NetSuite Alliance partner and Anchor Group implements NetSuite for merchants. We have a lot of experience, years and years of experience doing that for our clients. Now, what that results in when we work with clients that have NetSuite on the backend and have an e-commerce front end, whether it's a B2B portal like we've talked about or whether it's a D2C website, there needs to be an integration between those. As Caleb was mentioning, something called Suite Commerce, the NetSuite e-commerce engine, that's built right on top of NetSuite. No integration needed. But whenever you have NetSuite and an external e-commerce platform like Shopify, like BigCommerce, you need an integration layer to carry the data between both systems. Now, the crazy thing is, of course, you don't technically need an integration, but then you're going to have a bunch of manual work. NetSuite is an accounting software system. You want to make sure your information gets from e-commerce in the NetSuite, vice versa. That integration saves a ton of time, energy, and your team's talent automating all those flows. So Caleb, I know you've spoken with a lot of different companies about that integration layer between NetSuite and an e-commerce platform. Give us your quick thoughts on what companies should be looking for and thinking about when they enter conversations about that integration.

Caleb (21:49)

Well, I think it's important to think that NetSuite is more than accounting and that is one of the main components. It's also your full order management, your procurement, your inventory management. It is everything on the back office. And it's really critical that you integrated in not doing CSV exports of your orders from Shopify and then into NetSuite because it delays your fulfillment times. It delays many things throughout your operations. It just doesn't make sense to CSV export and import it in all the time and have someone managing that. So normally NetSuite, I would say, starts to become really relevant for someone to purchase once they're about five million in annual revenue. It's certainly possible to purchase it sooner than that and even later, but that's when the ROI, you start noticing the pain points in your business. If you're a products based business on Shopify, you're going to start noticing it quite a bit then. But it is also hard and expensive. ERP is expensive in comparison to a Shopify site. Usually when people are starting off on Shopify, their IT expenditure is very low. And it's because they're building up their marketing and all the rest of the business. And that's why Shopify is a great option because your IT expenditure is quite low. But then you start running into other issues. You're starting to use Shopify then as your order management and your fulfillment solution. It's just not designed to be that. It can be it for a lightweight with lighter volume, but it is not your full order management. It is not your inventory management, your procurement solution, accounting. It's not those things. It is just your e-commerce.

And now at a certain point in your growth, you need an ERP that handles all of the rest of this. And so we work a lot with NetSuite. That's what we implement. We work a lot with e-commerce and these businesses combining the two. But then the integration exists where you've got multiple record types. You've got customers data going back and forth. You've got item data, product data. And in the B2B space, you're going to have thousands of items. You don't want to manage those out in two different places. You want to integrate them. Then you're dealing with pricing on the item level. What about adjustments to pricing automatically when your costs, your landing costs are adjusted? So you're wanting to do all these adjustments live based on real procurement data. So when I receive this product in, am I adjusting my costs and my pricing live based on this procurement and receiving this information in? When I'm fulfilling the order, then having that go update Shopify so that it could be marked as ship with all the shipping information as well. You got the sales orders coming from Shopify into NetSuite. And then what about if there's a phone call order? Maybe I want to pass that sales order from NetSuite into Shopify so that they can view their order history for a phone call order. These are all areas and good examples of the importance to have an integration. And there's a few different options for these. And most of the direct to consumer, the flows are quite easy to set up across all the e-commerce and the direct consumer pretty well locked down. They become more complicated in the B2B flows. That's why I'm more hesitant on which ones I position in which in middleware and solutions I position for that B2B. But let's talk direct to consumer for a moment. NetSuite has their own NetSuite connector and it is fine to use, but it is not the best one forever. And because of that, I normally don't recommend it because there's implications on the rest of your licensing of NetSuite if you try to remove it later. And although it is an option and is probably the total cost of ownership of an integration is one of the cheapest out there to use the NetSuite integration. But when people come to talk to me, I talk a lot more about my opinions on how to be more strategic on licensing. And this is one of those topics. It's just too much to go into detail on this particular episode. So that is technically an option and then there's a few other options. There is a handful of others.

Michael (25:56)

And at Anchor Group, we like the iPass middleware options where you have some sort of middleware system connecting NetSuite to your e-commerce because from there you can also use that middleware to connect to other platforms or other software systems you have. And once you get to about that $5 million mark in annual revenue, as Caleb's saying, you're going to have NetSuite, you're going to have e-commerce, and more often than not, you've got other software systems that you need to all connect. So having a middleware system can be very helpful streamlining all that automation so you're not having to manually.

Caleb (26:43)

And it goes beyond just NetSuite when you have middleware, they can connect anything. So you may have Shopify to Zendesk for ticketing, extra ticketing, but what about, okay, Zendesk then to NetSuite and you don't want to have to pass it through Shopify that pass that data. The middleware becomes your hub to connect different softwares that may exist. Maybe you use Slack or something like that and you need to connect Slack to some other software as well. These are all different ways that you can utilize that middleware and that IPaaS type of solution to connect the data. Once you get beyond a single B2C flow, I definitely start to evaluate that as the next option. And then it becomes one place to manage all integrations. And that's favorable at scale for an IT team.

Michael (27:35)

Definitely. Now, one recommendation I have is that when companies vet out different e-commerce platforms, Shopify being one of them, and especially when they start thinking about that integration layer, what we always recommend is to find five products or five things. It could be a complex customer. It could be a customer structure in NetSuite. It could be complex products in NetSuite, a complex pricing table, stuff like that. Find five of those for your business and then focus on those five to think of the routing, the data routing that needs to happen to get that from NetSuite to in this scenario, your e-commerce storefront. So Shopify, for example. And that's our super good litmus test to figure out if Shopify is going to be the right solution for you. Does it handle all that data natively? Do you need to tack on apps in order to surface that data? Are your customers the way you want? And going through that, it takes work. It's not just the flip of a coin to figure out if it works, but that's a really good test to figure out if Shopify is going to be the right solution for a company. Now, Caleb, as you've mentioned many times, DTC companies, nine times out of 10, that's going to be a great fit. But when you get into the B2B space, that's where you just got to be more hesitant right now to really vet it out.

Caleb (29:01)

I would not recommend if someone does not have experience implementing 10 plus B2B sites for them to make the decision on which platform they should get for B2B by themselves.

Michael (29:13)

Definitely not. That's where you want to lean on an expert. So as we wrap this thing up, if you're listening to this and you're running a Shopify store or you're using NetSuite, or if you're thinking about migrating to Shopify, trying to figure out if it's the right solution for you, that's where Anchor Group can help. As I said, Anchor Group, we are a Shopify agency. We develop on Shopify. We help companies migrate their website to Shopify. And we bring that e-commerce expertise paired with that ERP expertise. And that's where we come in. So if your systems actually need support, they need growth, we'd be happy to have a conversation with you about that. And so always you can find more information about us at anchorgroup.tech. You can connect with Caleb Rye on LinkedIn, always happy to expand our networks. And of course you can subscribe to this, the Anchor Group podcast. We send weekly podcasts about ERP, e-commerce and integration related topics.

Caleb (30:19)

And that's it. It was good. Thanks for walking through everything, Michael. Appreciate it. And I know we got lots of other topics on this. There was other things I thought would be fun to talk about on this particular episode that I think will punt it on solution designing hard things for Shopify. I've had something today where I was like, this would be a good topic to explain how to solution design complex pricing needs for customers in a B2B space when you're trying to interact with them like a B2C customer. And these are all examples of, it took me a while to solution design this and I realized that I don't think very many people could do this solo. And it's important to have someone along the way. Just to bounce an idea about.

Michael (31:05)

We'll table that for now. But let's hit on that in an upcoming episode.

Caleb (31:11)

Sounds good. Well, thanks, Michael. Appreciate it.

Michael (31:14)

Thank you, Caleb.

Where to Listen to the Podcast

Find more episodes of the Anchor Group podcast!

• Anchor Group Podcast on Spotify
• Anchor Group Podcast on YouTube

Oracle NetSuite Alliance Partner, BigCommerce Certified Partner

As both a BigCommerce Certified Partner and an Oracle NetSuite Alliance Partner, Anchor Group is ready to handle BigCommerce and NetSuite projects alike! Whether you already have one platform and are looking to integrate the other, are considering a full-scale implementation of both platforms, or simply need support with ongoing customizations, our team is ready to help answer any questions you might have! Get in touch!