Speaking of Losing: Not Understanding Shopify

History is littered with the concept of marketplaces. 

"Shared money".

The entire purpose of a marketplace is to capitalize on shared money, to a point where more money comes in then goes out.

Cities performed this function in the old days. Think about "downtown" ... shared money as rural people came into the city and spent money ... more money going in than going out. This model was eventually blown up by interstate highways, which pulled retail out of downtown to the interchange. Downtowns died, eventually being repurposed.

Pre-internet, you had direct-to-consumer brands leveraging the marketplaces of their day ... lists and co-ops. Catalogers were nothing more than participants in a large marketplace that had more money coming in than going out. Ecommerce ended their marketplace.

Ecommerce was nothing more than a large marketplace fueled by an opaque network of shady digital advertisers using Google/Facebook/Display Ads as the hub of their activities. This worked well, because more money came into the system than went out of the system ... money was reallocated from suburban malls into the opaque digital advertising system. Of course, Amazon harmed this marketplace with their own marketplace.

Amazon is a gigantic marketplace fueled by algorithms. This worked well, because more money came into the system than went out of the system ... why wander in the Google/Facebook wilderness when Amazon self-contained the entire shopping experience? Of course, Amazon is now being harmed by the latest flavor of marketplace ... Shopify.

The Lemonhead will scream "AMAZON IS NOT BEING HARMED!!". The Lemonhead always defends the "old" business model (they're still defending department stores ... self-contained marketplaces from the pre-internet days). For a period of time, Shopify will have a money advantage (which is the secret of a marketplace), because more money will go into their world than will flow out of their world. This doesn't mean that Shopify will "win" ... but somebody doing what Shopify is trying to do (marketplaces fueled by AI) will create something interesting ... they will find a solution where they bring in more money than goes out of their ecosystem (likely at the expense of Amazon, Google & Facebook).

• Aside:  The entire brief history of social media is more traffic coming in than going out, the subsequent process of losing traffic happens much faster in social than in retail and/or ecommerce ... providing great case studies of when "tipping points" happen.

On the surface, Shopify is a self-contained world for a small-to-medium sized ecommerce brand to sell stuff. Under the covers, Shopify (or somebody who will do Shopify better than Shopify) is a modern marketplace seeking to bring in more money to the ecosystem than leaves the ecosystem.

Losing companies tend to over-focus on two ends of the spectrum ... on the 30,000 foot view of commerce (will ChatGPT supplant Google) or the 3 foot view of commerce (can Buy Now Pay Later grow sales for us). Both are important. Between 3 feet and 30,000 feet is where the Lemonhead does not understanding the Shopify effect on ecommerce ... the goal of every company is to bring more money into their ecosystem than goes out of their ecosystem. Which means, of course, if you are a $70,000,000 ecommerce brand, you have to figure out how to use all of these "ecosystems" to your advantage so you have more money coming in than going out.