Subscription businesses are hot. As they should be! They just make a lot of sense from a business perspective. Being able to sell again and again to customers you worked hard for to acquire.
But we see some of our clients struggle on the technical side. The goal of the post is to share what we have learned so far and to open up a discussion on how things can be set up in a better way.
Shopify has a great checkout. They spend a lot of money making it secure, fast and good looking. And, it makes a lot of sense to pay Shopify a monthly fee for all of these services.
It’s incredible how Shopify raised the bar for even the smallest merchant. But being in Europe and living in the age of recurring business models the Shopify checkout seems to be more of a liability than an asset at this point in time.
Let me clarify why.
Shopify didn’t support recurring payments natively before November 2020. So, Shopify’s rich ecosystem of app developers saw an opportunity! They made their own checkout that did support recurring payments. A checkout outside of the Shopify environment. This was a great time for devs as they could taste the sweetness of being able to charge 1% - 2% on the recurring revenue. Since hundreds of million of dollars are spent on Shopify stores these were some pretty good days 🥇.
But let’s focus on the payment flows instead of the money being made 😁. All of this literally meant that if you bought something as a one off purchase, you were directed to the normal Shopify checkout but from the moment you selected a product and chose a recurring payment option you were taken to a totally different checkout experience that is outside of the Shopify environment and thus custom made by the developers of the app.
As a firm believer in the clean UI, security and simplicity behind Shopify this felt a little weird. We were setting up customers that choose Shopify (partly) for the checkout to use another checkout.
I’m not at all saying here that the app developers didn’t do a great job, it was awesome to see how they grabbed the opportunity and came up with such a good solutions so quickly.
Eventually Shopify came up with a solution and enabled native recurring payment support. This meant that you didn’t have to be redirected to another checkout anymore as a customer. You could just stay within the well known Shopify environment.
This sounds like great news… App developers started to build on top of this new Shopify feature and instead of directing people to their own checkouts they used the Shopify APIs to build a native Shopify checkout experience.
But especially for European customers there is a huge huge huge BUT as Shopify only supports a handful of payment processors for the recurring orders:
Now what does this mean? To make a long story short, it means that Europeans are not able to pay with their preferred payment methods such as Bancontact, iDEAL, Sofort and SEPA Direct Debit. That is a big problem as our successful subscription based merchants get multiple questions a day about the lack of payment method options.
To see if our feeling was correct, we reached out to Mollie to ask if they had any idea how many people want to pay with such payment methods and according to their data more than 50% wants to pay with such payment methods. So we are leaving more than 50% up for grabs.
This brings us to the current situation in which you see all kinds of very good alternatives pop up. We had a discussion with one of them (there are probably more, if you know one please reach out), Firmhouse. They have a lot of awesome clients and are doing an amazing job. People that use a combination of Firmhouse and Shopify already please also reach out.
But, it is still another app, another “platform” that you have to log into, set everything up, have a duplicate product list, etc. It’s all manageable and there are lots of features that could benefit your business thoroughly so at this point this is the best thing you can do, period. But it is still strange that this is not natively possible within Shopify.
So if you are thinking of building a subscription business on Shopify (which we still very much advise) you should think long and hard before commiting to a system that manages your recurring payments because it is an important aspect that has a huge impact on your business down the road.
As always, if you have any questions, let me know, happy to help, listen and learn!