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Shopify announced a new product partnership with Klaviyo on Tuesday that will include an investment in the marketing automation company.
The partnership deepens the relationship between the two companies, signaling a vote of confidence from publicly-traded Shopify in a company that grew as part of the ecosystem it fosters to create new ecommerce tools for independent brands, and is now operating in a competitive software segment. Klaviyo, which offers tools to automate personalized email and SMS messages to customers and brings together customer journey data in one platform, has been part of the Shopify ecosystem since 2017. It is already one of the top platforms accessed by brands and merchants on the Shopify app store.
Through the partnership, Klaviyo receives the following:
- An investment valued at $100 million, according to an SEC filing first reported by Techcrunch.
- Recommended email solution partner status on Shopify Plus, which is Shopify’s plan for high-volume merchants.
- Early access to Shopify development features that will help bring about new marketing features for brands.
Founded in 2012, Boston-based Klaviyo has grown to serve more than 100,000 paying users. It works with brands including Unilever, Dermalogica, Solo Stove and Citizen Watches. In May 2021, the company raised a $320 million Series D round that brought its valuation to more than $9 billion. While Shopify is known for empowering startup brands that sell consumer goods, Klaviyo’s rise is a reminder that the community building software and integrations for the platform bolsters entrepreneurship, as well. In a statement announcing the deal, Shopify President Harley Finkelstein called the company “a shining example” of the ecosystem and its impact.
“Klaviyo has become invaluable to hundreds of thousands of merchants to help them better understand their customers and engage them in highly personalized ways across so many touchpoints,” Finkelstein said. “Klaviyo's success has been astounding, and we're excited to take this next step in our already robust partnership to make it even easier for Shopify merchants to grow their businesses.”
It’s the latest strategic investment made by Shopify as it looks to expand capabilities for merchants who use its software to open, manage and grow online stores.
A few weeks ago, the company invested in Nashville-based Single, a startup that makes tools to enable tokengated commerce for creators. Over the last year, the Ottawa, Canada-based company has also invested in ecommerce marketing company Yotpo and small business bookkeeper Bench Accounting.
In June, the company released details on 100 product releases, saying it was ushering in the “Connect to Consumer” era with tools for B2B ecommerce, social commerce, headless commerce and more.
That new era also brought a close to one in which the company expanded rapidly to meet pandemic demand. Last week, Shopify laid off about 1,000 people, or about 10% of its workforce, saying it missed on a projection that ecommerce growth would stay on the same trajectory as the early months of the pandemic. The next day, the company reported a $1.2 billion net loss for the second quarter of 2022 even as it grew revenue 16% year-over-year, and said it expected further losses in the second half, in part due to costs from the Deliverr acquisition. The company said 2022 as a whole would be “more of a transition year, in which ecommerce has largely reset to the pre-COVID trend line and is now pressured by persistent high inflation,” the company said.
Even with that transition, Tuesday’s announcement shows Shopify is continuing to invest in its ecosystem, and there's opportunity for companies that grow.
After all, the economic headwinds, shifts in shopping behavior and privacy-oriented changes in digital advertising that have rewritten direct-to-consumer growth playbooks present the kind of environment where entrepreneurship can solve problems.
“The next era of ecommerce will be marked by a continued shift toward consumer privacy and the forming of strong digital relationships,” Klaviyo CEO Andrew Bialecki wrote in a blog post announcing the deal. “Consumers now have an increased expectation of merchants to deliver smooth, customer-friendly experiences, and there is a continued proliferation of channels in which brands must deliver these experiences. This partnership builds on the combined vision of two powerful platforms to help founders and operators not just weather the new era – whatever it brings –but thrive within it.”
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LadderUp is aiming for 50% LGBTQ+ and BIPOC participation. Shopify will provide access to its platform.
Shipt is launching a new accelerator program designed to provide ecommerce tools for local retailers.Called LadderUp, the program is centered on equity. Target-owned delivery owned Shipt said conversations with business owners have revealed that local entrepreneurs face “gaps” in technology, but they also want to participate in ecommerce platforms. The COVID-19 pandemic was especially difficult for Black business owners, who saw earnings drop between 11-28% in 2019-2020, as compared to the earnings decrease of 5-17% for the rest of the population.
With the new program, the company’s goal is to reach at least 50% LGBTQ+ and BIPOC participation in the program.
Shipt is aiming to serve businesses in Atlanta, Birmingham, Alabama, Detroit, Houston and Washington, D.C.
Target categories include: grocery/beverage, health, beauty, and floral/gifts retailers.
“Working with small businesses to build up their capabilities is a key part of our commitment to help create healthier, more resilient and equitable communities,” said CEO Kamau Witherspoon. “We recognize the unique role that we can play in both combating hunger in under-resourced communities and boosting small, local retailers that are so vital to communities across our country.”
What will entrepreneurs receive?
Education: Business owners who are selected will receive an 8-week course with industry leaders that covers business-building topics including finances, efficiency, marketing, ecommerce 101, the basics of using Shipt, and legal knowledge.
Funding: Upon completion, retailers will provide $5,000 for businesses to invest in ecommerce.
Shopify access: Shopify, which is partnering with Shipt, is also providing to its access for a limited amount of time to help business owners build an online storefront and manage inventory. The program will also provide technical assistance.Applications are open Feb. 6- March 6.