Shopify to open first bricks and mortar space this year

Shopify CEO Tobias Lutke, center wearing hat, is celebrated as he rings the New York Stock Exchange opening bell, marking the Canadian company's IPO, Thursday, May 21, 2015. (AP / Richard Drew)

TORONTO -- Shopify Inc. announced Tuesday its first brick-and-mortar location will open later this year and unveiled a host of new in-store infrastructure in a bid to attract -- and keep --more retailers on its e-commerce platform.

The Ottawa-based company revealed at its Unite conference in Toronto that its first physical space for clients, a hub for retailers to get support for growing their business, will open in 2018, but did not say where.

"It is kind of weird that a company that was forged in the fires of the internet commerce is having a physical store, but it is a bit of a canvas for us to do some cool experiments," chief operating officer Harley Finkelstein said in an interview at the conference.

Shopify's focus on physical support for retailers comes amid slowing growth -- albeit at a rate that still hovers around 70 per cent -- and questions about its customer retention as curiosity has grown over how many merchants open stores through Shopify only to shut them down later.

However, Finkelstein stressed that the features weren't driven by talk of slowing growth, market fluctuations or questions around merchant retention.

The questions about customer count have grown since short seller Andrew Left targeted the company late last year, saying that it relies too heavily on small merchants whose future business is uncertain and called on the company to release data about customer "churn."

But the company refuses to share its current merchant count, saying it is a total it only discloses at the end of the year.

"Some businesses don't succeed, but the ones that do, stay with us for a very, very long time and the cool part about that is that the ones that stay more than offset the ones that leave," said Finkelstein.

"This has nothing to do with the stock price, or the earnings or some short-seller. This is really about partners and merchants."

Shopify's physical space will cater to small business owners.

Finkelstein figures most of the people who visit the location will be developer partners or merchants seeking information to collaborate, but he also envisions that the space could be used for events or opened to merchants to sell their products for a few days.

He said the move is in step with companies like eyewear brand Warby Parker and clothier Bonobos, which primarily sell goods online, but still operate showrooms and stores.

"The (companies) who do really well are the ones that realize we don't actually have to sell anything at our bricks and mortar store, it's just an extension of our brand, maybe it's a way for us to communicate with our community," Finkelstein said.

His remarks came after the company announced it was offering "dynamic checkout" to merchants, which eliminates the need to fill out lengthy forms and insert credit card information by allowing customers to make payments with a single tap using contactless payments systems including Apple and Shopify Pay.

Shopify also said it would roll out upgrades to its point-of-sale offerings, including tipping, in-store pickup and multi-channel return and exchange options.

It will even update its technology to accept local, cashless payment methods available overseas and offer a beta version with extended capabilities for merchants running their operations in French, Spanish, Italian, German, Japanese and Portuguese.

The company also showed off its virtual and augmented reality technology to Prime Minister Justin Trudeau at the conference.

In recent years, Shopify has been toying with using the technology surmount one of the e-commerce market's biggest barriers: getting customers to buy products without insisting on first seeing them in-person.

Some of the offerings it has been developing allow shoppers to wander around a virtual store by using a mobile phone or tablet to peek at product displays and shelves of merchandise, which customers can swivel to see from every angle, from the comfort of their home or wherever else they may be.