Shopify Gets SaaSy With Small Business

Small to midsized businesses (SMBs) have been caught between a rock and a hard place by their SaaS platforms.

Everyone knows interest rates have been rising and inflation has also lifted prices. However, the seemingly endless and automatic "price changes" announced by billion-dollar software companies like Shopify are endangering the very existence of SMBs. Shopify in particular just announced price hikes which have drawn the ire of small business customers.

E-commerce has rocketed past a quarter of all retail sales revenue, and SMBs make up some 40 percent of the GDP of most countries. As such, they will be a significant share of sales for SaaS companies. However, these SaaS companies seem to be treating this fact with disdain.

Larger companies can crunch significant per-user discounts on software usage, but SMBs usually pay close to the full rack rate for their software platforms. In addition, because Shopify and similar platforms are not full-service platforms, SMBs usually have to stitch together several platforms, apps and plug-ins to handle inventory management, shipping fulfilment and returns (a hefty financial burden themselves), and other tasks that each come with an additional price tag. The average merchant using Shopify, for instance, spends hundreds of dollars a month for upwards of six apps. This also raises personnel costs, as dedicated teams of platform-specific engineers and developers are needed to keep things running smoothly. If one app isn’t properly connecting with another — e.g., a point-of-sale system — it could mean loss of customers due to a poor experience, which a SMB simply cannot afford.

With each platform ratcheting prices, the benefits of e-commerce trading are being whittled away and threatening SMB profit margins and survival.

Lumping even more pain on SMBs is the rise in e-commerce returns and the associated cost of not one but often three postage costs for the same parcel of goods bouncing from company to customer and back again due to consumer fraud, change of mind, and vendor mistakes.

E-commerce solutions were meant to be the lauded savior of small businesses, allowing them to scale and reach customers outside their usual brick-and-mortar footprint. Yet e-commerce is fast becoming a burdensome anchor on the operations of most SMBs. The very platforms meant to help smaller players are ensuring their destruction, as SMBs have to balance keeping the lights on in a down economy with doling out even more funds for these much-needed solutions to run their business.

The solution will lie in new “customer commerce”-focused platforms that are a one-stop shop for every piece of the customer journey, removing a lot of the operational and software platform costs for SMBs. These types of platforms can bring the orientation back to the customer, allowing SMBs to deliver more personal service, attract and retain more loyal customers, and increase profitability. Single platforms also remove huge swathes of people costs out of SMBs as staff are not needed to help ensure the patchwork of SaaS solutions work together.

Putting technology back in the box to handle the data management and mundane tasks, while freeing SMBs to serve customers and build brand loyalty is the only solution that will work for the harried owners of these companies that make up the economic backbone of many countries.

Certainly, being under the thrall of large software companies that only seem to care about their customers with bigger pockets is no answer in a heated economy where price control is crucial for SMBs.

Mikel Lindsaar is the CEO and founder of StoreConnect, a company that helps small and medium-sized businesses become scalable customer companies powered by Salesforce.