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Shopify Collective: How Does It Work & Success Story

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Shopify Collective is a brand new feature from Shopify Summer 2023 edition updates that allows you to choose and use products from United States companies and seamlessly add them to your own store. To know more about this feature, let us dig deeper into how Collective works, its benefits as well as the process of getting discovered by other brands.

Outline

What is Shopify Collective and how does it work?

Shopify Collective is a great option for Shopify merchants, who want to try a dropship program with the help of other Shopify merchants as sellers or vendors. It enables sellers to put up their own pricing, sync inventory, and receive orders from customers.

shopify collective demo

Utilizing Shopify Collective can be really helpful, especially for new or start-up businesses and as well as mom-and-pop brands who are interested in testing a multi-vendor business model. Here, you can explore cross-selling and bundles with various select brands. Once you have checked and used the model, note that you may need enhanced strategies or sales channels to strengthen your dropship program.

Getting Started

You can get started by requesting pricing from other Shopify stores whose products you want to sell. You can also start by inviting your existing suppliers to connect with you on Shopify Collective, which can be easier as you somehow have an initial connection with them. Once officially connected, your suppliers can transparently share products for you to import to your store, and start selling.

When it comes to pricing, you buy at the supplier's discounted price and sell at the supplier's specified retail price. The profit you earn on each sale is automatically yours.

After you make a sale on your store, your customer’s order is immediately forwarded to the relevant suppliers. They are the ones who will fulfill and ship items directly to your customer. Tracking numbers sync from the supplier store to yours afterward.

Shopify Collective is currently free to use for all eligible stores that are based in the United States. You can watch this brief introductory video about Shopify Collective.

Benefits of Shopify Collective

Manage it all on Shopify

You don’t need to stock the product collections on your own. You also don’t need to do anything regarding shipping or delivering these products directly to buyers. The suppliers are the ones who are tasked to send the products to your customers. You just have to collect the additional sales, the you are all set.

Increase average order value

The more products displayed in your store means bigger carts and larger sales. You can increase your store profit with margins of 20 to 40%. If you want to calculate your store's average order value (AOV), divide total revenue by the number of orders.

Shopify Collective is a tried and tested function by several brands out there. Take for example Ten Thousand, which is a fitness apparel brand, as they created remarkable success by making great use of Shopify Collective.

Increase average order value

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In just a week, they were able to connect with GORUCK, another brand, and finished integrating products, syncing inventory, managing and monitoring orders, as well as payments.

Shopify Collective helped both brands ship their items faster. GORUCK established new tock-keeping units (SKUs) directly in Shopify, added product description pages, and shared them with Ten Thousand through the price list to allow them to import and publish.

Now, Ten Thousand is investing more into brand collaborations as 16% of sales were driven by net-new customers fueled by Shopify Collective.

Offer seamless checkout

Your customers will not see anything different, and their experience will be remain as if they are purchasing the products from you directly. Shoppers can easily check out once done, no matter which brands are in their carts. They don't have to go check and scan different websites to do so, your store allows them to avoid time consuming shopping journey.

Getting Discovered By Retailers and Wholesalers

Getting Discovered By Retailers and Wholesalers

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Suppose, you want to work together with other brands by letting them add your products to their own store, in order to be eligible to use Shopify Collective and get noticed by retailers and wholesalers, you need to fulfill some requirements. Activating the discovery feature means they can view your supplier profile together with your brand assets and send an invitation email to connect with your business on Shopify Collective.

Requirements for discovery feature on Shopify Collective

You need to meet the below requirements to use the Shopify Collective discovery feature:

  • You need to install the Shop sales channel in your store.
  • Your store needs to meet the Shop Merchant Guidelines.
  • Your store needs to have made at least $50,000 in the last 12 months.
  • You need to have a high reply rate to all invitations that you receive.

Activating the discovery feature

Your store can be easily discovered by retailers and wholesalers that are using Shopify Collective. Note that the discovery feature is automatically activated for all eligible suppliers.

You can check turn on your discovery feature by accessing the Apps and sales channels on Settings. In there, you will find Collective (Supplier), which you can navigate and turn on.

Managing the discovery feature

You also have the ability to turn off retailer invitation emails if you want to be discoverable by other brands but don't prefer receiving discovery invitations by email. Aside from that, Shopify Collective allows you to deactivate the discovery feature at any time if you no longer want it. All these let merchants use Shopify Collective with not much worry regarding any future plans they have in regards to the discovery feature.

Adding your Shopify Collective referral page to your store

A referral page is an automatic Shopify Collective page that you can attach to your storefront. Though you can't customize or edit this page, it is designed and branded according to your online store theme's branding. A referral page can help you look for new brands faster, whom you can work with on Shopify Collective. They can visit your referral page and learn more about Shopify Collective and how it works without any hassle.

You can create and add the Shopify Collective referral page to your store's header or footer. You can also preview your referral page before finally putting it to your store. Meanwhile, if you no longer want to visibly display the Shopify Collective referral page in your store, then you can remove the page anytime.

Examples of Success Stories

Lalo

Lalo

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Lalo, a brand launched in 2019, makes high-quality baby and toddler products, aiming to provide each parent great value. Lalo was founded by two dads, who, at first, knew so little about the challenges parents face when raising their kids.

Challenge

Lalo had always displayed and sold other stores' products on their site by using really complicated and time-consuming strategies for their everyday tasks. After experiencing a difficult system, they realized that they needed to simplify their processes so they could add partner brands to their product assortment.

Solution

When Lalo finally discovered Shopify Collective, they immediately invited another business on Shopify, which is PlanToys, to officially connect. They had already been collaborating with PlanToys, but doing it through Shopify Collective made it faster and a lot easier. They can share products and price lists through their Shopify admin straightforwardly. All Lalo had to do was to import and activate all of them. Then, within minutes, customers of Lalo could successfully purchase PlanToys on Lalo's site.

Results

Lalo's AOV significantly increased by 16% when the order included Shopify Collective products, with no additional customer acquisition costs (CAC). According to them, Collective offers a very low-risk way of generating additional revenue while adding more value to their customers.

Lalo is just one example among others that also witnessed a massive increased in AOV. This simply proves that with appropriate effort and added methods, you can also reach your desired success.

Conclusion

Collective is a trouble-free way for Shopify stores to join and sell each other's products. With Shopify Collective, you can build partnerships with other stores and increase customer engagement. You can sell complementary products from well-known Shopify brands, without any inventory costs or commitments. Meanwhile, if you choose to be a supplier, then you can expose your brand to new clients, and work on an entirely new sales channel.

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