Shopify cuts app store fees for developers on first $1 million in revenue as competition with Amazon heats up

As competition in the app space heats up, tech giants like Amazon, Apple, and Microsoft are providing new incentives to attract more app developers to their app stores. Today, Shopify, a subscription-based software platform that allows anyone to set up an online store and sell their products, announced that it’s lowering the share of revenue it collects from developers that publish apps on its app store.

According to the new plan, developers will keep 100% of their revenue from the first $1 million they make on Shopify’s app store, starting Aug. 1. The benchmark will reset each year, Shopify made the announcement during its annual conference for developers, Shopify Unite, which ended Tuesday.

Shopify also added that “app developers and merchants will now have even more potential to create unique experiences that will define the future of commerce on the internet.” With this announcement, Shopify is following in the footsteps of tech giants like Microsoft, Apple, Google, and Amazon, which have recently reduced fees for some app developers.

“The internet is the world’s largest city, and Shopify is building its commerce infrastructure,” said Tobi Lütke, CEO of Shopify. “Especially over the past year, we saw independent businesses succeed by showing up creatively and uniquely in this city. The future of commerce on the internet relies on creative expression at every touchpoint. Together with developers, we are building the infrastructure to make this possible.”

During the Shopify Unite presentation, Shopify President Harley Finkelstein also said that the e-commerce giant is also cutting its commission rates for developers who make more than $1 million annually to 15% from 20%. That’s “half of what other popular app stores cost,” Finkelstein said.

Canada-based Shopify was founded in 2004 by Tobias Lütke, Daniel Weinand, and Scott Lake after attempting to open Snowdevil, an online store for snowboarding equipment. Dissatisfied with the existing e-commerce products on the market, Lütke, a computer programmer by trade, instead built his own.

In 2020 alone, more than 450 million people checked out on Shopify, and the company processed nearly $120 billion in Gross Merchandise Volume (GMV).  As of May 2021, Shopify reported that it had more than 1,700,000 businesses in approximately 175 countries using its platform.

According to website monitoring platform Builtwith, 1.58 million websites run on Shopify as of 2021. The total gross merchandise volume exceeded US$61 billion for calendar 2019. As of 2021, Shopify is the largest publicly traded Canadian company by market capitalization with total revenue of $2.929 billion for the full year of 2020.