The Complete Guide to How Shopify Works

Shopify is quickly becoming a well-known brand among online shoppers and small businesses. Shopify is often associated with Etsy and Square by business media. Although I have written a Shopify review with the Pros & Cons, sometimes it is useful to step back and see a larger picture.

Shopify can be used to help you understand the basics of Shopify and how it works.

What is Shopify?

Shopify is a -hosted eCommerce platform, which provides all the software needed to sell products online.

The Shopify platform offers the tools that you need to manage inventory, market your store and sell your goods. It also allows you to interact with customers as an independent retailer.

Shopify is sometimes confused with ecommerce marketplaces and ecommerce software. It’s somewhere in between. Shopify bundles all of the software you need in an easy-to-use package, but it does not offer all the amenities and customers that a marketplace offers (because they always have limits).

Real estate is my favorite analogy. Shopify is sort of like the condominium/townhouse of the real estate world. It could also be considered a long-term rental on a commercial property.

A condominium is a community where all common areas, such as the structure and maintenance, are taken care of by professionals. The Condo / HOA Fee each month covers this cost. You are still a homeowner, however, unlike a hotel room. Your unit can be used for almost any purpose.

Shopify is exactly that. Shopify is a one-stop shop for all your ecommerce needs. Shopify allows you to create any design you like, but it also makes it easy to upgrade your server’s speed or security.

It comes down to convenience and control. Shopify is a platform that aims to reach the middle ground for retailers who don’t want to be tied to one channel (like Amazon), but want to grow their business without having to manage their software and servers.

What does Shopify do?

Shopify’s main selling point is its simplicity. Shopify works like this:

Shopify Plans

Shopify offers three main plans. An explanation on Shopify Plans and Pricing has been written by me. The short version is that there are three main plans available.

  • The size of your staff
  • Your international options
  • Your credit card rates will be higher because the more expensive plans have lower transaction fees (even Shopify Pay as a payment gateway).

These considerations aside, it is possible to get started and build the exact same store using any plan. If you need to upgrade, you can do so seamlessly. Shopify offers an integrated Shopify POS system that allows you to connect offline stores.

Shopify Lite and Shopify Plus:

ShopifyLite is Shopify’s answer to Square. Shopify allows you to add Shopify payment/credit card processing, inventory control, and customer management all in one button. This button can be added to any website or profile. The plan cannot be used to build an online shop. It costs only $9/mo.

ShopifyPlus Shopify’s enterprise-ecommerce plan. How Shopify Plus Works here. Shopify developers have access to your IT and inventory systems, so you can create a Shopify integration.

Create Your Channels & Store

After you have chosen your plan, it’s time to set up and make your store functional.

Connecting to a Custom Domain Name

By default, your store will be hosted at [yourstorename] – this address is live on the Internet and is what you’ll use to access your Shopify admin. A majority of stores will require a customized domain name such as [yourstorename].com. This is something I strongly recommend.

You can choose to buy one through Shopify or let them connect it automatically. You can also buy a domain name from Shopify if you have an existing domain purchase, such as Namecheap, GoDaddy, or any other good domain registrar. In either case, follow Shopify’s instructions for pointing the A record or CNAME.

Although it sounds difficult, the process is simple and quick. Make sure you check the box that redirects all traffic to your custom domain, not the subdomain of

Create Your Shopify Admin

Shopify’s admin area allows you to manage your ecommerce store. Your website is considered a channel and therefore it can be found in the admin menu.

To set up Shopify the way you like, you will need to follow Shopify’s onboarding instructions. The setup process can be tedious, but it is crucial. Shopify offers many variables that you can control, such as what email you receive after checkout, how payments will be collected, Shopify shipping options and so on. All of this can be controlled from your Shopify Dashboard.

It can be daunting to set up Shopify. Shopify Expert Directory can be used to find a specialist that will assist you with your business needs.

Select & Edit your Design

The Shopify Theme is fully functional in your initial design. There are three options available depending on your budget.

  • Shopify offers a free Shopify theme. Shopify’s website builders allow you to create custom designs.
  • Shopify themes are available in premium packages. You can browse and install the one that best suits you.
  • Hire a web designer who is a Shopify Expert via a referral.

Remember that web design can be edited and updated as you go. It is important to pay attention to your homepage, and your product pages early in the setup process.

Create a Store

After you have finished setting up your admin, and your design is complete, it’s time to start building out the rest. Images, video, and content will be needed for all pages.

You will map your store, and determine how your pages fit in a larger ecommerce marketing strategy.

Web design is not difficult. You can always improve and update your site.

You’ll also need to set up your inventory and fulfillment options. Shopify makes dropshipping easy if you use a service such as AliExpress or Oberlo. Same goes for fulfillment and shipping. Shopify makes it easy, but it’s still up to you to set it all up.

Get customers

Once you have an online store that is viable, you can attract customers to your Shopify store. Shopify is not a marketplace like Amazon Etsy and eBay. Shopify will not bring customers to your business. It is not a turn-key solution. It is not like opening a store in a shopping mall. To get customers to your store, you’ll need a marketing strategy and advertising options.

Grow & Improve

Shopify has a huge advantage over its competitors. The Shopify App store allows you to get paid and free extensions that will help increase your store’s sales or improve your distribution. Shopify offers apps that can help you sell on Amazon, eBay, Facebook, Pinterest Buy and other platforms.

You can also explore apps that integrate social media options (like Pinterest and Instagram) and create automated email, review collection and Google Shopping feeds.

Shopify also offers a Shopify API that allows you to create custom integrations with almost any third-party tool. Even if you’re only on Shopify Basic, all of your connections can be managed directly from your Shopify account.

Next steps

Shopify is a great tool for retailers. Read more in my Shopify Review w/ Cons. Ecommerce has come a long way since the days when you had to code your shopping cart on a virtual private server.

Shopify simplifies ecommerce and gives store owners maximum control over their brand and ecommerce experience. It’s important to remember that Shopify is not an easy-to-use platform. Like any other business, it still requires research and work. Get a 14-day free trial here.

  • Shopify Review w/ Pros & Cons
  • Shopify vs. Wix For Online Stores
  • Shopify vs. BigCommerce Ecommerce
  • Shopify vs. Etsy Small Shops
  • 11+ Shopify Website Examples
  • Why Shopify for an Online Store
  • Shopify Making Money
  • Shopify Plus Review for Enterprise Ecommerce
  • How to Get More Customers on Shopify
  • Shopify Pricing & Plans Explained
  • What is Shopify? How does Shopify work?
  • Shopify: What can you sell? (w/ Examples)

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