What is Shopify Collective?

As part of their Summer Editions product releases, Shopify launched Shopify Collective. We have spent time reviewing the product and talking to its beta users to understand it in greater detail.

Shopify Collective Overview

Shopify Collective is a lightweight way for Shopify merchants to test out a dropship program with other Shopify merchants as sellers (vendors). It enables sellers to setup pricing, sync inventory, and receive orders. Merchants can also use their marketplace to discover products to add to their stores.

We have received a lot of questions about how it compares to Modern Dropship, so we will share the product-level comparison below.

In general, Shopify Collective is useful for new businesses and ‘mom and pop’ brands who are testing a multi-vendor business model. We often see brands wanting to explore use cases like cross-selling and bundles with select brands. Shopify Collective offers a simple way to do that. Once you have validated the model, you may need something more sophisticated to enable greater scale of your dropship program.

How to Join Shopify Collective

At the time of writing, to use Shopify Collective, you need to qualify:

• $50K in lifetime GMV
• You and your partner must be using Shopify
• You and your partner must be using Shopify Payments
• You and your partner must be using Shopify Payments in the same currency
• Only USD and CAD are available
• Only available in North America 

You can click here to request access. 

Limitations of Shopify Collective

There are limitations to Shopify Collective to be mindful of. Here are some of the ones we have been hearing about:

Product Data is Incomplete

Only certain product information is imported from a supplier’s store and into yours. Many common details do not transfer from suppliers, including the SKU, collections, tags, barcode, compare-at price, etc. The seller will need to share this information manually outside of the Shopify Collective app, then you will need to add this information to the SKU in your Shopify account.
Modern Dropship provides the same core product data information and gives you additional control to request the information your team requires from your suppliers. Further, we've included intelligent tooling to enrich and automatically complete product information to match your product display page (PDP) requirements.

Reliability Challenges

‍We have heard from customers that they have run into performance issues with thousands of products synced. Modern Dropship has some vendors (sellers) who each independently sync hundreds of thousands of products, indicating the differences in infrastructure quality and reliability. 

Modern Dropship was made to scale vendors with hundreds of thousands of products alone. We also transform vendor product data through a set of features called Autonomous Merchandising. Autonomous Merchandising uses AI to turn vendor product data into an ecommerce-ready SKU by:

• Ensuring the headers and description are typecased appropriately 
• Resizing the vendor's product images to meet the standards of the retailer automatically
• Rewriting the romance copy of the product so it’s in the voice of your customer and differentiated from the vendor’s product content

Pricing Restrictions

In Shopify Collective, the vendor must apply a commission (markup) on their entire catalog. They cannot set SKU-specific pricing, or set pricing in terms of dollars and cents . A catalog wide commission is suitable for vendors with small catalogs (e.g. under 10 homogenous products and variants). For vendors with larger catalogs containing unique products, they will usually want to assign specific commissions for individual products. 

In Modern Dropship, the vendor can set SKU-specific pricing and apply a percentage markup or fixed dollar markup. They can even do currency conversions for international trade relationships. We have spent years perfecting our price list user experience — give it a try. 

Retailer Cannot Amend Retail Price

If a product is synced through to the retailer, the retailer cannot change the price. The retailer requires the vendor to edit the resale price in Shopify Collective and re-sync the product catalog. This is simple, but it makes it challenging for complex scenarios like promotions and discounts. 

For Modern Dropship-synced products, the retailer has full control over the price that they ultimately merchandise products at. 

Inflexible Retail Product Display Page (PDP)

‍Retailers won’t be able to add multiple variants to the same PDP. This is relevant to merchants who want to either create upsell opportunities in the same PDP using add-ons, or if they need the price to change in selecting unique variants of the same product. In Shopify Collective, products will sync over but then can’t be combined with other variants.

Modern Dropship enables multiple variants and SKUs to be merchandised together, enabling upsells for various product combinations. 

No Invoicing

‍Shopify Collective enables automatic payouts via Shopify Payments, but the vendor cannot create an invoice for dropship orders. And since invoices aren’t automatically generated, they aren’t transmitted to the retailer to do proper reconciliation. In Shopify Collective and Modern Dropship, the retailer is taking ‘flash title’ of the inventory at the point of purchase. Therefore, an invoice needs to be shared from the vendor to the retailer for the cost of any dropship products purchased by the retailer. 

Modern Dropship enables seamless creation of invoices automatically with instant payouts, so vendors don’t have to manually create them on each dropship order. This saves a lot of time for the vendor and ensures that proper reconcilation can happen. Accounting teams will be happy about this!

Shipping limitations

‍Shipping is only provided with two options: Flat Fee Only or a Combined Rate, and does not support carrier-calculated rates. A combined rate passes through whatever the flat fee is that the seller (vendor) has designated on their store to the final *combined* shipping rate at the retail checkout. The impact of combined rates is that the customer will see two or more shipping charges, likely leading to Combined rate crushes conversion since the customer ends up paying twice for shipping.

With Modern Dropship , you have the freedom to negotiate and apply shipping fees according to your established policies on Modern Dropship. If a seller wants to pass through pricing to you, we provide a separate line-item option on the products that allows a supplier to be paid the cost of shipping but doesn’t apply it on the checkout. We also support carrier calculated shipping with Easypost.

Choosing a Dropship Platform

Shopify has publicly stated that Collective isn’t dropshipping, but the vendor is responsible for fulfilling the order from the end consumer and the merchant (buyer) takes title of the sold inventory at the point of purchase (flash title). Therefore, this is dropship model and not a marketplace model. 

If you’re interested in using Collective, you should test it out. If you are looking for something more performant, then check out Modern Dropship.