What is Shopify and How Does Shopify Work? (Feb 2021)

Learn from scratch how to start selling on Shopify in these 8 simple steps.

Setting up an online business requires a full-length approach to all primary store building attributes. We did a background check from various data sources and Shopify seems to hover around all corners in the ecommerce industry. Let's find out what is Shopify and how does Shopify work.

Shopify's growth trend in the market is increasing rapidly.

Yet, on the other hand, it's highly likely that you're probably familiar with WordPress, even if you aren’t a blogger, and how it helps create killer blogs.

If you’re, however, looking to operate an online store, you might want to look elsewhere. And one might argue that its WooCommerce extension equally fits the bargain. But there seem to exist a couple of reasons why Shopify stands out as the holy grail in the market.

And this brings us back to the main point of discussion. In this guide, you'll learn how to build a Shopify store that even the kids, if not millenials, would crave to shop at.

But, of course, like everything else, there’s a learning curve. Not a steep one though.

So get aboard with me.

Table of Contents:

What is Shopify?

what is shopify - homepage

Well, not everyone is a techie. We're all much aware of this fact.

And even for the most experienced, they had to start from the ground up. Right? So if you’re here and aren’t sure what Shopify is all about, kick back and relax since this guide has got you covered. Shopify is a third-party ecommerce platform or online store builder that allows you to create a selling space and promote your products.

It’s one of the leading online store builders that’s sure to catapult your online store to the next level. While using Shopify, you can easily notice that its ease of use scores significantly higher than other store builders such as Magneto.

It doesn’t matter if you’re a novice or an expert, Shopify has got something for a seller who's at any level in the market. And you don't have to code any programming language.

So, whether you’re looking to manage a small e-shop or a large enterprise, Shopify is the right platform to realize your online business's objectives.

One of the top-tier highlights is the capacity to integrate your pre-existing site or social media pages with the giant e-commerce site builder. For more context, you can experience first-hand how it feels like to go “Shopify” from our Shopify reviews.

This Saas solution gives users extensive freedom to manage a store from any location. You can decide to sell online or offline from any location. Shopify gives you a mobile platform to help you manage and make your e-commerce business widely accessible to your target market.

Shopify is, by all crafty means, an online store builder built to take your business to optimal levels without too much manual input.

And, like WordPress, it comes with just about everything you need to get started.

Everything from the Shopify themes included as part of your purchase, to the apps that you can find in the Shopify App Store is designed to make life easier for you. When you invest in Shopify, you’re essentially spending your cash on a solution that offers everything you need for an ecommerce website in one.

What is Shopify Dropshipping?

Like most of its competitors, Shopify supports dropshipping.

This is a plus for small businesses with less money, time, and no warehouse space. But what is Shopify dropshipping all about? You could ask perhaps.

Dropshipping is a tested online business model that doesn't prompt you to hold any stock levels. The store owner, instead, forwards customers’ orders to the supplier who completes the fulfillment process by shipping the products directly.

Shopify dropshipping turns out to be a more convenient and cost-effective selling technique. Transferring your customers’ sales to the supplier means you don't have to bear the burden of shipping or holding large amounts of inventory. After all, you get to mark up the prices in your store.

As we'll explain further in this guide, you’ll need to install your favorite dropshipping app as they don’t come preinstalled. There are various Shopify dropshipping apps to work with.

But, first of all, you want to read the guides below before settling on any app:

Selling With Shopify's POS System

The Shopify POS centrally syncs both your in-store and online sales. Shopify's hardware integrates with the software to allow the seller to accept payments at extremely low credit card rates.

For all it's worth, the Shopify POS allows you to:

  1. Accept partial payments, sell gift cards, split payments, accept credit and debit cards using external card terminals
  2. Create a smooth checkout experience: Sellers can create custom receipts, offer discounts, and scan barcodes using a mobile phone.
  3. Automate the store management process. You can track your employees' performance, create multiple admin accounts, have a breakdown of the daily sales, view the order history, and integrate with accounting tools such as Quickbooks and Xero.
  4. Organize your products' data. Users can create product collections, variants, track inventory, access product reports(high-selling/quantity), and work with its barcode support system.

Its back-office gives you a dynamic approach while managing all demanding tasks. Shopify offers a 24/7 dedicated support to all users. So scaling your business wouldn't be much of a brainer.

You also get to make data-backed decisions since Shopify POS puts together all reports from both your physical shop and online store. Users can make the most out of the auto-generated inventory forecasts to manage their stock levels and avoid overselling.

Running Transactions Using Shopify Payments

shopify payments homepage

Shopify Payments is an instantaneous mode of accepting payments. It bypasses the hefty process of having to set up third-party payment gateways. Since it comes pre-installed, you only need to switch it on and begin handling payment transactions from customers.

shopify payments pricing plans

It offers a smooth checkout experience since it puts in place all security measures. To ensure a secure checkout, Shopify Payments uses PCI compliant servers that can encrypt the customers' sensitive data.

With Shopify Payments, the seller can fit together all actions to a single dashboard for easy tracking. As soon as you launch your Shopify store, you can easily mark all orders that are paid and get automated reports on the same. For more info, our Shopify Payments review has all the ins and outs at your disposal.

So let's dig a little further and learn how to use Shopify in these easy steps:

How Shopify Works?

Step 1: Sign Up

This part only needs you to key in the basic information. The initial setup includes setting up your email, store's name, and physical address details.

shopify Sign Up - free trial


As you can see above, Shopify gives all new users a 14-day free trial period. That seems like enough time to get started and run upfront layouts.

And once you've verified your email address via a notification link sent by Shopify, you can now access the admin page.

Shopify Add products

Your admin page is the gateway to quite several handy features. Here, you can access the Shopify's marketplace and find the right apps to help you optimize your ecommerce store.

The Shopify app store is a gripping hub full of developers who create and update tools to help sellers boost productivity and enhance the customers' level of engagement. There are tons of categories to choose from such as;

  1. Customer retention
  2. Upselling & Cross-selling
  3. SEO
  4. In-house fulfillment
  5. Inventory management
  6. Customer support
  7. Shipping & Automation
  8. multichannel selling
  9. Social media marketing
  10. Reporting

Each ecommerce business is unique especially on account of which products a retailer wants to sell online. While launching your store, you'll need a few apps to support your selling strategy.

And that brings us to the next track.

Step 2: Add Your First Product

Add Products

Shopify is designed to allow bulk product imports via a CSV file in a split second. Its navigation menu is quite straightforward. As you can see above, the admin page is pretty much user-oriented.

shopify add products

Adding products has been made simple and effective.

Shopify‘s' product loading page allows you to add and display on your online store using these basic entities;

  1. Product's title and images
  2. Item's description
  3. Pricing
  4. Quantity
  5. SKU's
  6. Shipping details
  7. SEO snippet

Like any other ecommerce platform, Shopify is set to offer an advanced level of flexibility to all its users. In that effect, the website builder extends its features to users looking to sell digital products.

Digital products such as eBooks, software, video, courses, and photography are extremely easy to sell on Shopify. You only need an optimized theme to help you display and boost your store's productivity.

Step 3: Choose a Compatible Shopify Theme

shopify themes

Before you start selling on Shopify, you might want to customize your theme. There are free and premium themes that are professionally designed to fit varied niche products in the market. Shopify has a dedicated theme store with categories ranging from:

  1. Electronics
  2. Clothing & Fashion
  3. Furniture
  4. Sports & Recreation
  5. Health & Beauty
  6. Jewelry & Accessories
  7. Art & Photography

Shopify's theme marketplace cuts across all industries with a noticeable state of ascendancy in the e-retail sector.

themes on Shopify's marketplace

With a fully customizable theme, a seller can focus on listing niche products and making all page layouts responsive for customers to navigate with ease.

To take a yielding stride on your store's presence on the online market, you need to add a credible domain name. Shopify's domain name generator is built to help you carve indestructible visibility for your store's brand. If you need to outsource hosting services, both SiteGround and Bluehost offer thriving support to their users.

Further reading:

Step 4: Find Products to Sell on Shopify

This is, arguably, one of the most exciting parts of launching your ecommerce startup.

More on that in a moment newbies…

But first, let's look back to find why Oberlo hikes up to the top as the best app for dropshipping. While most e-retailers want to carve a niche that cashes in a great deal of profit, finding the right product to sell can pose like a bull run battle for beginners.

And to set right any dead ends, here are a handful fun-facts about Oberlo:

Oberlo dropshipping app

Oberlo provides a route to dropshipping. The marketplace lets users find products to sell at warp speed. Its security status is top notch and you don't need a credit card to add it to your Shopify store.

Shopify users can import products, make changes to the descriptions and adjust the profit margins. Whether you're just starting or looking to scale your dropshipping business, Oberlo offers a wide market full of top trending products.

Finding the right supplier is key to building a reliable and credible online business. And since Oberlo only lists verified suppliers, it's way much easier to search for products and build a lasting relationship with your customers.

Oberlo‘s Starter plan is free, yet reasonably piled up with topping features. Users can import up to 500 products and fulfill 50 orders per month. You can also auto-import products, get a tracking number, and work with real-time sales reports right from Oberlo's dashboard.

If the free package imposes limits on your plans to scale, you can jump on to the Basic ($29.90) or Pro ($79.90 per month) plan.

Further reading:

Step 5: Edit Shopify Settings

This part is lengthy but significant while launching your Shopify store.

edit Shopify settings

And here's how your settings checklist should look like:

Update Your Shopify Store Details

Customers need to trust your online business. Hence, you have to set up your contact information befittingly. Your Shopify store needs to include the official email address, legal business name, currency to be used, and location.

In online retail, the seller has to put customer service as a top factor while running the business. Shopify has an inbuilt party line to help merchants boost the customers' experience. With all the contact information within reach, shoppers can gain confidence in your online store.

Create Legal Pages

Like other business structures, you need policies to effectively run your online business. Without these legal documents, then your business might be sitting on the fence. A refund policy, for example, allows the seller to lay down all conditions that'll validate a return or a refund.

Shopify legal pages

You can create your legal pages from Shopify‘s templates and make any edits that fit your niche. The seller also has to consider creating a privacy policy, terms of use and shipping policies.

Add Other Sales Channels

This is one productive gateway to marketing your products. Shopify allows you to connect your store with large marketplaces such as eBay and Amazon. You can create product listings and receive order notifications from Amazon or eBay on your Shopify's dashboard.

Selling on Instagram with Shopify is as easy as it gets. You only need to click the ‘Add' button and that's it. Promoting your products on social platforms such as Facebook Shop and Instagram can optimize the goal to grow your target audience.

You can boost sales and turn followers into repeat customers right from your Shopify dashboard. If you plan to run a blog using Shopify or even WordPress, you can embed buy buttons that connect with your store's checkout. Buy buttons not only work as shortcuts but can also show product images, descriptions, and images on a blog page.

Customize the Checkout Options

When your store's checkout page isn't well optimized, that would possibly result in a high cart abandonment rate. Well, Shopify has all the customization options to help the seller give customers a better checkout experience.

You can choose to let customers check out with or without an account. Also, customers can check out using their email addresses or phone number. Make sure not to skip this part since it's the basic element for order processing. What seems to be a little more productive is that the seller can use the checkout page to collect addresses for email marketing.

Step 6: Manage Payment Providers

There are a bunch of options to consider here if you're looking to launch your online store with Shopify. And the wow factor is that Shopify Payments works as a solid alternative to third-party payment gateways.

Since it's all inbuilt, Shopify Payments offers an integrated solution for retailers.

Sellers can also choose to integrate their stores with other gateways such as PayPal (read review), Amazon Pay, and many other third-party payment providers.

Shopify proudly offers you unlimited payment gateways so you can do what you do best. With 100+ payment gateways globally, there’s no way you can get stuck processing payments with this unparalleled software. Choose from iDeal to PayPal to bitcoin and get your clients’ payments processed in no time.

And, did you know Shopify supports most of the leading credit cards – Visa, American Express, Discover, Mastercard, etc.? Start accepting credit card payments the second you set up your online store on Shopify.

Also, in case you had no idea, Shopify supports over 50 languages so clients can check out hassle-free. A terrific online store website builder this is for sure!

Step 7: Connect Your Shopify Store to Analytics Tools

Shopify comes with an overview dashboard that gives users real-time updates on all actions.

how does shopify work - shopify overview dashboard

As you can see above, the store owner can access periodic reports on metrics such as the total number of sales, average order value, and the customer retention rate.

But there's still more homework to do. You need to put your customers' behavior on the beam to make insightful decisions on factors such as marketing and conversion rate optimization. And to do that, the next step is to sync your store with a Google Analytics ID.

You need to work with Google Analytics to track the essential KPIs in your store. To fast-track all your goals, Google Analytics feeds you with real-time data on:

  1. The average bounce rate
  2. Conversion rate
  3. Pageviews
  4. Average session duration
  5. New sessions

Such data is essential anytime you need to optimize your store's overall performance. You can assess the average revenue your store generates per visit.

Step 8: Pick a Pricing Plan

Time to talk about money.

Here's a breakdown for each Shopify pricing plan:

You need to make an informed buying decision based on your and store’s needs and potential to scale. Otherwise, you risk draining your wallet with a plan that exceeds or limits your needs.

Shopify Plus

Shopify Plus is the most expensive plan that comes with premium features. Consequently, it’s fit for larger businesses or those looking to scale their enterprises. Shopify Plus gives you that little extra functionality, from customer support to tackling high-order volumes and reporting attributes.

It’s safe to say that with Shopify Plus, you get what you pay for. You get advanced features that help your business to stand out from all other smaller businesses. Most important of all, with this plan, you can forget about your site crashing when the web traffic soars.

You can get a custom quote from Shopify Plus by contacting the official support center.

👉 Read our Shopify Plus review.

Shopify Lite

Shopify Lite is quite the opposite of Shopify Plus. It sits on the other end of the spectrum, with regards to pricing. So yes, you guessed it right: it’s the cheapest of Shopify’s pricing plans.

But is it worth the hype? Absolutely.

Let’s say your online store is hosted elsewhere and you’d like to taste how Shopify feels like. That’s where Shopify Lite comes in to ensure you’re enjoying Shopify's experience like a pro.

It gives you a Buy Button which you can embed on your store's Instagram page. And the perks don’t end here. You also get to enjoy other nifty features, including sending invoices, utilizing Messenger chats, and more.

Just keep in mind, transaction fees will still apply on the smaller versions of Shopify. If you want people to move through your shopping cart without paying any transaction fees at all, then you need a more advanced shopify solution with Shopify payments. The Shopify Lite plan also comes with basic functionality like free themes and a payment processor, but it’s not the most advanced service available.

👉 Read our Shopify Lite review.

Basic Shopify Plan

This is the most common package on Shopify. Then again, you get what you pay for. For instance, this plan might fit the bill if you’re just getting started in the ecommerce industry or your store is small.

You, however, get the bare-bone features to place your online business you on the move. Nothing more! The better part about it is that for as low as $29, you can manage your small online shop and start making sales.

The table below gives a descriptive breakdown of the three popular plans. You can also make estimates using our modified Shopify pricing calculator.

How Shopify Works? App Integrations

It's now time to tweak your store.

And what will cheer you up the most is the fact that Shopify‘s marketplace is stuffed with over 1000 trendy add-ons. For starters, here are some of the free plugins to try out.

  1. Inventory management: ShippingEasy, Stock Sync, eBay Connect, ShipStation
  2. Orders and shipping: Ordoro, AfterShip, Shopify POS
  3. Customer support: Gorgias, Sales Pop up
  4. Productivity: Kit, SellBrite, Retail Barcode labels
  5. Reporting: Better Reports, Quickbooks Sync, Stocky, SEO Site Audit
  6. Marketing: ReConvert Upsell & Cross-Sell, PageFly

Shopify apps help you boost the workflow automation and store management from any location. App integrations help you scale your online business and speed up actions such as order processing, your store's visibility on the search engine, and product management.

👉 Additional Information: The 15+ Best Shopify Plugins in 2020

Pros of Selling on Shopify

Shopify Has a Productive POS Technology

The point of sale is such a bargain (read our Shopify POS review) for multichannel merchants. Selling both online and offline could be a good fit for some merchants. And Shopify POS is sure to sort that out. It lets you sync orders and inventory simultaneously. So any changes you make on either (POS and dashboard) platform is reconciled automatically on the other podium– which is a plus for scaled online sellers.

You also get to process payments in your brick-and-mortar store using the POS system just like you would with the online store. No need to worry about processing credit card payments when selling in person.

You, therefore, don’t need to sign up for the Shopify POS system separately. You’re automatically signed up for Shopify POS the moment you register for your Shopify’s e-shop. How convenient is that? Very much, I suppose.

Shopify Has a Bullish Dashboard for Online Selling

An actionable dashboard is great for a thrilling backend experience–and Shopify knows it only too well. Shopify’s dashboard is designed for both newbies and experts and with an upbeat focus on online store management. You can monitor your traffic, orders, and sales pretty easily using your Shopify’s dashboard.

Effective Customer Support

Shopify’s customer support is sturdily built. Whether you want to chat, make a call, or send an e-mail, you can do it 24 hours a day, even during the weekend. But that's not all. The help center offers a whole load of information to users.

Shopify also offers social media support and video tutorials. The community forum is a bonus! It’s a small world of like-minded individuals who share ideas on common online store issues. You can be sure to feel right at home there.

Shopify excels in offering its clients unmatched customer support. A support system you can count on even in the hardest of situations in while operating your ecommerce business.

Shopify's Learning Curve is Quite Smooth

It couldn’t get any easier getting your online store set up on Shopify. You don’t have to be a tech junkie to do it. Shopify offers an intuitive, seamless interface that you can put to use hassle-free.

It comes with powerful tools for all sorts of customizations. Using its easy-to-use editor, you can get your site up and running in no time. Moreover, you’ve got total control over what you want to be placed on your site pages. Considering Shopify’s intuitive interface, even the most unskilled of store owners should have an easy time using it.

The drag-and-drop editing tool is one of the easiest tools that newbies can make the best out of and have their site up and running in seconds.

Shopify's Marketplace Has Strapping Dropshipping Apps

With more than 1,000 apps to choose from, you can manage your online store’s needs without having to look elsewhere.

From free and premium niche-oriented themes to powerful Shopify dropshipping apps, it seems like Shopify has something for everyone regardless of your budget. Even so, ensure you’re reading the reviews before installing any apps. This will help you avoid any redundant junk apps.

While integrations do most of the heavy lifting, especially for non-techies, you also want to ensure that you’re installing the right stuff to help optimize your store's performance.

It supports Omnichannel selling

From your Shopify‘s dashboard, you can sell on Amazon, eBay, Instagram, and Facebook at the click of a button. This giant e-store builder integrates with SEO best practices so your site can claim its spot in the search engine rankings.

Stable Web hosting

It’s safe to state that Shopify’s web hosting is spot on. With email forwarding, unlimited bandwidth, and free SSL certificates, you’ve got all the reasons to want to host your online store on Shopify.

The security of your clients’ credit card data is intact. You get to enjoy regular security updates.

Low Start-up Cost

Shopify has a very low barrier to entry. For as low as $29 per month, you can set up your online store and still make decent revenue using its basic features.

Cons of selling on Shopify

Functionality is Limited

Needless to say, Shopify comes with most of the features that’ll get your store set up in minutes, especially if you’re a small business.

However, if you’re a medium-to-large enterprise, you’ll find you need to add a couple more add-ons to optimize your store's performance. Since most of Shopify’s add-ons don’t come built-in, you’ll need to purchase these separately. And while Shopify's marketplace has so many free plugins, most don't offer anything substantial.

To get a premium experience you'll need to spend a couple more bucks.

Some Add-ons are Costly

Since one of Shopify’s major caveat is on the functionality aspect, you might need to set a significant budget for plugins. The cost for these add-ons can potentially surge your monthly plan.

What is Shopify and How does it Work? Conclusion

Is Shopify the right fit? Well, it all depends on what your needs are. Shopify makes it simple to create everything you need to run a store, from homepage to product page. Soon as everything's all set, you can now make your store go live.

To publish your store, you'll have to subscribe to the paid plan. It's now time to test your products and measure the market's reception. Shopify is so far, one of the most cost-effective subscription-based software and with a simple onboarding process.

Its flexibility is top-notch and users get more features for way less. Setting up a Shopify store is pretty easy. And this guide is the only cheat sheet you'll probably need to launch your store.

Of course, there’s still a lot of other options out there if you don’t want to set up a user-friendly Shopify account. Aside from Shopify.com, there are tons of sites that deliver ecommerce solutions, from BigCommerce to Magento.

However, you will need to think about the unique pros and cons of each tool. Just as with Shopify you have shipping rates and transaction fees to consider, as well as other shopify cost options, the same pros and cons apply to business owners on other ecommerce tools.

Before you choose which tool you want to use for your own online store and set up a new domain and storefront, you need to think about everything you can get from the basic plan of each solution. There’s plenty of product information out there to help you choose, and our guides are designed to help too.

If we left out any part, please let us know in the comment section.