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Tobias Lutke: How to set up shop with the click of a mouse

Tobias Lutke, founder and chief executive officer of Shopify.

Dave Chan/The Globe and Mail

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It's a classic story of boy meets girl, boy sells snowboards, boy then creates a prominent and continually growing retail payment platform.

Tobias Lutke, chief executive officer of Shopify, was selling snowboards in Ottawa a decade ago. A talented young computer programmer who started his work career in the German corporate world, he had left that life and had relocated to Ottawa to be with his then-girlfriend, now wife.

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Small business and retail interested him, but the e-commerce platforms available for selling snowboards or anything else online were woeful back then, he felt. So he took his programming expertise and created his own online shopping and payment system. Running that platform superseded his snowboard business, and in 2006 it turned into Shopify.

"I always loved retail. I love the ideas behind it. I think small-business retail is one of the areas where capitalism works so wonderfully well," the 33-year-old said.

Shopify aims to be an all-in-one service for small retailers. For a monthly charge, Shopify users can access an array of templates to display their wares (or create their own), plug that into the company's system for selling the goods online, as well as in person (with the ability to use a phone or iPad like a cash register and credit-card reader), and manage their inventory.

Shopify reached the 100,000 customer mark this year and has handled about $4-billion in retail transactions so far. And it continues to grow.

This year alone, Shopify is expected to process an estimated $3-billion of its users' retail sales.

"It took about 10 years to become an overnight success," Mr. Lutke said.

Shopify doesn't target large businesses. It is suited to small retailers, Mr. Lutke said. Its biggest users have sales in the tens of millions of dollars.

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"Simplicity is essentially what we're doing," he said. "More and more people are opening online stores and online retail businesses. This market is expanding very, very quickly."

What the company understood early on, Mr. Lutke said, was that new companies don't view online sales like older retailers do, as an appendage tacked onto the regular, physical retail business. For small retailers, it's the other way around. Many are starting online and then adding a physical shop or temporary, pop-up store as the business grows. Leasing an actual retail space often doesn't make sense compared with the minimal overhead of online sales.

"Shopify evolved with this mindset," Mr. Lutke said.

But keeping it simple can be difficult, as the logistics of online retailing become ever more complicated. Video promos on Shopify's website make the system seem about as basic as two people exchanging a smile. The reality is that Shopify has to keep up with the rapid pace of new online selling channels, such as allowing users to sell across social media sites.

Creating a one-stop service also means guarding against hazards. The Heartbleed security bug this year was detected by Shopify minutes before it became public, and a patch had to be rushed to protect users. "That was a crazy, crazy couple of hours," he remembered.

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About the Author

Guy Dixon is a feature writer for The Globe and Mail. More


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