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Shopify joins forces with BuzzFeed to increase merchant visibility

Employees work at their desks in the Shopify Inc. offices in Toronto, in November, 2015. Shopify is helping connect small retailers with bigger audiences through a new deal with BuzzFeed.

Kevin Van Paassen/Bloomberg

Shopify Inc. is jumping into the listicle business.

In a partnership that launched last week, the Ottawa-based e-commerce player is banking on BuzzFeed to help increase visibility of about 400,000 independent merchants on the recently public company's platform. The move marks an expansion of BuzzFeed's foray into affiliate marketing.

The first post featuring the collaboration couldn't have been a more BuzzFeed-like listicle if it was a parody: "34 Things That'll Make You Say, 'Why Don't I Own That Already?'" Among the links were an inflatable pretzel from the small California gift chain Fashion Nova, an activated-charcoal mask from Montreal's Blackmuck beauty products and a personalized pillow printed with a picture of your dog from Toronto's Treats Happen.

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The connection for these three small retailers and BuzzFeed is Shopify, which derives its revenue from subscriptions to host the online stores for these businesses and hundreds of thousands more.

Affiliate marketing is one of the older business models on the Internet. Company A has an online store and needs more shoppers, so it looks to Company B to post links to the store. Company A then gives a commission to Company B for every sale it can track back to a Company B referral.

In the Shopify deal, BuzzFeed has said it expects to receive a 10-per-cent to 25-per-cent commission per sale – well above the standard rates Amazon offers (3.5 per cent to 6 per cent, typically). Each merchant will be able to set their own commission for sales and Shopify will not take a cut from either party.

"We have a bunch of partners in the pipeline," said Brandon Chu, director of product at Shopify, who sees a lot of opportunity for synergy between the most popular categories sold on its platform. "We're pretty big in fashion apparel, beauty, toys, electronics games, those all are very conducive to media."

Affiliate marketing is on the rise as the online advertising business undergoes significant change. Media companies are looking for more sources of revenue as traditional ad rates flatten and fall. Companies that used to purchase ads to promote their products are looking for content that can't be blocked easily by ad-blocking software that is taking over Internet browsing.

According to Forresters Research, affiliate revenue paid to media sites reached $4.5-billion in 2016, a slow but steady rise of 17 per cent over five years.

Almost every major media business on the Internet works with affiliate links to one degree or another. The Washington Post, owned by Amazon boss Jeff Bezos, has boosted its affiliate-link revenues significantly in recent years and The New York Times bought The Wirecutter – a well-regarded gadget-review site that relied almost exclusively on affiliate links for its revenue – for $30-million (U.S.) in October.

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Shopify's new partnership falls under the umbrella of BuzzFeed Product Labs, which has hired writers to specifically create brand content and essentially open an online storefront for the site's audience of about 200 million monthly visitors.

"This is strongly positive for Shopify," said Erin Pettigrew, a media and technology consultant who helped build the former Gawker Media's affiliate program into a $50-million-a-year business in 2014 and now advises Business Insider among other media clients.

Because there are thousands of affiliate programs, Ms. Pettigrew added, third-party vendors such as Skimlinks (from Skimbits Ltd.) and CJ Affiliate (owned by marketer ADS Alliance Data Systems Inc.) have sprung up to aggregate the markets into single sets of software that partners can manage more easily. There's still no one-size-fits-all product, but Shopify is looking to become a major and possibly growing player.

"They are in a great position to be building new sales channels for all of those independents," Ms. Pettigrew said.

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