Shopify's president on why he prefers paying micro-influencers to grow his own side hustle

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Last week’s Shopify earnings report was one more example of how much the pandemic e-commerce boom and consumer goods economy has slowed, with the e-commerce giant announcing it was laying off 20% of its staff and selling its logistics and order-fulfillment operations to Flexport.

Shopify president Harley Finkelstein said in an interview with CNBC that after going on a “side quest,” the company — which represents 10% of all e-commerce sales in the U.S. — needed to focus on what it did best, “which is building incredible software for e-commerce. Shopify CEO Tobi Lutze wrote in a memo explaining the decision that “Side Quests are always distractions because the company must split its focus. This can sometimes be worthwhile, especially if the side quest helps to make the main quest more successful. “

But Finkelstein also had another side business on his mind last week in an interview that had been pre-taped for CNBC’s Small Business Playbook event, the loose-leaf tea side hustle, Firebelly Tea, that he co-founded as an independent entrepreneur.

He shared a few lessons he has learned firsthand from running his side hustle and impressed one big lesson on other retail startups: don’t allow chasing big-name influencers on

Alphabet‘s YouTube, Meta Platform‘s Instagram and TikTok to become a version of your own side quest in seeking success. Spend the time to learn about the micro-influencers across social media, including those on subReddits and Pinterest boards who are driving engagement in niches key to your business demographic. Finkelstein says that a good product can still fail to be successful. Social media micro-influencers may have a community that only numbers in the “few thousands,” Finkelstein said, but their relationship with those followers is deep and results in high engagement, which is why he advises small business owners to look across the entire market of internet personalities.“If you’re selling kitchenware or silverware and want to find a great influencer, rather than look for the most subscribers on YouTube, look for small channels that have great engagement,” Finkelstein said. It takes longer, but it’s worth the effort. They are less expensive, and they may provide a better return on investment. “

Finkelstein, along with his co-founder David Segal, started Firebelly in the midst of the pandemic. If he was starting the brand now, he’d take the same strategy: not going after tea and coffee influencers who are the biggest but instead identifying “small but engaged micro-influencers” building online communities. One way to track that is by seeing how often these micro-influencers are responding to tweets and comments, as well as the frequency of their posts across platforms.

“Those are the things that have been working best for us,” he said. You can change the entire business if you find a little alpha or arbitrage on a subreddit group that your competitors ignore. “

That is not to say that he has downplayed or minimized the importance and influence of big platforms and influencers. Finkelstein also stressed that entrepreneurs should focus on an omnichannel sales strategy at a time when the U.S. government is threatening to ban the Chinese-owned social media giant. Finkelstein said that if TikTok and Instagram were to disappear, brands would have to be omnichannel. This goes beyond the internet. Finkelstein says that after a boom in e-commerce, which accelerated five years’ growth into a single year, growth has returned to levels seen between 2018 and 2019. The biggest difference is the higher baseline. The end of the boom is a reminder that retailers have been through similar experiences in the past. For example, the traditional shopping mall experience from the 1980s and 90s became less popular than pop-ups and brands with their own flagship stories. You have to be everywhere consumers are,” he said, “online, offline and social media.” He added that Shopify is thinking of itself as more of a retail operating system than an e-commerce company. You have to try to be everywhere consumers are,” he said, “online, offline, social media and anywhere in between,” he added.

“You may have a customer today that wants to buy in a store or online or at a farmer’s market, you need to sell across surface area and reducing friction in those surface areas matters,” Finkelstein said, adding that Shopify is thinking about itself today as more of a retail operating system than e-commerce company specifically.

To find out where your customers are, business owners have to go back to the most basic option in the book: “Just ask them,” he said.

Whether engaging on Instagram or TikTok, or Spotify, where Shopify has an artist merchandise partnership, Finkelstein said entrepreneurs need to take advantage of the “hyper-real response” that is available.

“Asking what they want to see more and less of is the easiest and least expensive way of marketing,” he said. Finkelstein said entrepreneurs should take advantage of the “hyper-real response” available, whether they are engaging on Instagram or TikTok, or Spotify where Shopify has an artist merchandise partnership. 1 in your brand niche. Finkelstein stated that “we are seeing a much more deliberate approach to buying”. He said that instead of buying five pairs, he would buy one pair of the highest quality sweatpants.