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What is Shopify? How It Works (Complete Guide)

Learn what Shopify is and how it works in 2025. Complete guide to features, pricing, plans, and social commerce with real tradeoffs.

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What is Shopify? How It Works (Complete Guide)
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If you're typing "what is Shopify and how does it work?" into a search bar, you're usually in one of these situations: You have a product idea and zero clue how to sell it online. Or you're already selling somewhere (Instagram, Etsy, Gumroad, marketplaces) and wondering if Shopify is your "real home base". Or maybe your team keeps mentioning Shopify in meetings and you secretly don't know what it actually does.
This guide is written for you. We'll go from first principles (what problem Shopify really solves) all the way down to plans, pricing, workflows, tradeoffs, and where tools like LinkShop plug into the Shopify universe.
All pricing and stats in this guide are based on late 2025 data. Shopify changes fast, so always double check the official pricing page before you pull out your credit card.
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What is Shopify? (Quick Answer)

Shopify Definition: What Does It Do?

Shopify is a commerce platform. You pay a monthly fee, and in return you get:
  • An online store editor and hosting
  • A product and inventory system
  • A secure checkout and payment processing layer
  • Tools for shipping, taxes, analytics, and marketing
  • Integrations for selling on social media, marketplaces, and in person
Shopify itself describes it as a platform that helps you sell online and in person, used by entrepreneurs, retailers, and global brands to run and grow their business.
Think of it as "Shopify = your store's operating system", not just a website builder.
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How Big is Shopify in 2025?

Some quick reality checks:
Shopify merchants have generated more than 1.4 trillion dollars in sales through the platform. It served about 875 million shoppers in 2024. Shopify powers roughly 12 percent of US ecommerce transactions.
Third party trackers estimate between 2.8 million and 5.5 million live Shopify stores, depending on methodology.
Different analytics companies count stores differently (test stores, inactive stores, regional stores), which is why the numbers vary. What matters: Shopify is one of the core pieces of global ecommerce infrastructure.

What Problem Does Shopify Solve?

Forget software for a moment. Any commerce business has to do a few fundamental jobs:
1. Show offers
Present products or services clearly. Communicate price, variants, options, availability.
2. Capture orders
Let people select what they want and confirm an order.
3. Take money
Process payments safely and in multiple methods and currencies.
4. Fulfill and deliver
Ship physical goods, deliver digital goods, or schedule services.
5. Track what happened
Inventory, revenue, taxes, returns, customers, performance.
6. Get more customers
Marketing, campaigns, social media, ads, email, affiliates.
At tiny scale you can hack this together with DMs, spreadsheets, and a PayPal link. At real scale that becomes chaos.
Shopify's core move: Bundle all of those primitives into one system, then let you plug in extra tools where you need more power.
Underneath the marketing, Shopify is basically a database of products, customers, and orders, plus a set of highly tuned workflows for displaying products, accepting payments, syncing inventory, and talking to lots of other tools.
Everything else is decoration.
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How Does Shopify Work? (System Overview)

How Shopify's Hub and Spokes Model Works

Picture Shopify as the hub where your data lives:
  • Products
  • Variants and inventory
  • Prices, discounts, subscriptions
  • Customers and their order history
  • Orders, payments, refunds
From that hub, you connect spokes:
  • Online store (your main website)
You set everything up once inside Shopify's admin. Orders from any channel still appear in the same unified dashboard.
That "single source of truth" is the whole point.
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Shopify Main Features Explained

Shopify Admin: What Is It?

When you log in, you land in the Shopify admin dashboard. From here you can:
  • Add products and collections
  • See orders and fulfill them
  • Handle refunds and customer issues
  • Set up shipping, taxes, and payment methods
  • Install apps from the Shopify App Store
  • See analytics and reports
Think of it as your "retail back office" in a browser.
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How Does Shopify Online Store Work?

On most plans you get a fully hosted online store. A visual editor lets you rearrange sections, add images, video, and content.
In 2025, Shopify has AI assisted theme generation and content creation (Sidekick, AI theme generator), so you can describe your brand and have a base design created for you.
There are 900+ official themes in the Shopify Theme Store, plus countless third party themes.
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All hosting, SSL certificates, security patches, and performance optimizations are handled by Shopify behind the scenes. You don't deal with servers.

How Does Shopify Product Inventory Work?

Shopify stores your catalog. Each product can have variants (size, color, etc). You can track stock per location (warehouses, shops, 3PLs), with limits like 10 inventory locations on many core plans.
You can sell physical goods, digital products, services, memberships, and more, often with help from niche apps (for example, digital download apps, booking apps, subscription apps).
Inventory levels update automatically as orders are placed, regardless of which channel the order came from.

How Do Shopify Customer Orders Work?

Every order captures:
  • Customer details (name, email, addresses)
  • Line items and variants
  • Payment status and method
  • Shipping status and tracking
Customers get their own profiles, so you can see their order history and tag them for segments and automations (VIP, first time, high LTV, etc). Many marketing apps plug directly into this customer data.

How Does Shopify Checkout Work?

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This is where Shopify spends a huge amount of engineering effort.
Shopify Checkout is the standardized checkout across stores. In a 2023 consulting study used by Shopify, their checkout converted up to 36 percent better than competing ecommerce platforms, with an average uplift around 15 percent.
Shop Pay is a one tap accelerated checkout that stores shipping and payment details across millions of stores. By 2025, Shopify reports a buyer network exceeding 200 million accounts.
You have two main fee layers around payments:
1. Credit card processing fees
If you use Shopify Payments, typical US rates on lower plans are around 2.9 percent plus 30¢ per online transaction, trending lower on higher plans and in person sales. Exact rates vary by country and plan. For a detailed breakdown, check our guide on how much Shopify takes per sale.
2. Extra platform fees if you use third party gateways
On Basic and Grow plans, Shopify adds roughly 2 percent and 1 percent platform fee respectively for non Shopify payment gateways, dropping on Advanced.
Reality check: Payment fees often dwarf your monthly subscription. For a store doing five figures per month in revenue, getting fees right can matter way more than shaving ten dollars off your plan. Learn more in our cost analysis guide.

How Does Shopify Shipping Work?

Shopify gives you a gradient from "ship it yourself" to "outsourced network".
Shopify Shipping lets you buy labels, print them, and access major carrier discounts (often up to 77 to 88 percent off retail rates for some US carriers).
Shopify Fulfillment Network and various 3PL integrations let you outsource storage and shipping entirely.
Markets and Managed Markets let you sell internationally with localized currency, pricing, domains, and checkout setup, while Managed Markets (Global e powered) handles a lot of the cross border complexity for US based merchants.
In early 2025 Shopify rolled out a built in duties and import tax calculator to all plans, so international buyers see landed costs at checkout instead of surprise bills at delivery.
So Shopify doesn't automatically do your logistics, but it gives you tools and partners to compress the headache.

How Do Shopify Sales Channels Work?

You're not limited to "people type your domain in a browser".
Shopify lets you connect multiple sales channels to the same product catalog:
  • Search: Google Shopping
  • Marketplaces: Amazon, Walmart, eBay, Etsy
  • In person: Shopify POS for retail locations
All these channels sync back into the same inventory and order system in Shopify.
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This multi channel reality is why things like link in bio tools matter. For a significant portion of Shopify stores, Instagram is the first touchpoint, not the homepage. Storeleads estimates almost half of Shopify stores list Instagram, and over a quarter list Facebook, as official social profiles.

What Are Shopify Apps and How Do They Work?

Out of the box Shopify covers the basics. When you need something specialized, you go to the Shopify App Store.
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Shopify's own materials talk about 8,000+ apps. Independent analyses put the total number in the 8,000 to 13,000 range depending on counting method and date.
Apps cover everything from:
  • Email and SMS marketing
  • Loyalty programs and subscriptions
  • Product reviews and UGC
  • Upsells, bundles, and AOV tools
  • Digital downloads and memberships
  • Headless storefronts and mobile apps
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Hidden cost warning: Many Shopify stores end up with 10 to 30 apps. Even cheap apps at 10 to 30 dollars each can add hundreds to your monthly stack, and every extra script can impact performance.

What Are Shopify Finance Features?

Beyond running your store, Shopify is increasingly a fintech company:
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Shopify Balance offers a business money account with rewards and a variable APY on funds (the rate is updated periodically and was most recently refreshed December 2025).
Shopify Capital provides revenue based financing and short term loans, repaid as a percentage of your daily sales. In the first half of 2025 alone, Shopify Capital originated about 1.8 billion dollars in funding.
Some experiments like Shopify Line of Credit stopped accepting new draws as of January 2025, which is a reminder that individual financial products can be temporary even if the core platform is stable.

How Much Does Shopify Cost? (2025 Pricing)

Pricing is one of the most googled parts of this topic, and it's also one of the most misunderstood.

Shopify Pricing Plans Overview

In the US, as of late 2025, Shopify's main plan structure looks like this:
Plan Type
Typical Use
Approx Monthly Price (Paid Monthly, USD)
Approx Monthly Price (Paid Annually, USD)
Starter
Social only selling, no full website
$5
$5
Basic
First full store, solo operator
$39
$29
Grow (formerly "Shopify")
Growing brand, small team
$105
$79
Advanced
Scaling operations, complex shipping
$399
$299
Plus
Enterprise and high volume
from ~$2,300 on multiyear terms
from ~$2,300
Important details:
Shopify often runs promos like "3 days free trial, then 3 months at a steep discount". The specifics change by region and time.
Prices and even plan names can vary by country. For example, some countries see the same plans in local currency with different absolute numbers.

What Is Shopify Starter Plan?

The Starter plan is Creator Mode:
You do not get a full themed online store. You do get product pages, a simple checkout link, and the ability to sell through social media and messaging apps.
It's ideal if:
Most of your traffic comes from Instagram, TikTok, X, or other social channels. You're testing a new product idea before committing to a full storefront.
This is also where apps like LinkShop become powerful. Starter gives you the commerce core, and LinkShop gives you a polished link in bio storefront that feels like a real mini site, directly connected to Shopify's checkout.

What Are Shopify Basic, Grow, and Advanced Plans?

When people say "I run a Shopify store", they usually mean one of these:
Basic
Best if you're solo or very small team, and just need a real online store. Includes full online store, blog, up to 10 inventory locations, 24/7 chat support, and core reports.
Grow
Formerly called just "Shopify". Designed for small teams, with more staff accounts, slightly better card and transaction rates, and more advanced reporting and analytics.
Advanced
For stores doing serious volume or needing complex shipping profiles, third party calculated rates, and more staff accounts.

What Is Shopify Plus?

Shopify Plus is the enterprise offering:
Starts around $2,300/month on a 3 year term in North America. Adds things like fully customizable checkout, B2B features, 200+ inventory locations, and priority support. For a comparison with the standard plans, see our Shopify vs Shopify Plus breakdown.
Unless you're already doing high seven to eight figures in revenue or have very specific B2B or multi brand needs, you're unlikely to start here.

What Is The Real Cost of Running Shopify?

Your subscription is just the starting layer. Serious merchants also budget for:
Cost Category
Typical Monthly Range
Notes
Apps
500+
Email marketing, reviews, subscriptions, etc. See our best Shopify apps guide
Themes/Design
300+
Free themes exist, premium themes 350, custom work varies widely
Payment Fees
Scales with revenue
2.9% + 30¢ per transaction typical on Shopify Payments (lower plans)
Shipping/Packaging
Variable
Not a Shopify fee, but a real unit cost per order
Development
1000s
Heavy customization requires experts

How to Start Selling on Shopify (Step by Step)

Let's walk a typical journey to make this concrete.

Should You Use Shopify? (Decide First)

Shopify is usually a good fit if:
  • You're okay paying a monthly fee for "batteries included" infrastructure
  • You want to sell in multiple channels (site plus social plus maybe marketplaces) from one backend
It's usually a bad fit if:
  • You're extremely code heavy and want full control of hosting, database, and stack (then WooCommerce or a custom build may make more sense)
  • You only ever plan to sell in one marketplace and don't care about owning customer relationships
If you're still stuck, our existing comparisons like Shopify vs Etsy, Shopify vs Squarespace, BigCommerce vs Shopify, Shopify vs Square, and Gumroad vs Shopify go deep on these tradeoffs from a merchant's point of view.

Step 1: How to Start Shopify Free Trial

You sign up on Shopify, answer a few questions about:
  • What you're selling
  • Where you plan to sell (online, in person, social, marketplaces)
  • Your current stage (idea, selling elsewhere, already selling online)
The admin then tailors the setup checklist and recommended apps. Getting to a live dashboard typically takes minutes. If you need an LLC, check our guide on whether you need an LLC to sell on Shopify.
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Step 2: How to Add Products to Shopify

You:
  • Create products with titles, descriptions, images, pricing, and variants
  • Group them into collections (for example "New arrivals", "Bestsellers", "Black Friday", "Digital downloads")
  • Decide what's visible in which sales channels
This is where you start thinking like a merchandiser, not just a "person with items".

Step 3: How to Set Up Shopify Payments

Inside settings, you:
  • Choose which currencies you'll accept
  • Optionally enable accelerated methods like Shop Pay, Apple Pay, Google Pay
Behind the scenes Shopify handles PCI compliance, encryption, and integration with card networks. For details on Shopify's cut of transactions, see does Shopify take a cut.

Step 4: How to Set Up Shopify Shipping and Taxes

You:
  • Define where you ship to and how much it costs
  • Decide whether you want to charge real time carrier rates or flat rates
Blind spot many beginners have: Shopify gives you the tools, but you're still legally responsible for tax compliance, labeling, and any sector specific regulations.

Step 5: How to Design Your Shopify Store

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You:
  • Pick a theme (free or paid)
  • Use the drag and drop editor to customize homepage, product pages, collection pages, and other key templates
  • Create your basic content pages (About, FAQ, Contact, Policies)
In 2025, Shopify's AI tools can help by drafting sections and product copy for you, which is handy but still needs human editing.
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Step 6: What Shopify Apps Do You Need?

Typical "starter stack" might include:
You can absolutely launch with almost no apps if you're technically comfortable, but most merchants lean on apps heavily.

Step 7: How to Connect Shopify to Instagram and Social

From the "Sales channels" area, you:
  • Connect TikTok to sync your catalog and run ads
  • Optionally connect Google, YouTube, and marketplaces
All of these channels read from the same product catalog and send orders back into Shopify.

Step 8: How to Test Your Shopify Store Before Launch

Before you flip the switch you should:
  • Check email notifications, order statuses, and refunds
  • Confirm taxes and shipping charges are correct for your main regions
  • Run through your store on mobile, since most traffic will be there
Once you're happy, you connect your domain (see how to change domain name on Shopify), remove password protection, and start your launch campaigns.

Step 9: How to Track Shopify Store Performance

After launch you watch:
  • Conversion rate by device and channel
  • Average order value
  • Traffic sources
  • Repeat purchase rate
Shopify's own analytics plus external tools give you a decent view, with more advanced analytics on higher plans and in external tools. Want to see what competitors are making? Check how to see how much a Shopify store makes.

What Are Shopify's Strengths?

Based on 2024 to 2025 reviews and data, a few strengths are consistent.
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Is Shopify Easy to Use?

Non technical founders can realistically get to first sale without writing code. Developers can go deep with custom themes, headless storefronts using Shopify's Hydrogen plus Oxygen stack, and extensive APIs.

How Big Is Shopify's App Ecosystem?

There are thousands of apps, agencies, and freelancers who know Shopify deeply. Most other tools in ecommerce have a "Shopify app" button somewhere.

Does Shopify Checkout Convert Better?

Repeatable studies and Shopify's own data point to materially higher checkout conversion rates versus other platforms, thanks to Shop Pay's buyer network, performance optimizations, and one page checkout.

Can You Sell on Multiple Channels with Shopify?

Native support for selling on social, marketplaces, and in person. Many merchants use Shopify as their "brain" while pushing the catalog into multiple frontends, including custom headless stores and link in bio storefronts.

Is Shopify Reliable and Scalable?

Shopify's yearly revenue is approaching 290 billion in 2024. This isn't a fragile side project. As an infrastructure bet, it's about as de-risked as it gets in ecommerce.

What Are Shopify's Limitations?

Do You Own Your Shopify Store?

You own your products, brand, and data, but you're renting the platform:
If Shopify changes pricing, plan structure, or app policies, you adapt. If Shopify sunsets a feature (for example some finance products), you have to migrate.
For many merchants the trade is worth it, but it's still a trade.

Does Shopify Ever Go Down?

On Cyber Monday 2025, Shopify experienced a several hour outage affecting admin logins, POS, and some APIs during one of the busiest days of the year. Storefronts mostly stayed online, but many merchants couldn't manage orders or run promos.
This doesn't mean "Shopify is unreliable" in general, but it does mean:
If your entire business depends on Shopify, you inherit its rare but real downtime. You should have contingency plans for high volume events, such as queued promotions and backup communication channels.

How Complicated Are Shopify Fees?

The platform price itself is transparent. The complicated part is:
Card rates that differ by country, plan, and whether you use Shopify Payments. Extra percentage fees if you use third party gateways on lower plans. Apps and add ons that can quietly inflate your operating cost.

Can Too Many Apps Slow Down Shopify?

Because "there's an app for everything", a lot of merchants end up with:
Overlapping functionality (several apps all inserting popups or scripts). Slower page load times from extra scripts and widgets.
Speed matters for conversion, so part of running Shopify well is being ruthless about what you install.

What Are Shopify's Compliance Risks?

Shopify is under constant regulatory and political pressure. In 2025, for example, 25 US attorneys general asked Shopify to reduce illegal vape sales on its platform.
You don't need to panic about that, but you do need to:
Make sure your products and marketing comply with local regulations. Expect that Shopify may enforce new rules or policy changes in sensitive categories.

How Does Shopify Work for Social Commerce?

A lot of Shopify's merchants aren't "classic website first" brands. They're TikTokers, Instagram creators, and social native DTC brands.

Is Instagram Your Real Homepage?

Data from Storeleads shows that Instagram, Facebook, TikTok, and YouTube are deeply integrated into Shopify stores, with Instagram alone listed on nearly half of stores they track.
At the same time:
Platforms like Instagram and TikTok usually give you one clickable link in your profile. That single link often carries the entire weight of your funnel.
If you just send people to a generic homepage, you're forcing them to hunt for the thing they saw in your Reel or TikTok. Every extra click is a leak.
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What Is the Best Shopify Stack for Social Selling?

For a social first brand, a common 2025 stack looks like:
Component
Purpose
Cost
Shopify Starter
Low cost commerce backend and checkout
$5/month
Link in bio storefront (e.g. LinkShop)
Shoppable page on your domain, pulls live Shopify products
$15/month typical
Total Stack
Complete social commerce setup
~$20/month
This is where LinkShop comes in:
LinkShop is a Shopify app that transforms your link in bio into a mobile first, shoppable storefront that sits on your Shopify domain.
It plugs directly into your Shopify catalog, inventory, and checkout, so you're not syncing manually or sending people off to a separate platform. You can mix products, collections, content links, and integrated app blocks (for example video carousels, reviews, bundles) in a single page, tuned for social traffic.
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When Should You Use Shopify? (And When Not)

When Is Shopify the Right Choice?

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Shopify is usually the best answer if:
  • You want to build a brand and own your customer relationships long term
  • You have or want traffic coming from multiple sources (search, social, marketplaces, retail)
  • You value time more than saving a few dollars by self hosting
  • You want access to a huge ecosystem of apps and experts

When Should You NOT Use Shopify?

You may want to think twice if:
  • You're deeply technical and want full control of infrastructure, and are comfortable running your own stack
  • You're hyper cost sensitive, have very low volume, and don't want recurring fees
In those cases, platforms like Etsy, Squarespace, BigCommerce, WooCommerce, or Gumroad might be better primary homes. We already have deep guides comparing Shopify to each major alternative:
Comparison
Focus
Shopify vs Etsy
Own your store vs marketplace selling
Shopify vs Squarespace
E-commerce focused vs website builder
Shopify vs WordPress
Hosted SaaS vs self-hosted flexibility
Shopify vs Amazon FBA
Brand building vs marketplace fulfillment
BigCommerce vs Shopify
Enterprise features comparison
Odoo vs Shopify
ERP integration vs pure e-commerce

Frequently Asked Questions

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Do I need to know how to code to use Shopify?

No. You can set up and run a fully functioning store using only the visual tools. Coding helps when you want deep customization, but it's not mandatory.

Does Shopify give me traffic?

Shopify gives you infrastructure, not an audience. You're still responsible for:
  • Driving traffic from social, search, ads, partnerships
  • Improving conversion with better creative, offers, and UX
Think of Shopify as roads and utilities, not the customers themselves. Check our guide on how to promote your Shopify store and how to increase sales on Shopify.

Will Shopify handle my taxes automatically?

Shopify can calculate many taxes and duties at checkout and offers built in tools to manage sales taxes and import duties. You're still responsible for registering, filing, and complying with local tax law.

Can I sell internationally from a single store?

Yes. Shopify's Markets and Managed Markets products were designed for exactly this: multiple currencies, localized domains, duties collected at checkout, and region specific catalogs.

Is Shopify only for physical products?

No. You can sell digital files, memberships, coaching, events, and services, often with the help of specialized apps. Many creator stacks pair Shopify with digital delivery apps and link in bio storefronts to make this smooth. For specific guides, see how to launch a digital product or how to sell digital art.

Can I switch away from Shopify later?

Yes, but there's friction. You can export products, customers, and orders, but:
Checkout logic, theme customization, and app specific data may not port cleanly. Migrating is a project, not a toggle. If you're considering migrating from another platform, check migrate from WooCommerce to Shopify.
As your revenue grows, your switching cost grows with it. That's another reason to think about platform choice carefully early on.

Recap And Next Steps

If you strip away the hype, Shopify in 2025 is:
A mature, battle tested commerce operating system, sitting underneath millions of stores and trillions in sales, with a checkout that converts very well, a huge app ecosystem, and deep multi channel support.
But also with real tradeoffs around platform lock in, fee complexity, and ecosystem sprawl.
If you're a social first Shopify merchant, you're often leaving money on the table if your "link in bio" is still a static list of links or a generic link tool that doesn't talk directly to Shopify.
That's exactly the gap LinkShop is built to fill, by turning that single link into a mobile optimized, shoppable storefront fully wired into your Shopify backend.
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From here, useful next reads on our blog include:
  • Shopify vs Etsy if you're torn between owning a storefront and selling in a marketplace

Note on Data Currency

Plan names, pricing, and conversion statistics in this guide are based on late 2025 sources.
Shopify updates pricing, promos, and features frequently, so always confirm on the official Shopify site and help center before making financial decisions.

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