Keith Rabois: how to manage multiple Shopify stores

Many serial entrepreneurs run multiple Shopify stores at once. Navigating and successfully running a single store is difficult enough. For the bold entrepreneurs running more than one store, we peeled back the curtain on how we at OpenStore operate a large portfolio of Shopify stores across several categories. 

DTC e-commerce expert Nik Sharma sat down with Keith Rabois, OpenStore’s co-founder and CEO, in NYC to discuss the playbook for running and growing multiple Shopify stores efficiently. They touched on how to lower costs in shipping, marketing, advertising, and inventory management, as well as reducing dependence on a single customer acquisition channel.

Reduce fixed & variable costs of running multiple Shopify stores

When you leverage economies of scale in DTC e-commerce, you can “trim the fat” as Nik Sharma put it. Multi-store founders can reduce fixed and variable costs by consolidating resource across multiple business areas.

Shipping

One of the best places to reduce costs at scale is in shipping. Take it from Keith Rabois:

“When you ship goods, you pay retail rates unless you're sending a lot with FedEx. If you send a million packages a month, guess what, you don't pay the same cost that you and I pay when we send out a package. So as we have more scale, the marginal cost per shipping package goes down, which means we can effectively make more money per unit, because we're no longer paying off-the-shelf rack rates. We're getting volume discounts — extremely common in shipping. Longtail businesses just don't have access to it.”

Customer support

If you have in-house customer support and retention, or if you work with an agency or contractors, it’s wise to use the same resource across all of your Shopify brands. 

You can also explore using live chat, chatbots, or building out self-serve resources across all your stores to scale customer experience.

Advertising and marketing

Split your total capital across all brands to test which online advertising approaches work for your stores. Keith elaborates about the brands that OpenStore manages through OpenStore Drive, or has acquired:

“We figure out what the optimal spend is. Several brands actually underinvest in marketing on Instagram because they don't have the cashflow. We can make an economic decision, a model decision, what's the best amount of money to spend on Facebook, Instagram, and/or Google, and some businesses can grow faster with a very prudent, very rational payback period.”

Design and creative

Beyond marketing, OpenStore also has cross-channel teams that work across all brands for branding, visual design, and even a video creative team. Keith explains:

“When you run 40-something brands, you have some of the fixed costs of running a video creative studio. So adding another 5-10 brands to that isn't very expensive. If you're creating a video creative studio from scratch, it’s extremely expensive.”

Developing iOS apps for managed Shopify stores

Keith adds that an effective mobile marketing strategy for some Shopify stores acquired or managed by OpenStore was to develop dedicated, mobile applications:

“None of the brands we acquired or manage have their own app, so we give them their own app. And that helps with retention, marketing notifications, and sometimes conversions too.

We actually build iOS apps in-house now. There's some unique benefits of actually an authentic, truly unique iOS app.”

Optimize your inventory management

To add to Keith and Nik’s points, one of the biggest challenges for most multi-store owners in DTC is inventory management. From complexities in stock synchronization to analytics, it’s hard to get right.

When starting off with your first Shopify store: avoid being stuck with inventory that you can’t sell by private labeling or dropshipping. Later down the line, you may have your house overflowing with boxes like this kidswear Shopify store owner.

Advanced, experienced co-founders for yoga apparel found a way to grow their business by running ads only for low-ticket inventory on Facebook, Instagram, TikTok, and Google. But this took considerable work in planning and tracking.

Even if you get it right, a crisis can break the business. For example, inventory bottlenecks weren’t a problem for one science toy Shopify store owner, as they had great cashflow and a solid marketing strategy. Until a holdup in the port nearly bankrupted them.

Avoid multi-store inventory problems

• Use third-party inventory management software that integrates directly with Shopify. At OpenStore, we built our own, in-house software for synching inventory and controlling order flow.
• Automate your reordering to save time and avoid stockouts/overstocking. For example, when stock falls below a certain amount, or based on historical order data from your inventory management software.
• Reorder based on demand forecasting, and invest time in inventory planning for seasonal trends and upcoming promotions. If your data shows an uptick in sales during the holiday season, you should anticipate this trend and order accordingly.
• Regularly audit your inventory and implement barcode tracking to reduce human error. Train staff and invest in barcode equipment.
• Prioritize based on popularity: focus on your best-selling items and ensure these are never out of stock. Consider dropshipping for less popular items.

Reduce dependence on a single channel

If most of your sales come from Facebook, Instagram, TikTok, or Google — this one’s for you. Relying on a single channel risks uncertainty for your business. 

For example, if you get most of your Shopify sales via search engine optimization (SEO), you are at the whims of Google’s algorithm changes or how search results are displayed with AI. 

If you’re advertising on Facebook or Instagram, you’re vulnerable to mobile operating system updates interfering with tracking and attribution.

Nik Sharma: “When we chatted last time in 2022, you mentioned that 70% of OpenStore brands’ sales come directly from Facebook. Is part of your vision to lessen that number?”

Keith Rabois: “​​I would like to absolutely reduce the dependence on Meta (Facebook, Instagram), but you need scale. At the end of the day, we're gonna scale business direct to consumers. And there's not that many platforms and options in the real world today to offset the scale of Instagram. I hope that over time, let's say, we have 40 million buyers using our app every day, or every month or every week, we may not have to pay that Instagram tax.”

Keith teased the upcoming product from OpenStore later this year for serendipitous discovery in e-commerce.

Secret sauce of OpenStore

Even with the flatlining e-commerce sector, OpenStore’s model allows entrepreneurs to leverage economies of scale.

Multi-channel specialists and a deep tech advantage allows the team to grow acquired and managed brands at scale.

OpenStore Drive is a new offering that allows serial Shopify entrepreneurs to reclaim their time. Take it from Keith Rabois himself: