Software Stack Editor

   

A virtual showroom is no longer a pandemic-era experiment—it’s the new storefront for modern retail. Unlike a static website, it lets customers explore products interactively, creating an immersive experience that mimics a physical store.

Think of it as retail showrooming turned inside out. This digital-first environment merges discovery and purchase. 

A furniture brand can help shoppers visualize a sofa in their living room, while an auto dealer can offer a virtual test drive. The payoff is higher engagement, broader reach, and data-rich insight into customer behavior. What was once a trend is now becoming a core part of any successful retail strategy.

Ahead, you’ll learn how virtual showrooms work, the technologies behind them, and how brands from wholesale to home goods are putting them into practice. 

What is a virtual showroom?

A virtual showroom is an interactive, branded space that lets people explore, configure, and purchase products displayed in 3D, augmented reality (AR), or virtual reality (VR). Instead of static product photos and grids, customers can spin a product 360 degrees, zoom into details, watch embedded videos, or even step into a VR environment.

Virtual showrooms are different from standard online catalogs because they replicate how customers actually shop, creating a more engaging shopping experience. Instead of static images and long spec sheets, they enable shopper to:

• Interact: Zoom, spin, and configure products in real time
• Curate: Story-driven assortments and collections tailored to buyers
• Explore, but with a guide: Hotspots, comparison views, and embedded video demos
• Transact: Pricing, availability, and ordering inside the same experience

Taken together, these capabilities enable shoppers to move from interest to purchase without making them jump between pages, meaning less friction and a better overall customer experience.

The concept began in wholesale, but consumer-facing brands have adopted virtual showrooms as part of their sales strategies and scaled them even further. 

• Automotive companies use virtual showrooms to let shoppers virtually sit inside a car, change paint colors, or configure trims before booking a test drive. 
• Fashion retailers use AR overlays so customers can virtually try on clothes and accessories before they click “buy.” Even home improvement brands are introducing digital tools that let homeowners visualize materials and finishes before they ever visit a store.

Rather than replacing physical showrooms, virtual showrooms complement them. A shopper might test furniture at home through AR and then go to a physical store to see and feel the piece before making the purchase. Or a wholesale buyer might use a virtual showroom to narrow down a collection online, then confirm their choices at market week. In both cases, the virtual experience strengthens a click-and-mortar strategy by connecting virtual shopping to physical purchasing.

According to Grand View Research, the extended reality (XR) market—which includes AR and VR—is projected to grow from $142.39 billion in 2023 to over $1 trillion by 2030. The trend reflects growing consumer demand, rising government support, increased trust, and other factors contributing to increasing sales.

Key benefits of using a virtual showroom

There are many benefits to using virtual showrooms for both retail buyers and brands. But the real value of a virtual showroom doesn’t lie in its impressive visuals, but how it drives measurable results. 

Let’s look closer at the benefits virtual showroom offer:

Reduce operational costs and improve sustainability

The first win is cost. By replacing physical samples and prototypes with 3D models, retailers can lower expenses tied to shipping, storage, and production. A virtual showroom also helps cut down on waste and carbon footprint, since fewer samples and fewer last-minute product changes mean less material headed to the landfill.

Tips for retailers and wholesalers:

• Start by digitizing your highest-volume stock keeping units (SKUs) so they can be reused across your ecommerce site, marketing, and showroom displays.
• Use 3D updates in place of shipping out sample rounds—whether that’s sending a new colorway to wholesale buyers or showing furniture finishes to consumers.
• Build a single digital asset library so photography, video loops, and product visuals all come from the same files instead of multiple costly shoots.

Aligning digital assets with in-store storytelling also ensures consistency. Coordinated displays across both physical and digital spaces strengthen your brand identity, a key part of visual merchandising.

Accelerate your time to market

Virtual showrooms streamline launches by making product updates instant. Instead of waiting weeks for prototypes or line sheets, retailers can roll out changes in real time, ensuring customers always see the latest version.

Tips for retailers and wholesalers:

• Centralize your 3D models, swatches, and product information in one content hub that feeds directly into your showroom.
• Announce new products in stages—use teaser scenes to generate early interest, then make them shoppable when inventory arrives.
• Sync showroom updates with your broader omnichannel campaigns. A well-planned click-and-mortar strategy lets you launch online and reinforce it with in-store promotions.

With everything connected, you can move from concept to customer much faster—without adding extra overhead.

Expand your global reach without physical expansion

Opening new stores or showrooms—especially across international borders—isn’t always realistic (particularly for SMBs). A virtual showroom extends your reach by making products accessible to buyers and shoppers anywhere, without the costs of new real estate. For example, if you’re based in California, a buyer from Amsterdam can view your products and make an order from the virtual showroom platform. 

Tips for retailers and wholesalers:

• For B2B, use wholesale networks like JOOR, which connects thousands of brands with buyers worldwide, to put your products in front of retailers you’d never meet in person.
• For B2C, duplicate your showroom for different regions with localized pricing and availability, so shoppers get a tailored experience even if you only ship from one location.
• Pair virtual showrooms with in-store events and QR codes, tapping into showrooming and webrooming behaviors where customers blend online and offline exploration.

The result: greater exposure without added overhead.

Create immersive and interactive customer experiences

Engagement is where a virtual showroom shines. Instead of flipping through static images, shoppers can examine a product in 3D, drop it into their living room with AR, or click through shoppable hotspots to learn about products and features. This kind of interaction builds confidence, shortens the path to purchase, and can give you a competitive advantage.

Tips for retailers and wholesalers:

• Design your showroom scenes like you’d design a store floor. Tell a story with hero products and themed collections, then layer in comparisons and finish options.
• Use AR to give customers context at home, whether that’s a lamp on a nightstand or a sofa in the living room.
• Keep calls to action (CTAs) in view. Buttons like “Add to cart,” “Book a test drive,” or “Request wholesale pricing” should appear inside the showroom, not on a separate page.

💡Pro tip: If you’re stuck on how to connect physical and digital storytelling, keep in-store marketing best practices in mind—many of those tactics translate directly to virtual spaces.

Gather valuable data on product engagement

Unlike static catalogs, virtual showrooms generate actionable insights. You can see which products attract clicks, which finishes get explored, and where shoppers spend their time. That data informs both your digital strategy and your next in-store reset.

Real-time updates in your virtual showroom allow you to act faster and direct buyers to products and assortments that already have proven demand. 

Tips for retailers and wholesalers:

• Use QR codes and UTMs to connect physical displays to your showroom. A 2024 survey found that 64% of North American shoppers have scanned a QR code in-store, showing how mainstream this behavior has become.
• Run simple A/B tests. Try different hero products, CTAs, or scene layouts, then compare which drives more engagement or sales.
• Feed results back into your customer relationship management (CRM) or point-of-sale (POS) system to identify the products most likely to generate revenue.

By measuring product engagement inside your showroom, you’ll know exactly what resonates with buyers and consumers—and where to invest next.

Core technologies that power virtual showrooms

A modern virtual showroom runs on three core technologies that turn product discovery into an interactive experience: 3D visualization, try-before-you-buy through AR, and immersion through VR. For sellers, the goal is to understand what each technology does, where it fits, and what kind of setup it requires.

3D rendering and product visualization

3D is the foundation for virtual showrooms. A single 3D model can power your product-page viewer, your virtual showroom scene, and even marketing renders, so you can produce it once and reuse it in multiple contexts. 

Here’s how to get started with 3D rendering:

1. Choose the right formats for your needs. Use GLB/glTF for Android and web viewers (it works on most browsers) and USDZ for iPhone/iPad. These are the two formats most SMBs need—with no deep pipeline required.
2. Create or convert your assets. You can model from scratch, scan with a service, or use newer tools that generate 3D renderings from photos, which is handy for large catalogs with limited budget. We’ll cover more of the how-to later in this article.
3. Keep files light. Smaller textures and simpler geometry mean faster load times, which matter for mobile customers.
4. Start with priority SKUs. Digitize your top sellers and high-return items first, where 3D clarity can reduce uncertainty.

A 3D rendering alone can be enough if your product doesn’t need in-room context (for example, products like handbags or small electronics).

Augmented reality for “try before you buy”

AR lets shoppers place a life-size product in their space using a smartphone camera—ideal for furniture, décor, lighting, appliances, and any other item where fit and scale drive confidence. For B2B, AR helps preview fixtures or planograms onsite before you commit.

Here’s what you need to get set up with AR:

1. A phone and your 3D file: On iOS, Quick Look opens a USDZ file directly; on Android, Scene Viewer uses GLB/glTF. Most AR experiences launch from a simple button on your product page or within your virtual showroom.
2. Good lighting and realistic materials: The closer your textures look to the real thing, the more persuasive the AR will be.
3. Clear CTAs: “View in your room,” “See in your space,” or “Save to project” are persuasive CTAs that can reduce friction and help nudge buyers toward conversion at the exact decision moment.

AR and VR tools are becoming more accessible and affordable, making entry easier for smaller teams. Rapid market growth and projected expansion shows sustained vendor support and falling costs, making now is the time for SMBs to plan for AR investment.

Virtual reality or fully immersive experiences

VR places shoppers or wholesale buyers inside a space, which is great for complex, high-consideration journeys (like walking a living room layout, touring a “store-within-a-store,” or hosting a wholesale line review).

You can deliver VR in two ways: headset-based (using stand-alone devices for events and showrooms) or web-based experiences that simulate “first-person” navigation on a laptop or phone.

Here’s where VR technology fits—and where it doesn’t:

1. Use VR for depth, not every detail. VR shines when layout, scale, or storytelling need immersion. It’s overkill for simple SKU-browsing.
2. Consider shared sessions. For B2B, a rep can guide multiple buyers through a seasonal presentation. For B2C, VR technology can elevate popups and in-store kiosks or create social shopping experiences.
3. Plan for accessibility. Offer a non-VR fallback (like a standard 3D viewer or video tour) so every customer can engage, with or without a headset.

After a slowdown in previous years, AR/VR headset shipments grew in 2024, with analysts expecting further gains as prices fall and devices improve. This matters if you’re weighing in-store headsets for events or guided experiences, but it’s still a good idea to keep an eye on adoption signals. You might consider investing in 3D or AR before committing to full VR, especially if your budget is limited.

Virtual showrooms in action: B2B vs. B2C examples

Virtual showrooms are no longer confined to the fashion industry and enterprise retailers with deep pockets—they’re shaping how consumers shop everywhere. By looking at both B2B and B2C applications, retailers can see how these technologies serve as practical, revenue-driving tools.

B2B use case: Streamlining wholesale fashion with JOOR

JOOR shows how a virtual showroom can replace the bulk of physical sampling and trade show travel with digital assortments. The platform connects more than 14,000 brands with more than 650,000 buyers worldwide, allowing sales teams to showcase lines with interactive lookbooks, 360-degree imagery, and real-time ordering.

Takeaways for smaller businesses:

• Build a core digital assortment of top sellers, new products, and key colorways.
• Host short virtual line showings with embedded ordering, then follow with a limited physical sample set only where needed.
• Use saved assortments as templates for future seasons to speed repeat business.

By treating the virtual showroom as your primary wholesale stage—and physical samples as supporting assets—you’ll cut costs while increasing buyer coverage.

B2C use case: Configuring cars with Toyota’s virtual showroom

Toyota’s virtual showroom is a strong consumer example of how interactivity shortens the path to purchase. Shoppers can use the automotive virtual showroom to view cars inside and out with 360-degree rotation, customize trims or colors, and move seamlessly to actions like booking a test drive or requesting a price quote.

What can smaller businesses learn from Toyota’s platform?

• Offer close looks at key product features and finishes.
• Place primary CTAs inside the showroom viewer where they’re clearly visible—not on a separate page.
• Capture partial leads (like the customer’s chosen configuration and email) so you can follow up with them if they bounce before making a purchase.

This same pattern supports click-and-mortar models, where online configuration hands off to an in-store demo or pickup to close the sale.

B2C use case: Visualizing furniture at home with IKEA

IKEA’s Kreativ platform turns home furnishing into an AR shopping experience that reduces returns. Customers can design rooms in 3D, view items up close, place products at true scale, and see how multiple pieces fit together before buying. This not only boosts confidence but reduces costly returns.

Smaller retailers can look to IKEA’s virtual furniture showroom for plenty of inspiration to apply to their own businesses:

• Prebuild a few common room templates (studio, small living room) that fit your product offerings.
• Give scaled previews for larger items.
• Allow customers to save and share designs so store staff can pick up the conversation in person or via chat.

Context transforms the buying journey. Allowing customers to explore a car’s interior or visualize a sofa in their small apartment makes your virtual showroom not just a virtual gallery, but a trusted decision-making tool.

How to create a virtual showroom in four steps

A virtual showroom isn’t an enterprise-only project. With a clear plan and the right tools, you can now launch one in just weeks. All it takes is focusing on the assets you already have, the platforms that fit your use case, and the integrations that make it measurable.

Step 1: Digitize your products with 3D modeling

Start with the products that move your business. Prioritize your top sellers and high-return items (where visualization reduces uncertainty). Your goal is a small, high-impact 3D library you can reuse across product detail pages (PDPs), ads, and your virtual showroom.

Here’s what to do:

1. Pick a practical capture method. If your vendor has CAD files available, use them. Otherwise, consider outsourcing basic 3D modeling for hero SKUs, or test photogrammetry (a technique that converts photos into 3D models) for simple shapes. Aim for web-friendly formats: GLB/glTF for Android and web, and USDZ for iOS.
2. Set a performance budget. Keep textures optimized and file sizes lean so models load quickly on mobile. Test how assets look on mid-tier phones before you approve them.
3. Standardize naming and metadata. Include SKU, finish, and size in filenames so your team—and your platform—can automatically swap variants. This keeps your back end organized and saves you tons of time down the road.
4. Create one reusable master for each product. From a single 3D file, render cutouts, 360-degree spins, and short animations you can use in ads and PDPs.

A disciplined 3D pipeline lowers long-term production costs and gives your virtual showroom a consistent, high-quality look.

Step 2: Choose the right virtual showroom platform

Pick the virtual showroom technology that best fits your business needs, not the one with the flashiest demo. Is your primary use B2B wholesale selling or B2C consumer exploration (or both)? What are your must-have features?

Here’s an evaluation checklist—use this as a scorecard when comparing vendors:

• 3D and AR support: Native viewers for GLB/USDZ, “view in room” AR, hotspots, annotations
• Selling workflows: 
• For B2B: Price lists, order capture, assortments, buyer accounts
• For B2C: Cart/checkout, wishlists, appointments
• Content tools: Scene templates, easy updates, video support, multi-language/currency if needed
• Analytics: Event-tracking (scene views, hotspot clicks, add-to-cart), UTM fields, export to GA4/BI
• Integrations: Product catalog, inventory, pricing, and customer data with your ecommerce stack
• Admin and governance: Roles/permissions, version control, scheduled content sunsets

Demo or pilot the platform with a small collection first. If the platform makes it easy to update scenes, add variants, and embed CTAs, you’ve likely found the right one.

Step 3: Design the user experience and journey

Treat your virtual showroom like a well-run store: Make sure it has clear entry points, curated paths, and obvious next steps. Design for mobile first, keep decisions close to the product, and make help one tap away.

Here’s how to design the flow (and measure it):

1. Map a few core scenes: Each scene should have a clear CTA: add to cart, request wholesale pricing, book an appointment, or start checkout.
2. Use hotspots to answer questions: Place product specs, material callouts, or short demos directly on the product. This reduces cognitive load and reasons not to buy.
3. Build for accessibility and speed: Make sure your showroom has high contrast, alt text or transcripts for media, captioned video, and fast load times on cellular connections.
4. Track every interaction: Set up tracking for scene views, hotspot clicks, finish/size toggles, and CTAs so you can see where shoppers stall or convert.

Mirror your strongest in-store stories in your virtual showroom. If three pieces of living room furniture sell best as a set, create a “room” scene with a one-click bundle and a clear handoff to chat with a sales representative or book an in-store appointment.

Step 4: Integrate with your ecommerce ecosystem

Your virtual showroom should integrate with the rest of your business, not sit on an island. Connect catalog data, track behavior, and make it easy for shoppers to jump between digital and physical touchpoints.

Here’s how to make your showroom operational and trackable:

1. Sync product and inventory: Connect showroom scenes to live SKUs and availability so pricing and stock are always up-to-date.
2. Embed measurement from day one: Add UTM tracking codes to links and connect activity to Google Analytics (or your analytics tool) so you can compare engagement to revenue.
3. Bridge store and screen with QR: Print QR codes on endcaps, catalogs, or window signs that link directly to specific showroom scenes. Brick-and-mortar employees can use the same links to continue the conversation by phone or chat.
4. Close the loop with POS/CRM: Use sales systems to tie orders directly to scenes or campaigns, flag high-interest products for staff follow-ups, and set content “sunset dates” so promotions end on time.

Once your virtual showroom is integrated, small optimizations (like a clearer CTA or a better default finish) translate into measurable lift, the same way a better endcap does in-store. Over time, the data you collect will guide new products, pricing, and your next virtual showroom refresh.

Four virtual showroom platforms to consider in 2025

There are many virtual showroom software and platforms available to retailers and brands today. Choosing the right one comes down to your use case: wholesale selling, product-level 3D, or immersive AR/VR spaces.

Let’s take a look at four options:

1. Shopify virtual showroom apps (pilot quickly on your storefront)

For many SMBs, the fastest path is to test virtual showroom ideas with a Shopify app—either a 3D/AR viewer or a lightweight 3D virtual store experience embedded in your theme. Thanks to Shopify’s expansive App Store, you have multiple options. Here are just a few:

• Odyssey – 3D Virtual Stores: Creates a browsable 3D store environment inside your existing site, letting you showcase products in an immersive layout without custom development.
• Angle 3D Configurator – 3D & AR: Adds interactive 3D customization and AR viewing at the product level, which you can link from a curated “showroom” landing page.

These apps are best for SMB retailers who want to validate interactive 3D or a virtual showroom concept before investing in a bespoke build. You stay in the Shopify ecosystem, move quickly from idea to test, and learn what shoppers engage with. Then you can decide if a more robust virtual showroom platform is a good fit for your ecommerce business.

2. JOOR (for fashion/luxury wholesale)

If your priority is wholesale, JOOR is a marketplace and data-exchange platform for beauty, fashion, and home goods retailers that combines virtual showrooms, digital linesheets, and order capture inside a large buyer network. 

Brands use JOOR to simplify their B2B sales process and reach new retailers already using the platform. The same goes for retailers. Buyers can discover new brands to stock in their store via JOOR. 

You can show off your products using dynamic video, 3D interactive images, and audio. For example, share a video of your runway show, a video of you explaining the collection, and product performance reviews. 

Additionally, you can schedule virtual appointments with retail buyers to share details about the collection you’re selling. It also has a style board feature, so product assortments can be personalized to each buyer during online showroom appointments. 

You can arrange your products into specific collections depending on the buyer’s past purchases, region, and other factors to help simplify the process. 

JOOR is best for fashion and lifestyle brands that need B2B assortments, shoppable lookbooks, and retailer collaboration—plus embedded payments and ERP/PLM integrations.

3. BrandLab360 (for immersive VR/3D environments)

When your goal is an immersive brand space that runs in the browser (and optionally on headsets), BrandLab360 builds bespoke virtual retail stores with interactive 3D environments, integrated voice/video, and transactional handoffs. Their platform emphasizes web delivery—no apps or VR headsets required—with optional support for devices like Apple Vision Pro. 

With this platform, you can create any online store in a 3D digital format, including integrated live voice and video communication that links seamlessly to transactional ordering platforms.

Each virtual showroom environment can host unlimited users, allowing you to show your products to multiple buyers simultaneously. You can also invite people to their own private shopping experience. 

BrandLab360 is best for launches, editorial storytelling, and high-impact environments where you want shoppers or wholesale buyers to “walk” a space and interact with products.

4. iEnhance (for furniture and home goods)

If your catalog hinges on finishes, dimensions, and in-room context, iEnhance offers 3D visualization and AR for configurable products (think sofas, tables, and storage).

The platform positions itself as a 3D/AR personalization engine designed to move shoppers from static images to interactive exploration—useful for categories where fit and space drive confidence.

With iEnhance, you can speed up buyer consideration with real-time finish changes and AR sizing, then pass shoppers to checkout or to a store appointment.

iEnhance is best for furniture, décor, and home goods that benefit from AR “place in room” and on-the-fly configuration.

Best practices for a high-performing virtual showroom

High-performing virtual showrooms balance speed, accessibility, clear UX, measurement, and consistency with your physical store. These best practices will keep your virtual showroom simple to implement, budget-aware, and focused on results—not bells and whistles.

• Keep models fast and lightweight. Fast scenes convert better because shoppers don’t wait for assets to load. Keep your 3D files lean, use web-friendly formats, and preview on mid-range phones before you ship.
• Set KPIs for your digital showroom. Define your primary objectives so you can build your digital strategy around them. Common goals include spending less money on trade shows, increasing order values, reducing unsold stock, or shortening sales cycles.
• Invest in brand content. Make your content and the experience engaging by ensuring that buyers can view your merchandise from different angles. Write detailed product descriptions that answer all the questions a buyer may have. Include information about product materials, color options, price, where the product is made, size range, fit, and delivery dates.
• Create collections to spark ideas. Use your digital environment to showcase collections that retail buyers may not have thought of otherwise. Test different product assortment strategies and gather feedback from buyers and your team. 
• Create an interactive virtual showroom experience. Dynamic video, 3D images, and virtual samples are used to show clear, stylistic views of your products. Integrate with a chatbot or live chat function to ensure you’re always available if buyers have questions.
• Design for accessibility by default. Accessible design expands your audience and reduces friction. Follow WCAG 2.2 fundamentals so text and controls are easy to see, hear, and use.
• Keep digital and physical locations in sync. Great retail showrooming connects storytelling across channels. Your virtual and physical showrooms should share the same collections, messaging, and timing.
• Make the journey obvious. Design your scenes like a well-run store floor—clear entry points, helpful context, and obvious next steps. Keep decisions close to the product and make it clear that help is one tap away.

If you run an ecommerce business, there’s a good chance you’ve had to wrangle and upload images. Whether they were logo graphics for your website, high-quality studio photos of your products, or behind-the-scenes pictures to share on social media, images are an essential part of your online presence.

There are several common file types you can use on the web, and others that are better for print. Understanding when to use different image file formats helps you keep web pages lightweight, ensure quality, and streamline your workflow.

What are image file types?

Image file types are standardized formats for saving and displaying visuals, such as photos, graphics, and logos. Each format balances quality, file size, color support, transparency, and compatibility differently. Choosing the right image file type depends on where the image will appear (web or print), how it will be edited, and whether features like transparency or animation are needed.

Factors to consider when choosing an image file type

There are different types of image files for a reason, and these factors make some file types better than others for specific applications. Keep these core differences in mind:

Vector vs. raster

Vector and raster graphics refer to the way an image file is composed at its most basic level. Raster files are grids of tiny dots called pixels. The more pixels in an image, the higher the resolution. If you zoom far enough into a raster photo, you eventually will see those pixels, so there will always be a limit on how big the image can scale. Most photographs you work with will be raster images, and all of the graphics and images you see online are in a raster format, even if they originally were edited and exported from a vector file.

Vector files use mathematical equations to create shapes and lines, so you can enlarge them without losing definition. Businesses typically use vector files as master files for logos and graphic artwork.

High resolution vs. low resolution

When it comes to online images, bigger isn’t always better. Most are made of thousands of pixels. The more pixels that compose an image, the higher the resolution will be. That means the image is sharper, and you can post the picture clearly at a larger size.

However, if an online image has a resolution that’s too high, it might slow down the page load speed—which is bad for a website’s technical SEO—and be harder to share or store. File types like JPG and PNG are able to walk the line between quality and performance, which is why they are some of the most common file types.

Lossy vs. lossless compression

Compression is the act of digitally shrinking files, which makes them easier to manage and transmit online.

Lossless compression, as the name suggests, is a method of compression that retains all of the original information, like colors, brightness, sharpness, and the makeup of each individual pixel, while still making the image smaller. A lossless compression algorithm might look at an image and find identically colored pixels throughout. To save space, it will create an abbreviation for “black pixel,” so it doesn’t use memory for every single black pixel.

Lossy compression determines an acceptable amount of image degradation, which is a loss of detail and quality, in order to shrink the image. It may lump pixels together or merge similar shades of a certain color.

Image file types

You’re likely familiar with the main image file types like JPG, PDF, or GIF, but there are several more, each with its own strengths and weaknesses. Here are 10 image file types you might encounter:

JPEG or JPG

Short for: Joint Photographic Experts Group

File extensions: .JPEG or .JPG

As one of the most common image file formats, JPEGs (or JPGs) are good at keeping file sizes small while maintaining reasonable image quality. If you run an ecommerce business, it’s a great image format for your product photos pretty much anywhere you want to display an image online. You can use JPEG and JPG interchangeably as a file extension.

The JPEG format is a lossy raster image, so it’s prone to pixelation when zooming in. This is problematic when you’ve saved and reuploaded JPEGs multiple times, as they tend to become distorted. If you struggle with this issue, there are tools that can help with resizing photos, like Shopify’s Image Resizer.

PDF

Short for: Portable Document Format

File Extension: .PDF

A PDF is a file format that preserves the appearance of a document, allowing you to share it regardless of the software, hardware, or operating system you initially used to make the file. Created by Adobe as a proprietary format in 1993, PDFs became publicly available in 2008. They’ve since become a default way to share documents and high-quality images, and you can also upload PDFs to your website for readers to click and read. You can also open these files in a viewer like Adobe Acrobat.

If you run a business, you’ll likely use PDF files for materials such as multipage documents, style guides, and reports with multiple images. You may also find public-facing use for them as downloadable white papers or trend reports, which you can use as lead magnets.

PNG

Short for: Portable Network Graphics

File Extension: .PNG

The PNG file format is similar to JPEG, but not as ubiquitous. Unlike JPEGs, PNG is a lossless image format that allows for more detailed editing without losing quality. Despite the lossless compression, it’s not as high-resolution as other file formats, so you shouldn’t use it for printing.

The real strength of the PNG is its ability to include a transparent background. If you maintain a website for your company, the PNG format is likely the best image format for logos, graphics, and product photos. The ability to make the background transparent means you can place images of your products directly over the website background.

HEIF or HEIC

Short for: High Efficiency Image File or High Efficiency Image Container

File Extensions: .HEIF or .HEIC

A HEIF is a modern image format you can use to store photos and sequences of images, like bursts or animations. An HEIC is a type of HEIF file, and it’s the default file format for photos taken on iPhones and iPads. It is not an Apple-specific format, however. HEIF files are basically JPEG files, but with higher quality and a smaller size, thanks to technological advances in compression algorithms.

HEIF uses compression derived from the MPEG video format to create smaller, higher quality images. HEIF and HEIC files are not yet accessible by everyone, so you may have to convert them into JPEGs until the format is widely adopted.

GIF

Short for: Graphics Interchange Format

File Extension: .GIF

If you’ve clicked around the web at all, you’ve definitely seen animated GIFs. They have a very small image file size and allow for animation of multiple frames repeating in a loop. This type of file can contain still images too.

GIFs are small and load extremely fast, thanks in part to their having a limited color palette of 256 colors. You may use GIF format image types for animated images on your site, but you may also find uses for them where you want to display small, simple images that will load fast and not take up much bandwidth.

TIF or TIFF

Short for: Tagged Image File or Tagged Image File Format

File Extensions: .TIF (or .TIFF)

TIFF files are raster files that use lossless compression, meaning you can copy and edit them without losing information or quality. A TIFF file is great for storing images and photos for print, so you may use this image file type for a mailer, flyer, or brochure. However, TIFF is typically too big for web graphics, and it will cause your website to load too slowly on your users’ web browsers.

PSD

Short for: Photoshop Document

File Extension: .PSD

Photoshop is the most well-known photo editing software, so it’s no surprise that Adobe Photoshop’s proprietary image extension (.PSD) is a common file type. It’s a fairly specialized file type that’s not meant for image display. PSD files are not uploaded as images to your website, but are project files that allow you or someone else (likely a graphic designer) to edit images before exporting them as another file type for upload.

It’s also worth noting that PSD files open only in Adobe Photoshop, so they are useful mainly to designers and consumer-users of the software. PSD files include image layers, giving you the ability to edit with much more precision. Photoshop works only with raster image files and does not support vector graphics. In ecommerce, the main way you’d use a PSD file is to send a project to another person in your company or to a designer to work on before exporting a JPG, PNG, PDF, or another image file to upload.

AI

Short for: Adobe Illustrator

File Extension: .AI

Note: AI files (Adobe Illustrator, not artificial intelligence) are arguably one of the best image formats for logos, as they work with vector data instead of pixelated graphics. This means the lines in your logo will be perfectly sharp with no pixelation or degradation, no matter how big you enlarge it. That said, they are not built for display, so you likely will keep a master logo file in AI format but export a PNG or JPEG to display on your website.

Similar to Photoshop files (PSD), Adobe Illustrator files are a proprietary file format of Adobe, and are meant for use by designers. They aren’t file types that are displayed publicly online. What sets Adobe Illustrator documents aside is scalable vector graphics. Unlike Photoshop, which creates raster images made of many pixels, Illustrator uses vector image files. An AI file is perfect for keeping master files of your logos and graphics, so you can send them to designers or printers to achieve perfectly straight lines with no pixelation.

WebP

Short for: Web Picture

File Extension: .WebP

If you’ve ever dragged and dropped an image from your web browser, there’s a good chance you’ve come across a WebP. This web-specific image file can support transparency like PNGs and animated frames like GIFs, and works pretty similar to JPEGs. 

In recent years WebPs have become more common online as a catch-all internet image format. They have higher quality and compression ratios than JPEGs or PNGs, so WebP images are great for image-heavy websites that need to load quickly. Nearly all modern browsers support WebP; for older or legacy browsers, provide fallback formats if needed.

RAW

Short for: Nothing (it literally means “raw”)

File Extension: .RAW, .CRW, .NEF, .CR2, more

RAW files are unprocessed digital images. They’re uncompressed and contain as much data as possible. Digital photographers often snap pictures in this format and edit them later. RAW is a catch-all term that refers to a constellation of proprietary and non-proprietary file formats for different camera systems. Canon created the CRW and CR2 RAW file types, while Nikon developed the NEF file extension.

You won’t run across RAW image files online, but you will open them in editing software like Lightroom or Photoshop to edit and create different image file types for display, like JPGs and PNGs.

What type of strategy works the best when you need to grow your ecommerce business? You can focus your efforts on a viral marketing campaign that turns everyday customers into brand ambassadors, write a useful blog to generate organic leads online, or even hire a robust sales team to get the word out.

But one strategy to consider for growing your business is a product-led growth strategy, using methods like free trials and freemium models to help great products sell themselves. While this strategy still requires sales and marketing efforts to reach customers, it takes a different approach by getting products into the hands of customers as quickly as possible to prove their value.

Here’s how this type of growth strategy works, when it makes sense for your business, and the specific tactics that turn curious browsers into committed customers.

What is a product growth strategy?

A product growth strategy, also known as a product-led growth (PLG) strategy, is a type of business strategy that relies on product usage as the main driver for sales. By making it easy for customers to access and use your product through methods like freemium plans, product sampling, or free trials, a product-led growth strategy focuses on acquiring and retaining customers based on the value of the product itself.

Here are some of the key characteristics of a product-led growth strategy:

• Immediate value. This type of business growth strategy requires a low barrier to entry, making it as easy as possible for customers to access and use a product quickly.
• Transparent pricing structure. Since this type of strategy often includes a tiered pricing structure or subscription model, it’s important to put all pricing information upfront to avoid customers feeling tricked into further costs down the line.
• Paywalls. Companies strategically limit free access to create natural upgrade moments. These paywalls allow users to experience core aspects of the product, encouraging them to upgrade for the full experience.
• Data-driven. Product-led growth strategies rely on customer feedback loops to continually enhance the product experience (PX) and make consistent improvements to the product itself.
• Self-service. PLG strategies often include a self-service model, where customers can access and use products on their own without the help of a sales, customer support, or onboarding team—highlighting a product’s ease of use and simplicity.

Product-led growth vs. other growth strategies

1. Product-led growth strategy
2. Market development growth strategy
3. Diversification growth strategy
4. Market penetration growth strategy

No matter your business model, you will likely fall into at least one of four frameworks when growing your company—and a product growth strategy can overlap with all of them. Here’s a breakdown of the four primary types of growth strategies that companies can consider based on their business model, target market, and product offerings:

1. Product-led growth strategy

A product development strategy involves introducing new products or services in a market to stimulate growth by investing in research and development (R&D) and creating innovative new offerings. A company generating interest for their new software tool by launching a marketing campaign for free trials of the tool would fall into this category.

2. Market development growth strategy

A market development strategy involves selling existing products or services to new customers through methods like expanding into new geographical areas, identifying new customer segments in your existing market, and investing in new distribution channels for delivering offerings to a wider customer pool.

3. Diversification growth strategy

A diversification growth strategy requires companies to create new services, products, or product line extensions to increase sales by expanding a company’s offerings in an existing market. For example, a software company could expand into physical products that appeal to both its current customers and an untapped demographic.

4. Market penetration growth strategy

This growth strategy focuses on expanding a company’s market share in an existing market with aggressive pricing strategies designed to undercut competitors and new-and-improved products. A company using this approach might slash prices while upgrading features based on customer feedback to steal market share from competitors.

Benefits of a product growth strategy

A product-led growth strategy can benefit your business in a variety of ways, including:

• Lower customer acquisition costs. By engaging customers with a freemium plan or free trial of a product, this type of growth strategy can result in a lower customer acquisition cost (CAC)—the total cost of acquiring a single customer—and increase revenue without leaning as much on paid ads or long sales cycles with large sales teams reaching out to qualified prospects. 
• Opportunity for scalability. Product-led growth strategies are highly scalable because you can serve thousands of new users without proportionally expanding your sales team or expensive marketing budget.
• Shorter sales cycle. Using product-led growth strategies like product sampling can encourage users to engage with a product immediately, which shortens the sales cycle when compared to longer sales-led strategies involving lead qualification, pitching, and product demos.
• Quicker time to value. Time to value (TTV) is a metric for how quickly users realize the value of a particular product. By offering a low barrier to entry for product usage, a product-led growth strategy can create a low TTV—meaning customers realize the value of your products much faster than if they’re going through a long sales cycle.

Examples of product growth strategies in action

Sometimes, it’s easiest to learn by example. Here are some case studies of companies using product growth strategies to earn new customers and grow their businesses:

Free trials

Shopify uses a free trial model that lets ecommerce merchants sign up for the platform for free for three days with no credit card required. Merchants can build and customize their ecommerce stores and create product selections within that trial period, then decide from there whether they want to continue using the platform for $1 per month (for the first three months) after the trial period ends. Free trials like this allow users to experience the value of a product immediately and encourage those users to convert into paying customers by creating a sense of urgency.

Freemium business model

Zoom is a video conferencing platform that uses a freemium business model—which involves providing customers with a baseline version of a product for free, while offering paid plans for more features. Zoom offers a free version with unlimited meetings of up to 40 minutes each; paid plans include features like an AI companion, cloud storage, a meeting scheduler, and more.

The freemium strategy gives new users the chance to engage with a limited version of the product to quickly prove its value and create incentives for upgrading.

Growth loops

Communication platform Slack uses another popular product-led growth strategy to earn new customers: growth loops, which drive customer acquisition by including shareability as a key function of the product. Growth loops are cycles where the actions existing users take result in more users engaging with the product.

For example, an ecommerce merchant who downloads and uses Slack can easily share the tool with the rest of their team for easier communications. On the main menu of Slack, the merchant can click the “Invite people” button to generate an active invite link and send it to other team members through a channel like messaging, emailing, or onboarding documents. As more team members in the company join, Slack becomes a more effective communication tool for the merchant while organically bringing more users onto the platform—an effective growth loop.

Free samples

Beauty retailer Z Skin Cosmetics uses a product sampling strategy by including free samples of its cosmetic products in every order in an effort to turn one-time buyers into repeat customers. Z Skin Cosmetics strategically matches samples to each customer’s purchase—like including a neck cream sample for a customer who orders an eye cream product. This strategy can increase brand awareness for your product offerings and create a sense of reciprocity—where shoppers feel a subtle obligation to return the favor of a free gift by purchasing from you again.

How to execute a product growth strategy

If your business aligns with a product-led growth strategy, consider these best practices for how to execute that strategy successfully:

Create customer feedback loops

Since businesses using a product-led growth strategy rely on the quality of their products to grow their businesses, it’s essential to prioritize customer satisfaction. Customer feedback loops are structured processes for collecting and acting on customer questions and feedback.

You can gather user feedback with customer surveys, interviews, reviews, focus groups, or product feedback forms. For example, a messaging tool like Shopify Inbox can help you ask your customers relevant questions about your products in real time.

Ask, categorize, act, follow up (ACAF) is a helpful framework for organizing customer feedback loops:

• Ask. Request feedback from existing customers using email, live chat, or social media.
• Categorize. Collect and categorize feedback in a central location, so it’s easy for your team to access.
• Act. Implement updates in response to the feedback. 
• Follow up. Check in with customers about their experience with the updates. (This also shows customers that you value their continued feedback.)

Use quantifiable growth metrics

Measuring product-led growth with quantifiable metrics, or key performance indicators (KPIs), will help you understand and improve your customer experience. Consider product growth metrics such as:

• Activation rate. This is the percentage of users who complete a specific action with your product, like upgrading from a freemium plan to a paid plan.
• Customer lifetime value (CLV). Your CLV estimates the total profit your company generates from a single customer during their entire relationship with you.
• Net Promoter Score (NPS). NPS measures your customers’ likelihood of recommending your products.
• Churn rate. Your company’s churn rate is the percentage of customers who stop using your products.
• Active users. This measures the number of unique users engaging with your products over specific periods of time, such as daily active users (DAU), weekly active users (WAU), and monthly active users (MAU).

Businesses can utilize these metrics to inform decisions about how to improve the overall product experience and earn customers using a product-led growth strategy. For example, a software-as-a-service (SaaS) company with a low activation rate could focus efforts on simplifying the initial onboarding process or making it more interactive with a welcome survey to personalize the user journey. Similarly, a company could use a Net Promoter Score to evaluate how effectively it can introduce growth loops into a product update to earn new users.

Develop a knowledge base

A knowledge base is a centralized repository of important information about your business and product offerings, which enables users to easily answer questions and understand new features. Since product-led growth strategies often focus on a self-service model, comprehensive knowledge bases can empower customers to learn about a product without leaning as much on sales teams or customer support teams to explain how to use it.

Customers can interact with your knowledge base through FAQ pages on your website or via AI chatbots that respond directly to customers’ questions with information from that base. SaaS companies using this strategy can include in-app notifications within their software tools that pull from your knowledge base to walk customers through their user journey step by step, highlighting and explaining different product features.

Set up a customer referral program

Establish a referral program that encourages customers to recommend your products to others by using a clear incentive structure. You can offer discounts, free products, or exclusive access to new products before they’re officially released. Make it easy for your customers to recommend your products by providing pre-written messages and links that they can copy and share on any platform—email, social media, and messaging apps.

Use referral tracking software to manage, automate, and track how your customers are engaging with your referral program and make informed decisions about how to optimize your rewards and messaging.

Nobody likes telling customers that prices are going up. Yet growth, inflation, and the simple reality of running a business mean you’ll face this moment eventually. The difference between losing customers and keeping them often comes down to how you break the news about price increases.

A well-crafted price increase letter does more than announce new rates—it reinforces why customers chose you in the first place. By being transparent about the reasons and confident about your value, you can navigate this tricky conversation while preserving the relationships you’ve built with loyal customers. Whether you’re a service provider adjusting invoices, a subscription-based ecommerce brand, or a business-to-business (B2B) firm updating a contract, the way you communicate this change matters as much as the change itself.

This guide shows you exactly how to write price increase letters that maintain trust, plus two templates you can adapt for your business.

What is a price increase letter?

A price increase letter is your formal announcement to customers about an upcoming price adjustment for your products or services. Whether delivered as a letter or email, it needs to clearly state the new pricing, the effective date, and—here’s the crucial part—the reasons behind the price change that make sense from your customer’s perspective.

Think of a price increase announcement as a strategic opportunity. Yes, you’re delivering unwelcome news, but you’re also reminding loyal customers why your product or service is worth every penny. Done right, it can actually strengthen the relationship by showing that you respect them enough to be transparent and that you’ve exhausted other options before taking this step.

Price increases typically affect three main business models:

1. Service-based businesses. The broadest category, including freelancers, agencies, consultants, and tradespeople who charge for their time and expertise.

2. B2B suppliers. Companies that sell products, raw materials, or components to other businesses, often on a recurring basis.

3. Subscription and membership models. Businesses where customers pay a recurring fee for ongoing access to a product or service.

Why do companies raise prices?

Deciding when to raise prices is a key part of your pricing strategy. It should never be an arbitrary decision; it should be a response to specific business realities. Sending a price increase letter is appropriate in different scenarios, including these reasons that justify adjusting prices:

Increased operating costs

A rise in operating costs is the most common driver. When the costs to run your business go up, your profit margins shrink, unless you make price adjustments. These increased costs include:

• Higher costs of materials. The price of raw materials, component parts, or your software licenses has risen.
• Higher labor expenses. You’ve increased wages to attract talent or are paying more for benefits.
• General inflation. The overall cost of doing business—from utilities to rent to shipping—has risen.

Product or service enhancements

When you’ve invested in significantly improving your products or services, your pricing should reflect that added value. The key is that the customer is getting more for their money than they were before. These improvements might be:

• Powerful new features that add meaningful capability to a product they already use
• Higher-quality materials that make a product more durable or effective
• Faster, more responsive customer support so they get help when they need it
• Enhanced service experiences through faster shipping or a more personalized attention

Market realignment

Many businesses enter the market with intentionally low prices to attract customers and gain a foothold, a strategy known as penetration pricing. While this works for building an initial customer base, it rarely stays sustainable long-term.

Once you’ve built a strong reputation and a loyal following, it’s time to transition your pricing to match the value you deliver. This isn’t just a price bump; it’s a planned evolution reflecting your company’s growth and the proven track record. Aligning your rates with industry standards signals that you’re a competitive, high-value player in the market.

To fuel future growth

Staying competitive means investing in infrastructure and research and development. A price adjustment can generate the capital needed to maintain quality while funding innovations that will ultimately serve your customers better.

How to write a price increase letter

1. Give ample advance notice
2. Provide justification
3. Be direct, honest, and upfront
4. State the specific details
5. Express appreciation
6. Offer a point of contact
7. Consider offering valued customers a deal

The way you announce a price increase can determine whether customers accept it grudgingly or take their business elsewhere. These seven strategies help shift focus from what customers lose (lower prices) to what they keep (exceptional value):

1. Give ample advance notice

Customers handle price increases better when they have time to process and plan. Provide advance notice so your customers can address their budgets. The standard for how much notice to give is typically 30 to 60 days, but for business-to-business (B2B) contracts or high-value annual subscriptions, 90 days is even better.

2. Provide justification

Customers are more accepting of a price increase if they understand the reason behind it. Connect the change to a tangible benefit for them or a clear business necessity. Explain that increased operating costs necessitate the change in order to maintain the continued quality they expect, or that the adjustment lets you invest in new features they’ve requested. Be honest without being overly apologetic.

If you don’t already have a clear statement of why someone should pick your product over another company’s merchandise, consider articulating your value proposition. Remind existing clients why they do business with you. Briefly mention your product’s or service’s benefits, recent improvements you’ve made, or the exceptional support you provide. Show them that even at a new price point, they are still receiving excellent value.

3. Be direct, honest, and upfront

Don’t bury the lead. State the letter’s purpose in the first paragraph, but do so with sincerity. While you should be confident in the value you provide, it’s crucial to also be honest and acknowledge that you’re delivering difficult news.

Customers appreciate transparency far more than corporate spin. A vague introduction will only make them feel misled, while a tone that’s overly cheerful or unapologetic can feel dismissive. Start with a clear and respectful opening that owns the change. Instead of: “We’re excited to announce some updates to our service offerings,” try something more direct and honest. Here’s an example: “We’re writing to let you know about an upcoming change to our pricing. We value your business, so we wanted to share this news with you directly.”

4. State the specific details

Avoid ambiguity by being specific. Your announcement should explicitly outline:

• The exact plan, product, or service that is changing
• The old price versus the new price
• The specific date the new pricing will take effect for their account

5. Express appreciation

Acknowledging your customers’ loyalty and importance softens the blow significantly. Phrases like “valued customer” show your appreciation, as do references to their “continued support” or “continued patronage.”

6. Offer a point of contact

Demonstrate that you’re open to discussion by providing a direct point of contact for questions. Instead of a generic email address, which can feel like a black hole, provide the name and email of a specific person, like the customer’s account manager or a department head. This personal touch demonstrates a genuine willingness to hear their concerns and assures them their message will be read by a real person.

7. Consider offering valued customers a deal

To mitigate the possibility of losing clients, especially for many who are on legacy plans (older, discontinued price tiers), consider offering them a chance to lock in the old price if they sign up for an annual plan or a discount for early renewal. This gives your clients a sense of control and rewards their business.

Price increase announcement letter template

The exact wording you use will need to be adjusted for your own business’s circumstances, but here’s a general price increase letter template for an initial announcement.

Subject: An important update about our pricing

Dear [Customer Name],

On behalf of [Company Name], I wanted to let you know about an upcoming change to our pricing structure. After careful consideration, we are implementing a price increase effective [effective date].

For more than [number] years, we have been committed to providing you with [high-quality services/high-quality products] at a competitive price. Due to [State the primary reason, e.g., significantly increased operating costs, investments in key product improvements, rising costs of materials], we have adjusted our prices to ensure we can maintain the level of quality and innovation you have come to expect from us.

The price adjustment will allow us to continue [Mention a specific benefit, e.g., investing in new features, expanding our customer support team, improving our infrastructure]. We recently launched [Mention one or two improvements or added value points] to provide you with more value, and this change will help us continue that momentum.

Your new price for [product/service] will be [new price]. This change will be reflected on your invoice starting with your next billing cycle after [effective date]. All customers on existing rates will remain at their current rate until that date.

We deeply express our appreciation for your business and understanding. Our commitment to providing you with an exceptional experience remains our highest priority. If you have any questions, please don’t hesitate to reach out to our team at [business contact email/phone number].

Warm regards,

The [Company Name] team

Price increase reminder letter template

Sending a reminder about a week before the change takes effect helps ensure that your customers or clients are informed. It keeps your new pricing structure top-of-mind and shows professionalism.

Subject: Upcoming pricing update on [effective date]

Dear [Customer Name],

This is a friendly reminder that our new pricing structure, which we announced last month, will go into effect on [effective date].

As a valued customer, we wanted to ensure you had this update well in advance of your next invoice. As of the [effective date], the price for your [product/service] will be [new price]. This adjustment will allow us to continue delivering the continued quality and service you deserve.

We are so grateful for your business, and we appreciate your continued support. If you have any questions about your account or this update, please feel free to call or email us at [business contact email/phone number].

Sincerely,

The [Company Name] team 

We are thrilled to announce a landmark update to the Shopify platform: The product variant limit has officially been raised from 100 to 2,048 variants per product.

This isn’t just an incremental increase; it’s a fundamental expansion of what’s possible on Shopify. For years, going above 100 variants has been one of the most requested features from merchants with complex catalogs. We listened. We’ve re-architected a core part of our platform to deliver one of the highest variant limits in commerce, giving you the power to manage intricate product lines and merchandise your catalog exactly as you envision.

Read on to learn about the importance of high-variant catalog support, how we tackled this exciting project, and more. 

The power of choice: meet modern customer demand and boost conversions

In today’s competitive market, choice is everything. Consumers have come to expect a wide array of options, and the brands that deliver on this expectation are the ones that win.

Give the customer what they want

As consumer choice has expanded, so have expectations. Buyers now want to find their perfect option, whether it’s a specific color, fabric, pattern, or material. Product phenomena like the Stanley Quencher—celebrated by fans globally with each new colorway drop—showcase the power of variety. The fastest-growing brands are finding immense success through limited-edition product drops, brand collaborations, and strategies that lean heavily into providing customers with an abundance of choice. With 2,048 variants, you now have the runway to execute these strategies without compromise.

A better buyer experience that converts

Beyond meeting expectations, consolidating all your product variants onto a single page delivers significant business benefits. It creates a seamless shopping experience and a powerful marketing asset.

By using a single product detail page, you concentrate all your efforts from SEO, ad spend, and social marketing onto one canonical URL. This means better search rankings and more efficient campaigns. Once a visitor lands on your product page, they can explore every available option without needing to navigate away or risk bouncing because they don’t immediately see their desired choice.

Industry-specific support 

While 100 variants may be sufficient for some, many industries require far more flexibility. For example, furniture companies often offer items that come in multiple sizes, colors and materials, quickly blowing past the 100-variant limit. This is also common for apparel companies that sell bras, often merchandised in countless sizes and colors. For these industries, having access to a higher-variant limit was not a nice-to-have, it was essential to their merchandising strategy.

From clunky workarounds to a single, simple workflow

Given the clear importance of offering more choice, merchants have developed a number of creative solutions over the years to work around the 100-variant limit. These included splitting a single product across multiple product pages, custom development, or using third-party apps to stitch listings together on the storefront. While necessary for brands looking to merchandise more than 100 variants, these approaches created friction, adding setup costs, complexity, and ongoing management overhead.

Our goal was to make offering high-variant products seamless, eliminating the need for complicated workarounds and replacing them with the simple, intuitive product creation flow you already know. We knew it would be a big undertaking, requiring significant updates to our underlying data models and APIs.

The project: a multiyear endeavor 

We first needed to fundamentally rethink how products were supported inside the platform.The sheer amount of data for high-variant products was no longer compatible with the design of the REST Admin API. So we updated the GraphQL Admin API in April 2024, releasing a new version of the product APIs that supported 2,048 variants. This kicked off a large-scale migration, where thousands of Shopify partner apps had to migrate to our new APIs in order to support 2,048 variants, or else merchants would have a broken or downgraded experience. 

Our partners showed up in a big way. Through community Q&As, surveys, and hundreds of direct conversations, this deeply collaborative effort between Shopify and our partner ecosystem was one for the record books. We want to give a huge shoutout to the more than 6,500 app partners who migrated to the new APIs, ensuring the entire Shopify ecosystem is ready to support your most complex products. This platform-wide upgrade makes the whole ecosystem faster and more powerful for every merchant, and this variant increase is the first incredible result of that shared investment.

Built for scale, engineered for speed: the Shopify difference

Our goal was to deliver a comprehensive solution that sets a new benchmark for quality and performance, engineered on three core principles: ease of use, reliable performance, and an industry-leading limit.

Same admin, more variants

Despite all the change we were doing behind the scenes with our data model and APIs, it was important to us that the increase of the variant limit didn’t add any additional complexity to creating products. And we delivered. The process for creating a product in Shopify is exactly the same as it used to be—you can just add more variants.

Performance that keeps pace with your growth

As the number of variants grows, so does the complexity of the data required to manage them. We knew that simply increasing the limit wasn’t enough; the experience had to be blazing fast for both you in the admin and your customers on the storefront.

An entire team was dedicated to performance, and the results are transformative. This investment in our core infrastructure has also yielded benefits across the board. Creation time of products at the 2,048-variant limit improved by 10 times over the course of the project, and single variant products are now 33% faster in the admin.

A differentiated variant limit

If you’ve shopped around in the ecommerce software world, you’ve probably noticed that it’s uncommon to find a variant limit over 500. And this is understandable, given the significant investment of infrastructure required and the fact that the vast majority of merchants don’t need support for this complexity. However, at Shopify, we support some of the most complex catalogs in the world, and that requires going above 1,000. We ultimately landed on 2,048 to ensure merchants had plenty of headroom for their most complex products.

Get started with 2,048 variants today

To get started creating or editing a product with more than 100 variants in Shopify admin, simply add your options and option values all the way up to the new limit of 2,048. It’s the same intuitive workflow, now supercharged for your most complex products.

To learn more, visit the Shopify Help Center.

We are thrilled to announce a landmark update to the Shopify platform: The product variant limit has officially been raised from 100 to 2,048 variants per product.

This isn’t just an incremental increase; it’s a fundamental expansion of what’s possible on Shopify. For years, going above 100 variants has been one of the most requested features from merchants with complex catalogs. We listened. We’ve re-architected a core part of our platform to deliver one of the highest variant limits in commerce, giving you the power to manage intricate product lines and merchandise your catalog exactly as you envision.

Read on to learn about the importance of high-variant catalog support, how we tackled this exciting project, and more. 

The power of choice: meet modern customer demand and boost conversions

In today’s competitive market, choice is everything. Consumers have come to expect a wide array of options, and the brands that deliver on this expectation are the ones that win.

Give the customer what they want

As consumer choice has expanded, so have expectations. Buyers now want to find their perfect option, whether it’s a specific color, fabric, pattern, or material. Product phenomena like the Stanley Quencher—celebrated by fans globally with each new colorway drop—showcase the power of variety. The fastest-growing brands are finding immense success through limited-edition product drops, brand collaborations, and strategies that lean heavily into providing customers with an abundance of choice. With 2,048 variants, you now have the runway to execute these strategies without compromise.

A better buyer experience that converts

Beyond meeting expectations, consolidating all your product variants onto a single page delivers significant business benefits. It creates a seamless shopping experience and a powerful marketing asset.

By using a single product detail page, you concentrate all your efforts from SEO, ad spend, and social marketing onto one canonical URL. This means better search rankings and more efficient campaigns. Once a visitor lands on your product page, they can explore every available option without needing to navigate away or risk bouncing because they don’t immediately see their desired choice.

Industry-specific support 

While 100 variants may be sufficient for some, many industries require far more flexibility. For example, furniture companies often offer items that come in multiple sizes, colors and materials, quickly blowing past the 100-variant limit. This is also common for apparel companies that sell bras, often merchandised in countless sizes and colors. For these industries, having access to a higher-variant limit was not a nice-to-have, it was essential to their merchandising strategy.

From clunky workarounds to a single, simple workflow

Given the clear importance of offering more choice, merchants have developed a number of creative solutions over the years to work around the 100-variant limit. These included splitting a single product across multiple product pages, custom development, or using third-party apps to stitch listings together on the storefront. While necessary for brands looking to merchandise more than 100 variants, these approaches created friction, adding setup costs, complexity, and ongoing management overhead.

Our goal was to make offering high-variant products seamless, eliminating the need for complicated workarounds and replacing them with the simple, intuitive product creation flow you already know. We knew it would be a big undertaking, requiring significant updates to our underlying data models and APIs.

The project: a multiyear endeavor 

We first needed to fundamentally rethink how products were supported inside the platform.The sheer amount of data for high-variant products was no longer compatible with the design of the REST Admin API. So we updated the GraphQL Admin API in April 2024, releasing a new version of the product APIs that supported 2,048 variants. This kicked off a large-scale migration, where thousands of Shopify partner apps had to migrate to our new APIs in order to support 2,048 variants, or else merchants would have a broken or downgraded experience. 

Our partners showed up in a big way. Through community Q&As, surveys, and hundreds of direct conversations, this deeply collaborative effort between Shopify and our partner ecosystem was one for the record books. We want to give a huge shoutout to the more than 6,500 app partners who migrated to the new APIs, ensuring the entire Shopify ecosystem is ready to support your most complex products. This platform-wide upgrade makes the whole ecosystem faster and more powerful for every merchant, and this variant increase is the first incredible result of that shared investment.

Built for scale, engineered for speed: the Shopify difference

Our goal was to deliver a comprehensive solution that sets a new benchmark for quality and performance, engineered on three core principles: ease of use, reliable performance, and an industry-leading limit.

Same admin, more variants

Despite all the change we were doing behind the scenes with our data model and APIs, it was important to us that the increase of the variant limit didn’t add any additional complexity to creating products. And we delivered. The process for creating a product in Shopify is exactly the same as it used to be—you can just add more variants.

Performance that keeps pace with your growth

As the number of variants grows, so does the complexity of the data required to manage them. We knew that simply increasing the limit wasn’t enough; the experience had to be blazing fast for both you in the admin and your customers on the storefront.

An entire team was dedicated to performance, and the results are transformative. This investment in our core infrastructure has also yielded benefits across the board. Creation time of products at the 2,048-variant limit improved by 10 times over the course of the project, and single variant products are now 33% faster in the admin.

A differentiated variant limit

If you’ve shopped around in the ecommerce software world, you’ve probably noticed that it’s uncommon to find a variant limit over 500. And this is understandable, given the significant investment of infrastructure required and the fact that the vast majority of merchants don’t need support for this complexity. However, at Shopify, we support some of the most complex catalogs in the world, and that requires going above 1,000. We ultimately landed on 2,048 to ensure merchants had plenty of headroom for their most complex products.

Get started with 2,048 variants today

To get started creating or editing a product with more than 100 variants in Shopify admin, simply add your options and option values all the way up to the new limit of 2,048. It’s the same intuitive workflow, now supercharged for your most complex products.

To learn more, visit the Shopify Help Center.

It doesn’t take an MBA to know that a business needs to make a profit to keep going. You’ve likely seen some variation of the South Park–inspired meme: “Phase 1: [basic business idea] Phase 2: ? Phase 3: Profit.”

But here’s what matters for your business: Profit isn’t just one number. Different profit margin measures reveal different truths about your company’s financial performance—and understanding the complete picture, from gross to operating to net margins, helps you spot opportunities to boost profitability.

This guide breaks down each margin type, with formulas, real examples, and industry benchmarks, so you can evaluate your business performance and identify exactly where to focus your efforts to improve your profits.

What is gross margin?

Gross margin, also known as gross profit margin, measures how much money your business keeps after paying the direct costs of making and delivering your products. These direct costs include raw materials and the labor directly involved in production. When your gross margin is 30%, for example, you’re keeping 30¢ for every dollar of sales.

Why track gross margin? It helps you spot when production costs are eating into profits. This signals when you might need to raise prices, negotiate better deals with suppliers, or find more efficient production methods.

Gross margin formula

Here’s the formula to calculate gross margin:

[(total sales revenue – cost of goods sold) / total sales revenue] x 100 = gross margin

This straightforward calculation uses two key numbers from your income statement. Total revenue (also called net sales) equals your gross sales minus any returns or discounts. Cost of goods sold (COGS) covers your direct production expenses—the raw materials and manufacturing labor that go directly into creating your products.

Gross margin example

Let’s see this in action: Say a women’s apparel retailer generated $50,000 in total sales during the second quarter, with direct production costs of $27,000.

[($50,000 – $27,000) / $50,000] x 100 = 46%

This 46% gross margin means the retailer kept 46¢ from every dollar of second-quarter sales after covering direct production costs.

What is operating margin?

Operating margin, or operating profit margin, takes a broader view of your costs. While it still considers production expenses in relation to revenue, this metric captures your entire operational picture.

Operating margin includes all COGS, plus all your other operating expenses—rent, research and development, administrative costs, marketing, salaries, and non-cash expenses like depreciation and amortization. It doesn’t include non-operating costs like interest payments and taxes.

You’ll also hear operating margin called return on sales (ROS), which highlights its real value: showing how efficiently your company transforms sales from core operations into actual profit.

Operating margin is one measure of business management effectiveness. Although you can’t always control raw material costs, you do have more control over decisions about rent, equipment, ecommerce platforms, marketing spend, and staffing—all of which directly impact profitability. That’s why investors compare operating margins when evaluating companies in the same industry—it shows which management teams are making smarter operational choices.

Operating margin formula

To find your operating margin, first calculate operating income: total revenue minus all operating expenses (including COGS, depreciation, and amortization).

Then apply this formula:

(operating income / total sales revenue) x 100 = operating margin

Operating margin example

Building on our apparel retailer example: The same business that generated $50,000 in sales with $27,000 in COGS also had $15,000 in operating expenses (including $8,000 in rent and utilities, $5,000 in marketing, and $2,000 in administrative costs).

Operating income = $50,000 – $27,000 – $15,000 = $8,000

Operating margin = ($8,000 / $50,000) x 100 = 16%

This 16% operating margin shows the retailer kept 16¢ from every sales dollar after covering both production and operational costs—revealing the true efficiency of the business operations.

What is net profit margin?

Net profit margin represents your bottom line: the percentage of revenue that becomes actual profit after every expense. This includes COGS and operating expenses, as well as interest payments, taxes, and any one-time costs like restructuring charges or lawsuit settlements.

Net profit margin answers the ultimate question: How much profit does your business actually generate from each dollar of sales? This metric matters because it shows whether your business model truly works after accounting for all costs of doing business.

Net profit margin formula

The net profit margin formula captures your complete financial picture:

(net income / total sales revenue) x 100 = net profit margin

Net income appears at the bottom of your income statement—hence the term “bottom line”—after subtracting all expenses from total revenue.

Net profit margin example

Continuing with our retailer example: After the $8,000 in operating income, the business paid $1,500 in interest on a business loan and $2,000 in taxes.

Net income = $8,000 – $1,500 – $2,000 = $4,500

Net profit margin = ($4,500 / $50,000) x 100 = 9%

This 9% net profit margin means the retailer kept 9¢ as actual profit from every dollar of sales—the true measure of business profitability after all financial obligations.

Gross margin vs. operating margin vs. net profit margin

• How they’re similar. All of these metrics measure financial health by showing how efficiently your company converts sales into profit. They appear as percentages, where higher numbers signal better performance. All of these metrics factor in total revenue and production costs.
• How they’re different. Gross margin focuses narrowly on profitability after direct manufacturing and distribution costs (COGS). Operating margin paints the complete operational picture, including COGS plus every operating expense—from rent and marketing to depreciation and amortization. Net profit margin includes all of that, while also accounting for all other expenses (e.g., interest payments, taxes, and any one-time costs). 

Calculating each margin type reveals different insights about your business. Gross margin shows production efficiency, operating margin demonstrates management effectiveness, and net profit margin proves overall business viability. Together, they tell your complete profitability story.

Comparison table: gross vs. operating vs. net profit margin

To help you diagnose specific business challenges and opportunities, here’s a breakdown of when to use each type of margin metric: 

.tg {border-collapse:collapse;border-spacing:0;}
.tg td{border-color:black;border-style:solid;border-width:1px;
overflow:hidden;padding:9px 15px;word-break:normal;vertical-align:top;
background-color:#d9d2e9;}
.tg th{border-color:black;border-style:solid;border-width:1px;
font-weight:bold;overflow:hidden;padding:9px 15px;word-break:normal;
background-color:#d9d2e9;}
.tg .tg-header{text-align:left;vertical-align:top}
.tg .tg-cell{text-align:left;vertical-align:top}

What is a good profit margin?

A good profit margin depends entirely on your industry, business model, and growth stage. Software companies might achieve 80% gross margins, while grocery stores operate between 1% and 5%. The key is understanding your industry’s benchmarks and tracking whether your margins improve over time.

According to CSIMarket data, the total market gross margin reached 45.76% in Q2 2025, while net profit margins averaged between 9.05% and 10.26% in recent quarters. But these overall market averages mask enormous variation between sectors.

Profit margins by industry (2025)

Industry margins vary dramatically based on business models, competition levels, and cost structures. Here’s what different sectors achieve, on average:

High-margin industries, on average (higher than 40% gross margin):

• Software (system and application): 72% gross margin
• Financial services (non-bank and insurance): 68% gross margin
• Pharmaceuticals: 70% gross margin
• Apparel: 54% gross margin

Moderate-margin industries, on average (20%–40% gross margin):

• Consumer electronics: 37% gross margin
• Home goods and furniture: 29% gross margin
• Health care products: 56% gross margin

Low-margin industries on average (less than 20% gross margin):

• Farming and agriculture: 15% gross margin
• Steel: 15% gross margin
• Health care services: 13% gross margin

How to benchmark your margins

Comparing your margins against industry standards helps identify improvement opportunities. Follow these steps to benchmark effectively:

• Find your industry baseline. Research margin data for your specific sector using resources like industry associations, financial databases, or public company filings. Remember that your business model matters. For example, if you run a dropshipping business, you’ll have different margins than a manufacturer.
• Compare similar business sizes. A startup’s margins differ from established companies. Startups often accept lower margins initially while building scale, and mature businesses should achieve industry-standard or better margins.
• Track trends over time. Your absolute margin matters less than its direction. Improving margins quarter over quarter signals healthy business growth, even if you’re below industry average.
• Consider your value proposition. Premium brands command higher margins through pricing power. If you compete on price, expect lower margins but higher volume. Align margin expectations with your product strategy.

How to improve your profit margins

Boosting profit margins requires adjusting costs and revenue from multiple angles. The strategies you choose depend on which margins need improvement. For example, gross margin improvements require different tactics than operating margin optimization.

Strategies to increase gross margin

Gross margin improvements come from either raising prices or reducing direct costs. Here’s how to achieve both:

• Optimize your pricing strategy. Test price increases on your bestselling products first—loyal customers often accept reasonable increases for products they value. Bundle complementary products to increase average order value without seeming expensive. Create premium versions of popular products to capture more value from less price-sensitive customers.
• Negotiate with suppliers. Higher unit volume commitments often unlock better rates, so consolidate orders when possible. Request quotes from multiple suppliers to create competition. Suppliers sometimes offer discounts for predictable orders, so consider longer payment terms if cash flow allows.
• Reduce production waste. Audit your production process to identify where materials get wasted. Small improvements in cutting patterns, packaging efficiency, or quality control can significantly impact margins. Track defect rates and address root causes rather than accepting waste as inevitable.
• Improve inventory management. Dead stock ties up capital and eventually requires markdowns. Use inventory management software to optimize order quantities. Focus purchasing from proven suppliers and test new products in small batches.

Strategies to reduce operating expenses

Operating margin improvements require examining every aspect of running your business beyond production:

• Automate repetitive tasks. Customer service chatbots, email marketing automation, and inventory management systems reduce labor costs while improving consistency. The upfront investment pays off through ongoing savings.
• Renegotiate fixed costs. Review contracts for rent, insurance, software subscriptions, and utilities annually. Market rates change, and vendors often offer better deals to retain customers. Even 10% savings on fixed costs can directly improve your operating margin.
• Optimize marketing spend. Track return on ad spend (ROAS) by channel and cut underperforming campaigns. Focus your budget on channels delivering profitable customers, not just traffic. Email marketing and content marketing often deliver higher margins than paid advertising, so it’s worth investing time into those longer-term marketing strategies.
• Streamline operations. Map your workflows to identify bottlenecks and redundancies. Cross-train team members to handle multiple roles during slower periods. Consider outsourcing non-core functions if specialized providers can deliver better value.

Profit margin calculator and tools

Calculating margins manually works for spot checks, but automated tools help you track profitability consistently and identify trends before they become problems.

Beyond basic calculators, consider these tools for comprehensive margin analysis:

• Accounting software integration. Connect your ecommerce platform to accounting software for real-time margin tracking. This automation eliminates manual calculations and provides up-to-date profitability data.
• Product profitability analysis. Use analytics tools that calculate margins by product, including all associated costs like shipping and returns. This granular view reveals which products truly drive profits.
• Scenario planning tools. Model how changes in costs or prices impact margins before implementation. Testing scenarios helps you make data-driven decisions about pricing and cost management.
• Dashboard reporting. Set up automated reports that track margin trends over time. Visual dashboards make it easy to spot problems early and celebrate improvements.