Hi [%first_name | Quartz member%],
Chances are you haven’t noticed all the times you used Shopify to buy stuff online. That’s quite a feat for a company now estimated to be the second-largest e-commerce platform in the US, edging out eBay and trailing only Amazon. Shopify’s momentum has only accelerated during the pandemic, as online shopping surges and the company strikes new partnerships with the likes of TikTok and Walmart. It’s a good time to be in the business of e-commerce.
But first, a recap: Things are…complicated in the US, where a mob-led storming of the US Capitol yesterday shook big business, stirred up bad memories in India, prompted accusations of hypocrisy in China, drew (incorrect) comparisons with Hong Kong activism, and left markets unbothered. In other developments, India approved its own Covid-19 vaccine (before completing human trials), France’s vaccine rollout is off to a slow start, and Google got its first union. The Bezos/Buffett/Dimon healthcare venture is no more, and neither is a US legal provision that made life easier for global criminals. What are the demographics of the new US Congress? Use our interactive to see how representation has changed.
Your most read story this week: Ethiopia is set to end its $3.6 billion oil deal with a controversial US firm. And most relatable member goes to the reader of You could be flirting on dating apps with paid impersonators. At this point in the pandemic, so be it.
Okay, now imagine Jeff Bezos’s office dartboard. What’s that logo tacked right to the center? Ah yes, it’s Shopify.
E-commerce’s unseen infrastructure
To consumers, Shopify is “virtually invisible,” co-founder and CEO Tobi Lütke wrote in a letter to shareholders in 2015, the year Shopify went public. “This,” he said, “is by design.”
That’s because unlike Amazon, Shopify isn’t a shopping destination in itself, though it has recently taken a small step in that direction. It’s a platform for merchants to create their own digital shops with minimal fuss and limited technical know-how. Shopify provides the infrastructure, and subscribers need do little more than upload pictures and link a bank account to begin selling their wares online, with plenty of flexibility to customize their digital storefronts.
Lütke and some friends launched the company in 2006 after trying to create a business selling snowboards online, only to find the available software complicated, expensive, and geared toward large companies. They pivoted to creating and selling a solution for small entrepreneurs.
There are now more than 1 million merchants in 175 countries using Shopify, including big brands such as Heinz, Allbirds, and Rebecca Minkoff. (While its basic subscription plan is $29 a month, a premium service, Shopify Plus, starts at $2,000 a month.) Most merchants, however, are on the smaller side. Just over half are located in the US, where Shopify is often held up as a potential check on Amazon’s ever-growing power. Rather than default to selling on Amazon, the thinking goes, entrepreneurs can just create their own online stores.
Shopify doesn’t bill itself as a direct competitor to Amazon, but it happily promotes itself as a counterbalance at least. In his 2018 letter to shareholders, Lütke warned of the risk of mega-companies consolidating power, and in a question-and-answer session on Twitter in 2019 he remarked, “Amazon is trying to build an empire, and Shopify is trying to arm the rebels.” The company has also introduced paid features such as loans for small businesses and a fulfillment service that uses a network of third-party logistics providers to handle warehousing and shipping, giving upstarts more firepower to compete against bigger players online.
Moving product
By the digits
1,069,000: Number of merchants on Shopify’s platform at the end of 2019 (pdf)
$5.1 billion: Global sales across Shopify’s platform during the Black Friday/Cyber Monday weekend in 2020
$1 billion: Amount Shopify said in 2019 it would spend over the next five years building out a fulfillment network
$17: List price of Shopify stock for its debut on May 21, 2015
$1,069: Closing price of Shopify stock on Dec. 31, 2020
67%: Share of more than 500 investors surveyed by Benzinga at the start of 2021 who believe Shopify’s stock price will reach $2,000 by 2022
7.4%: E-commerce’s share of US retail sales in the third quarter of 2015
14.3%: E-commerce’s share of US retail sales in the third quarter of 2020
The Covid surge
The pandemic supercharged growth of Shopify’s revenue, which comes from subscriptions, payment processing fees, and fees for add-on services such as fulfillment. The e-commerce boom Covid-19 triggered sent droves of merchants to set up digital stores on Shopify.
Howdy, partner
Shopify has a history of striking partnerships with companies to allow its merchants to easily list products for sale on their platforms. The deals keep coming, extending Shopify’s reach online. Companies it has made deals with since 2017 include:
Beam me up
Shopify’s aim is to eliminate the e-commerce challenges entrepreneurs face, from setting up a store to shipping products to customers. On the company’s Oct. 29, 2020, earnings call, one analyst asked Lütke which remaining points of friction Shopify plans to tackle. Lütke replied:
“It’s been just a question of time and capital allocation, so it’s certainly in scope for us to make the whole thing as simple as possible. I mean, the ideal way for us to do [that] with Shopify Fulfillment Network is employ teleportation. Like if we can figure out the physics related to that and can just make things appear on the desk right when you want them, then that would be awesome.”
Keep reading
- Shopify faces a balancing act if it wants to counter Amazon without becoming Amazon.
- Will e-commerce ever come back down to pre-pandemic levels?
- The “Amazon of Africa” isn’t focused on selling stuff.
- Why on earth did Walmart want a slice of TikTok?
- To see the future of retail, look to Asia.
Thanks for reading! And don’t hesitate to reach out with comments, questions, or companies you want to know more about.
Best wishes for a rebellious end to your week,
Marc Bain
Senior fashion reporter