How Shopify Worried About Amazon

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Back on the journey of Shopify, which has become a Canadian digital giant by offering a range of tools for creating and developing e-commerce sites, with Émilie Benoit-Vernay, the company’s French manager.

In 2020, Shopify became Canada’s largest publicly traded company, surpassing even the Royal Bank of Canada. By providing merchants with a suite of tools to create their website and optimize their online presence, Shopify, like many other technology players, posted record performance in 2020, a year of crisis and upheaval in consumer habits. The company posted a net profit of 319.5 million for the year, compared to a net loss of 125 million in 2019, on revenue of $2.9 billion, an increase of 86% compared to the previous 12 months.

Shopify recently saw three executives leave, but that didn’t stop it from posting impressive new results in the first quarter of 2021. Listed in both Toronto and New York, the company reported net income of $254 million as of April 28, 2021, compared to $22.3 million in the first quarter of 2020, on revenue of $989 million (+110). % year-over-year). The only downside announced at the end of 2020: an expected slowdown in growth in 2021 due to a possible return to ‘normal’ economic activity as a whole.

Amazon wanted to duplicate Shopify’s business model

For Émilie Benoit-Vernay, France manager of Shopify, the company’s success lies in the fact that the platform “masters the technological constraint, giving the entrepreneur commerce time to focus on their brand and pursue growth”† The platform was also able to take advantage of the “power of the crowd”which means “merchants on Shopify have become more and more numerous, making it possible to work on the product”she tells the Digital

Today, Shopify has not only made a name for itself as a major player in BtoB e-commerce solutions, it is also accelerating into a professional e-commerce segment that is of increasing interest to Amazon. As proof, the ecommerce giant BtoC recently got its hands on Selz, a platform that allows businesses to create and manage their own ecommerce platform, as well as their payments. At the end of 2020 the Wall Street Journal even underlined Amazon’s creation of a shock team called Project Santos, whose goal is to duplicate Shopify’s economic model.

Amazon next to Shopify

From there, herald the end of Amazon’s dominance in the list of solutions available to e-merchants? “The question does not arisesays Emilie Benoit-Vernay. If you have your own site, you can offer your entire catalog. Then when we start distributing on a marketplace, we can pick a few products, it could be a way to be discovered.” Shopify, whose “main value is the independence of traders”would therefore prefer to be placed next to the Amazon marketplace. “I fundamentally believe in omnichannel and believe that you should be able to reach your audience where they are and expand your catchment area”she says.

The SaaS model allows the user to have a little more out-of-the-box.

Émilie Benoit-Vernay, Shopify France Manager

While Amazon takes between 8% and 20% commission for every sale made by a third-party company on its platform, Shopify takes only 2.9%, in addition to a flat fee of $0.30 per sale. † The company offers three monthly plans: a first for $29 (Basic Shopify), a second for $79 (Shopify), and a third for $299 (Advanced Shopify). “The idea is to offer hosted technology with a subscription system to simplify the life of the entrepreneur”, describes the manager in France. So the trader has “its subscription, its Shopify interface and benefits of all updates, developments, payment gateways integrated into Shopify, hosting”† It also has tools such as help with creating logos or image banks. For Emilie Benoit-Vernay, “the SaaS model” (Software as a service or software as a service, editor’s note) allows the user to have something more out-of-the-box, which is moving towards the democratization of e-commerce”

A “inevitable structure” from the market

A model that paid well in 2020: $5.1 billion in cumulative sales through its solution over the Black Friday weekend, more than the $4.8 billion registered by third-party companies on the Amazon platform over the same period . Shopify now claims 1.7 million hosted sites (including 41% small businesses) in 175 countries, as well as 3.6 million jobs created indirectly in 2020 (including 23,743 in France).

The company faces fierce competition on several fronts in the e-commerce software market. On the one hand, software and cloud giants such as Adobe, Salesforce, SAP or Oracle have all supported their BtoB e-commerce efforts: Adobe launched its Commerce Cloud offering after its acquisition of Magento in 2018, Saleforce acquired start-ups Demandware and CloudCraze SAP acquired Qualtrics and its experience management solutions in the same year; and Oracle launched its conversational AI solution Oracle Digital Assistant. However, at the end of 2020, some estimates placed Shopify at the top of this market, which would see a 4% annual growth rate. On the other hand, Shopify also has to deal with other online store creation platforms such as Squarespace, WooCommerce (WordPress extension), 100sklepow or Wix Stores, which currently have a larger market share than Shopify.

However, other fronts are opening up. “If the digital ecosystem revolving around retail is enriched by players from different backgrounds, long-term structuring is inevitable”believes in a study Delphine David, e-commerce specialist at Xerfi, for whom the digitization of companies is also a godsend for Gafam and other technological players. “Local advertising and SEO leaders need to strengthen their position by adding online sales to their solution portfolios”, she continues. On the part of digital solution providers such as Shopify, “there will remain those who are able to gain acceptance due to their price positioning and their innovative capacity”she analyzes. Finally, without counting on competition from local marketplaces, delivery platforms such as Uber Eats or Deliveroo, “which could attack food companies”but also owners of shopping centers such as Mercialys or Ceetrus, “Emerging Players in Small Business Digitization”says Delphine David.

E-commerce is often seen as a kind of depersonalization and dehumanization of the commercial transaction.

Émilie Benoit-Vernay, Shopify France Manager

Logistics powered by artificial intelligence, Shopify’s next challenge

Many Shopify customers discovered e-commerce during the health crisis. And for Émilie Benoit-Vernay, the habits learned during the different periods of incarceration have become indispensable: “E-commerce is often seen as a kind of depersonalization and dehumanization of the commercial transaction. But individuals have found brands with strong identities, close relationships made possible by social networks and all this community animation.” For her, e-commerce has not only benefited large, established brands. “We see it at Shopify in the number of online store creations”she notes. We also have transaction volumes: all transactions that went through Shopify merchants in France in 2020 compared to 2019 are up 119%.”

The online store is the foundation stone of the Canadian company’s offering, but what else can it offer to differentiate itself from the competition? “A multitude of other services”, said Émilie Benoit-Vernay, who declined to provide details on the financial targets. In North America, Shopify has already announced a network of warehouses connected by artificial intelligence, “made available to merchants to give them access to advanced logistics, worthy of the logistics of major players”

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