Now Bigger Than eBay, Shopify Sets Its Sights on Amazon
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Something like 80% of the people that would install our apps in their shops would be gone or in limbo after a couple months. (Not an app uninstall, their shops actually no longer existed.)
The charts we see from Shopify like this always say "Number of merchants" and the number climbs up towards a million, but at what point do they start excluding their delinquent/disappearing merchants? I'm not convinced they're factoring in churn.
What you might be seeing a lot of these days is that app dev companies go around buying up other well-established apps and/or their development companies just because they can't find an app to make or get traction with apps they make at this point in the game. Even with great teams and money coming out their ears, they're having a hard time getting established with new apps.
There are 20 apps all doing the same thing competing with each other and all of them have had years head start, so having zero reviews compared to hundreds of favourable reviews can almost be insurmountable for a newcomer. Having said that, if you have 50 subscribers for your possibly obscure app, you can still eke out a good living.
Keep in mind there's a review process though, so just because you make it doesn't mean it will be published in their marketplace. Shopify tries hard to maintain an air of fairness but a large part of getting visibility with your app is who you know, too.
Re: "Keep in mind there's a review process though" - My experience of this is that Shopify wouldn't approve my App because there were existing Apps in their store which they thought were too similar.
So make sure it's sufficiently differentiable to existing Apps (no, I don't know what that means either!)
Some merchants on it are professionals and operate their business that way. Many merchants (and I don't have a percentage) are somewhere in the prosumer to wantrepreneur range and have unrealistic expectations.
Much of Shopify's strategy here, in developing a developer ecosystem, is to have developers effectively do technical support for its customer for free. I've troubleshooted (more times than I can count) theme, general platform, and other app issues. A while ago when Shopify was down after a merchant installed my app complained that I broke their Shopify store when in fact the entire Shopify platform was having a hiccup.
I enjoy the Shopify experience from the Vendors that use it and do stick around.
As an investor I'd be worried about losing their churned-out merchants to other platforms like Etsy and Woocommerce and Weebly and about ten other platforms hacking away at their knees. To be fair to Shopify though, I think they know they've already lost the battle for the little merchants and have fixated on other things.
Of course, they never ship product (because they don’t have any) or if you’re lucky you get some super low quality alibaba knockoff.
Magento is probably the biggest loser to Shopify after making v.2 impossible for smaller merchants to maintain so they're moving their v.1 stores to Shopify instead. Shopify is also way simpler for your work-from-home new mum than setting up a WooCommerce store.
The only reasons to go to WooCommerce would be support for a specific payment gateway or content management which Shopify is still lacking. Maybe ongoing fees for some functionality that is standard in WooCommerce or can be had for a small one-off fee is a turn-off for some as well.
Coming from a background building stores in Magento 1 & 2, WooCommerce, ZenCart/OpenCart and now wrapping up a fairly complex Shopify integration I'm warming to it.
Seeing this point remembered here will help some, but overall you A. either won't know you're shopping at a shopify.com store or B. you'll not care because the company is too big to fail (Tesla).
I guess it depends on why you're interested in the user number to begin with. I mean, from an investor standpoint, their profits keep growing so I'm not as interested in the exact number of merchants actually using the platform (assuming it's still a reasonably high/diverse number).
Something like 70% of small businesses fail[2], so it's not surprising you'll see a large amount of churn if your audience is the broad set of all merchants, including those that are probably just kicking around the idea of spinning up a drop shipping business on the side. That doesn't mean there aren't great businesses in the Shopify ecosystem.
[1] - https://apps.shopify.com/reamaze [2] - https://www.fundera.com/blog/what-percentage-of-small-busine...
Whether it's Amazon or eBay they are spending a lot on getting traffic to those vendors who sale through them. Shopify has been a loss making entity for last three years without significant money on traffic acquisition for it's vendors, they do spend to get more store owner traffic not on buyer traffic. [1]
So I am not sure if Shopify can even be compared with eBay or Amazon. Reason eBay is affected is due to Amazon nothing to do with Shopify which is just a tool to launch an online shop.
. you operate under the assumption that amazon is driving traffic fairly. in reality, there are at least 17 pieces of flair on each search page. remember that most scrubs do not use ublockorigin!
. "getting traffic" is also called networking. making connections with diverse groups. it is part of building a brand, reputation, and yes a client base. trying to avoid that step often makes your business trivially replaceable. for commodities that is actually fine, but many shop owners are not selling commodities.
. you are spot on about shopify having many alternatives. perhaps the competition will benefit shop owners as a whole. i can hope.
The GP seems to be saying 80% of shopify businesses fail within a year.
Totally different statistics, the page you linked to says only 20% fail within their first year.
I wouldn't be surprised if setting up a shopify merchant page is a 'pre-business' action, before you're completely serious about the business.
When the systems that most of these gurus sell fail to work, their students simply abandon their Shopify stores. I would never buy shares of Shopify for this reason. For now, they continue to grow because there are still thousands of gurus pushing Shopify, but we are reaching the end of that cycle. As soon as a new fad takes hold among the gurus, Shopify will be a ghost town.
And none of the data you pointed to disproves anything I said. Additionally, there is some data to back up my position: while it’s true that it would be impossible for anyone to have data on how many accounts have been opened due to the guru effect, a quick search of YouTube should help you understand the gigantic scale of this issue.
Here’s why you have not disproved a single thing I said. Most of these gurus are preaching facebook ads + Shopify + dropshipping. As long as these students keep putting money into FB ads, and the gurus keep recruiting people, Shopify payments sales volume will continue to grow - whether or not the guru students are actually making a net profit after expenses. But of course that won’t continue forever, as people don’t have infinite sums of money to lose, and most will lose money.
Right now, there is still enough momentum to keep it growing. I would imagine that within a year though, you’ll start seeing it level off or start to decline, as the gurus move onto the next fad. Once that starts happening, the whole house of cards comes tumbling down.
- https://github.com/Shopify/liquid/commits?author=tobi
- https://github.com/activemerchant/active_merchant/commits?au...
We leverage these projects daily, so it's awesome to see his company doing so well. In addition, we're on Shopify's platform as a app developer, so his company has added a lot of value, both commercially and non-commercially to developers, not just e-commerce merchants.
Kudos to them.
I was pretty much able to dive straight into Shopify templating and leverage the docs as I went without even having a background in Rails or Ruby.
Their biggest investments are for their subscribers that ACTUALLY sell stuff. Dropship-dreamers are super scared of actually subscribing but they are the vocal majority because of guru's and such.
Its all about growing GMV / PLUS / CAPITAL / FULFILLMENT and those are all hitting +50% YOY
This makes no sense. Why would any company that starts making serious money continue to give SquareSpace money for a template. There's nothing you can do in SquareSpace that you can't do better in a custom app running on one of the many free software CMS's out there. I don't get this.
They did ~$21B in sales last year.
That said, there are definitely plenty of huge merchants running on Shopify turning over hundreds of millions of dollars through the platform - we work with quite a few of them.
Or I could get Wordpress, pay for hosting, pay a developer, buy an ssl certificate, leave wp admin on a default url and get hacked...
Now I know how to fix those things with cheap hosting, Lets Encrypt, etc... but my graphic designers don't. $10 a month is very very cheap for a business.
https://services.amazon.com/fulfillment-by-amazon/benefits.h...
After 7 years in Amazon Fulfillment, I'll say this: we're doing a mediocre job- fortunately no one else is doing much better. But still, we've got 25 years of legacy software and processes to carry with us wherever we go.
There's a lot of potential for a new entrant to radically and rapidly innovate and compete inside the warehouse. Shopify's business model is different enough to make the fulfillment problem different in a few fundamental ways that might let them undercut further. Lots of potential.
There's also a great big Shopify office opening not too far from Amazon Toronto. And wouldn't you know it, there's a big chunk of Amazon Fulfillment right here in this office. I'm expecting to see poaching begin soon, just like when Uber opened here and hired a lot of Amazon Flex talent. (Non-competes sure are hard to enforce in Ontario).
I really hope they can prove themselves a viable competitor.
Mind expanding more on the specific kinds of baggage holding back fulfillment at Amazon?
And on a software front, those older facilities are using different physical processes which need different software than the new tech. How do you architect the whole thing such that the increasing complexity of this ecosystem doesn't create exponential work as it needs to all integrate together and be maintained?
Shopify, by contrast, isn't carrying that legacy on their back. They're potentially on the same exponential curve, but they are much farther on the left and maybe they can find a way to make it a smaller exponent. Maybe. We'll see how it goes.
They damage your stock (or maybe the robots do), then return it.
They claim money from you after random audits, which after wasting time you find you don't owe.
They randomly deactivate your products and you can't speak to anyone to get it fixed.
They charge very high fees. Even direct to Amazon you have all the kick backs to pay.
The lure of Amazon is not fulfillment (there are loads of logistics houses it there). It is the giant customer base. I look after some Shopify stores, and they just can't do the volumes that Amazon do
I don't see the churn rate as a big problem for Shopify. Their revenue is pretty tied into the customer's revenue and expenses, not the amount of unique subscriptions. On top of subscription revenue, they have credit card processing and shipping labels which would be higher than the subscription cost for shops with high revenue.
IMO I don't really see Shopify and Amazon as really being in the same space unless Amazon makes a real push into curation and I think that would require a radical change in how Amazon works with sellers. I see Amazon as more of a competitor to Walmart, Target, etc.
You can say all you want about bad the platform is, but the fact of the matter is that you can setup and start selling on a proven platform for almost nothing.
Unless there is some feature that WooCommerce can throw in for free that would require paying a Shopify developer an ongoing fee (wishlist functionality is probably one) your monthly fees are going to be similar.
Is Meteor still being actively developed?
https://github.com/meteor/meteor
looks like they're a monorepo now:
https://github.com/meteor/meteor/tree/devel/packages
but its slow going, from the looks of it perhaps.
I think the meteor community is a shell of what it used to be, though.
I wonder how Smile Software is handling it, they were 'all in' on meteor when they announced their subscription pricing model.
I can connect my Stripe account to Shopify, but I can't do that on eBay.
OP didn't say anything about profit.
Similarly, Stripe does not recognize the full value of every transaction as revenue, only their fees.
Shopify's revenue from https://investors.shopify.com/financial-reports/default.aspx is $362 million and their GMV is $13.8 billion. Looking at their fees at https://www.shopify.com/pricing , they charge between 2% to 3%. This seems to be about right.
This is a superficial look but, I think to your original question, the revenue should be comparable.
From the growth numbers listed in the report, the gross merchant volume (and therefore the Merchant Solutions revenue) is increasing so maybe more merchants are being successful or the existing successful merchants are selling more. The Merchant Solutions revenue is growing about 18% faster than Subscription Services.
Shopify seems to be trying to make more merchants successful (more merchants selling more goods) versus just making it easy to open (and close) unsuccessful stores.
Hopefully Shopify is able to capitalize on increase in merchandise volume if they haven't been able to negotiate a good deal on the payment processing fees themselves. While they might make profits (and not just revenue) from their monthly fees and their App Store, I just can't imagine a merchant platform which does not capitalize on gross merchant volume since that's where the significant profit comes from (like eBay, for better or worse).
In 2018 Ebay made $10.74 Billion in revenue
In 2018 Shopify made $1.07 Billion in revenue
when they run out of places to efficiently deploy capital then they become a standard tech bluechip
However, I really hope Shopify can figure out a way to make it easy to find quality sellers and replace Amazon’s dumpster fire of a third party marketplace. Trying to buy electronics or household products on amazon is a complete crapshoot these days.
So, what's the best case scenario? They go from $800m in revenue now to $5bn? Even if they don't increase R&D, that means they're profiting $500m a year. That's an 80 P/E for what I consider to be a very optimistic 6x revenue growth extrapolation. Is there some other huge business (like Facebook's untapped user data in 2012) that isn't making itself known in their financials?
- shopify PLUS memberships (+$2K/month)
- enterprise level products (handshake, etc)
I think the fact that their enterprise sales are growing is a huge indicator. Its replacing legacy ERP systems in sales organizations because of the flexibility and value add.
I run a consulting company[0] for Amazon suppliers, and about 90% of our clients don't have "real time" inventory counts. 50% are someone automated but 100% have to enter at least 1 order MANUALLY each month because outdated technology. ORders with hundreds/thousands of line items entered manually will seriously mess up your day.
Amazon started out as a store to sell you a book, grew selling you other that can be stocked and packed like a book, evolved to ask others to sell too, because of competition they became a landlord mall operator. Their DNA has always been to drive traffic for growth.
Shopify gives you a dumbed down version of a selling tool. It was easy enough, paired up with Alibaba's rise, a subculture of dropshipping dropsurfing gurus selling you on how easy it is, they've now convinced most people to give it a try.
But their DNA has never been to drive traffic for growth. There's been no indication that's their strategy as they've only unveiled more tooling for owner operators.
Eventually they'll peak, run out of people wanting to give it a try and the whole thing collapses.
Shopify is more like Rovio having a hit with Angry Birds, growing rapidly, then watching sales drop 40% shortly thereafter.
Also, having down Shopify dev back in 2014-2016, their app ecosystem is a mess, more akin to a medium sized POS company's third party ecosystem.
I often hear people attribute part of their success to things they already did, and I think it's usually just a combination of survivorship bias and other similar effects. I've heard people say similar things of nearly every substance or activity: "I am successful and doing X is part of the reason" where X can be anything from illegal substances to something mundane like coffee. Usually when X is something one likes, one tends to find it interesting.
This has been on my mind after recently debating with friends whether some substances like weed or shrooms should be legal and them basically saying they shouldn't because they know people who have taken them and turned their lives for the worse. Then I brought up how you can say similar things about video games (which IMO they are addicted to) and they quickly said it's different and you need to perform some impossibly complex studies to determine anything.
This is likely part of the reason echo chambers form everywhere. If ideas confirm our own beliefs, we hold them to much lower standards than when they don't.
It's not worth listening to anyone's advice. Only experiment with your own life and find what works for you or die trying.
How big are Amazon and eBay these days in terms of dollar value sold via their market places?
If eBay is anywhere near Amazon and Shopify stores outsell eBay, that would be pretty spectacularely.
Shopify stores live on their own domains, right? No reviews, no central discoverability, no nothing, correct?
Try getting my interest again when there's a publicly-viewable link.
Worked in a german shopify partnered agency for ~3 months beginning this year (latori.com)
This is in the FAQ at https://news.ycombinator.com/newsfaq.html and there's more explanation here:
https://news.ycombinator.com/item?id=10178989
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