Interview Synopsis

Shopify – Focus on Payments, Fulfilment & Competitive Dynamics

  • Public Equity
  • TMT
  • North America

Canadian company Shopify announced last month that its revenue growth is likely to slow in the first half of 2022 as the COVID-19 tailwind on e-commerce begins to wane.* Shopify also announced plans to spend USD 1bn over the next two years expanding its distribution centres (DCs), which a former Shopify senior sales representative told us is a “sleeping giant” for the company.

USD 1bn investment in Shopify’s fulfilment operations awakens “sleeping giant”

In an Interview with Third Bridge Forum, the specialist said Shopify was “fast approaching” 2 million active merchants and 12,000 active Shopify Plus subscribers.1 We were told Shopify’s benefits are its ease of use, with merchants able to open stores “in a matter of hours”. The specialist said Shopify’s success is related to the high number of selling platforms built into it, including Facebook, Pinterest, Instagram and recently TikTok, which make promoting products more convenient. 

Growth in Shopify is coming from three areas, according to the specialist – the “core” platform, payment offerings and order fulfilment. Shopify’s continued investment in fulfilment should increase its DCs from three to nine by 2025 as the company attempts to recreate the “Amazon Prime” experience. The specialist said increasing the number of DCs for merchants would help them “up scale more quickly and offer a better customer experience”.

The specialist described Shopify Plus as a “cash cow” for the company. They told us the primary benefits for merchants are greater efficiencies from automations and cost savings compared to competitors Magento, Salesforce and Commerce Cloud. We were told Shopify is able to reduce costs because it has more developers building stores compared to Salesforce or Magento.

Although the specialist said Shopify is a “rocket ship” for the SMB market, for businesses with a large omnichannel footprint, Commerce Cloud and Salesforce are more “sophisticated”. Enterprises that rely heavily on B2B sales are also likely to “gravitate towards” Magento or BigCommerce rather than Shopify, according to the specialist.

Shopify could expand its headless commerce offering, which the specialist said would probably be built  in house as part of the same tech stack as other Shopify products. Over the next three years, we were told Shopify will continue to be a “front runner”, investing further in fulfilment to make it as “turnkey” as possible. However, Shopify faces challenges from competitors offering price concessions. 

To access all the human insights in Third Bridge Forum’s Shopify – Focus on Payments, Fulfilment & Competitive Dynamics Interview, click here to view the full transcript. 

* Reuters

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