Shopify Moves the World Another Step Closer to E-Commerce
This past weekend, the leading e-commerce platform Shopify (SHOP) announced that its merchants achieved $2.4 billion in sales on Black Friday. This was a 75 percent increase from last year.
Our fast-changing world
The real story of this year’s Black Friday and current holiday shopping season isn’t what Shopify’s stores did or will do (although it’ll be an incredible milestone), but rather the overall shift from one special day of shopping in big-box retailers to a slew of online sales stretched out over several weeks.
Of the many lasting impacts that COVID-19 will have on the modern world, the accelerated change in shopping habits will be one of the most apparent in everyday life. What was once a convenience is now a necessity. See: Amazon.
According to Department of Commerce estimates, third quarter e-commerce sales this year were $209.5 billion — an increase of over $50 billion from 2019’s third quarter sales of $154.5 billion. That’s in one quarter.
At time of writing, Amazon’s stock price has increased by over 66 percent since the start of this year and Shopify’s has almost tripled. While they’ve still had successful years, traditional retailers like Kroger’s haven’t skyrocketed to the same extent. Its shares have increased just over 15 percent this year.
David vs. Goliath
By almost every available metric, small businesses are the heart of the United States economy. They are responsible for roughly have of U.S. economic activity and produce two-thirds of net new jobs. And they’ve been hit hard this year. The National Restaurant Association conducted a survey in which they found that approximately 100,000 restaurants have been forced to shut down as a result of lockdowns.
Meanwhile, Amazon has been criticized for posting record sales and making it more expensive for independent sellers to earn money on its platform.
In many ways, Shopify is the light at the end of the tunnel for many local businesses. (Both for this year and for the future.) This is co-founder and CEO Tobi Lütke’s stated goal. The company came about when Lütke was attempting to sell snowboards online and couldn’t find any good solutions.
In an interview with The Motley Fool last summer, he said he started his new venture thinking “I’m going to do something that’s going to be really valuable for merchants.”
Shopify’s software tools allow up-and-coming brands to compete with incumbents in ways not possible just years ago and it’s slowly building an infrastructure to give shoppers Amazon-fast shipping. Last summer, the company announced the Shopify Fulfillment Network to give online stores more help with headache-causing operations.
According to IBM’s 2020 U.S. Retail Index report, coronavirus has moved the shift from brick-and-mortal shopping to digital retail by five years. This past weekend is further evidence of that. Traditional stores have to reinvent the in-person experience and optimize their digital channels to fight against Amazon — and Shopify is helping them.
Here’s to more records in the coming weeks…