You may know very well what it is and how it works, or at least it will sound familiar to you, but what you may not be so clear about is its history. And that’s why we are here 😉
What is Shopify: the origin
This CMS was founded a few years ago, specifically in 2004 by Tobias Lütke, Daniel Weinand and Scott Lago after an attempt to open an online store for Snowboard called Snowdevil. And we say “try” because in the first instance they were not able to find any e-commerce product that met the needs that their store demanded.
Perhaps it would be easier to build your own software? Said and done! Luke, a computer programmer, built his own online product sales software to get Snowdevil’s online store up and running after a couple of months of development.
Shopify was founded in 2004 but the launch of the platform took place two years later, in 2006.
In June 2009, Shopify launched an App Store and Platform API. From then on, the growth was unstoppable.
In 2007 it was a finalist in the CNET Webware Awards and, from 2010 to 2012, it expanded its staff from 40 people to 140 and then continued to expand to 300 in 2013. In 2020 it reached 5,000 employees in 17 offices spread over twelve countries. Two million sellers already use Shopify worldwideof which 25,000 businesses are in Spain and 60,000 in Latin America.
2020, the year of the Shopify boom
According to the information offered by the company, its total income during 2020 was $2,929.5 million, around 2,422 million euroswhat it means year-on-year growth of 86%. This growth is broken down into an increase in revenue from subscriptions of 41%, and 116% from commercial solutions.
Another aspect that showed incredible growth was its GMV, or gross sales value: this indicator refers to the value of all the products sold on the platform, without taking discounts into account. For example: if 10 pairs of shoes are sold at €25, the sales value will be €250, despite the fact that some of the shoes have been sold for less due to the incorporation of discounts or promotions in the purchase.
Having said that, Shopify’s GMV increase was 96% compared to 2019. This represents a net income for sales value of 119,600 million dollars, approximately 98,887 million euros. Of this, 45% were processed through the Shopify’s own payment platform.
On the other hand, the annual gross profit registered an increase of 78%, together with a net profit of $319.5 million, around 263 million euros. With this, it also presented an operating income of 3%, compared to a 9% loss presented in 2019.
During 2020 Shopify surpassed eBay in revenue, so in its continued growth it is already beginning to approach the giant. for 2018 Shopify’s sales value accounted for only 25% of Amazon’s marketplace results. By 2019 this proportion became 30%, to finally reach 2020 40% of the GMV of the marketplace.
2021, the advance of Shopify is unstoppable
Shopify user businesses in Spain experienced an increase in sales during the period of time covered between and Cyber Monday 2021with respect to the data of the previous year, the average price of the shopping cart rose from €59.52 in 2020 to €71.64. Most of these purchases, 68%, were made from shoppers’ mobile devices, while the remaining 32% were made by computer, which confirms the growing trend of using mobile phones to carry out these actions.
On the other hand, cross-border trade also stood out during this campaignsince the 29% of orders corresponded to this characteristic, the most frequent combinations being: Spain – Germany, Spain – Italy and Spain – . Shopify is aware of the opportunities of breaking down territorial barriers, an example of this is a tool launched at the end of 2021 that seeks to support and promote the internationalization of small online businesses. Sellers can easily sell their products anywhere in the world through a centralized hub, and it will also be possible for them to manage from the same place what products, at what prices, in what currencies and with what payment methods to sell in each market .
Peaks like the one experienced during Black Friday and Cyber Monday are neither just an isolated case of success in Spain nor much less punctual, since as revealed by a study by , in 2021 the total sales volume of platform sellers reached 175 billion dollars (about 154,000 million euros). This would be equivalent to 45% of Amazon marketplace sales volume of a whole year. Analyzing this trend, if Shopify continues to grow in the same way, there will be few years in which it reaches the same level as Amazon (at least, in the part that corresponds to its marketplace), and it is that during the last years its users’ sales, as a group, have shown faster growth than those of Amazon’s third-party sellers. However, this is not necessarily a competition for the eCommerce titan, rather it presents a possible new approach due to the differences in their platforms.
2022: Shopify takes over Deliverr
2,100 million dollars (or what is the same, 2,000 million euros) was the amount that Shopify paid to acquire the eCommerce fulfillment provider whose intelligent system can predict the places where consumers might be interested in buying products. This technology makes it possible to “pre-position” items in your warehouses according to that estimate of demand.
This has become the highest value purchase made by Shopify to date, an operation with which they hope to obtain great results and boost the activity of their users. As stated by Tobi Lütke, founder and CEO of Shopify, «With Deliverr, Shopify’s fulfillment service will give millions of growing businesses access to a simple and powerful logistics platformthat allows them to make their customers happy again and again.”
The merger between Deliverr and the service «Shopify Fulfillment Network» (SFN), which already allows sellers to store their inventory and ship their orders, will bring new features such as improved inventory management capabilities, or the Shop Promise. The latter is a new service that will provide deliveries in one day and in two to customers and that, in addition, includes more options for storage, transport, inventory preparation or returns.
Strengthen the last mile strategy, an obligatory step to face Amazon
The importance of speed in order management and shipments of these is increasing more and more, and in 2021, 41% of consumers were willing to pay more money for a shipment if it were delivered on the same day, according to one . Several companies, including Amazon, have been quick to start offering express delivery services, and Shopify hasn’t wanted to be left behind.
Thanks to the Deliverr integration, Shopify will take its last-mile strategy to the next level and complement the tools for your sellers.
The Shopify Effect
Shopify’s philosophy is based on the idea that the world is better the more independent businesses there are in it, since these are an important driver of the economy. In addition to representing an extensive chain of benefits, causing a positive impact on the lives of their owners, their local communities, their families, their employees, suppliers, partners, etc.
This is why the company set out to calculate the impact that your activity has on the lives of the owners of the online businesses present on the platformthrough a report baptized as “The Shopify Effect”. For this, it has had the collaboration of , a firm of professional auditing and consulting services.
The Shopify Merchant Pool, the World’s Largest Employer
Shopify based businesses generated five million jobs and more than 444,000 million dollars (about 421,000 million euros) in economic activity in 2021, which means a 45% increase from 2020. This data makes the sum of Shopify merchants the largest workforce in the world. In addition, this group would form the second largest company in the world in terms of revenue, surpassing giants such as Amazon, Apple or Volkswagen.
The impact of Shopify internationally
Based on the data reflected in the report, which correspond to 2021, Shopify sellers sold more than $25 billion (just over 23,000 million euros) in goods and services outside their country of origin. As for small companies, they managed to generate as much money as the six highest-grossing superhero movies combined, 11,000 million dollars (about 10,400 million euros).
In Europe, merchants from this continent exported goods and services worth 4,000 million dollars (3,800 million euros) outside their continent, which represented an increase of 39% compared to 2020. On the other hand, online businesses present in developing countries generated 700 million dollars more in income in 2021 than in 2020, going from 5,800 million dollars to 6,500 million (6,175 million euros).
The impact on the partner ecosystem
Shopify’s partner ecosystem includes developers, designers, marketers, accountants, logistics providers, and a host of other experts who help sellers on the platform succeed with their businesses. this ecosystem generated 656,000 jobs and 32,000 million dollars (just over 30,000 million euros) in revenue in 2021. Likewise, the partners increased their profits by 45% compared to 2020which was nearly seven times the revenue of Shopify in 2021.
Shop, the Shopify app that works like a marketplace
In April 2020, . With Shop, users can still track their shipments, but it also allows them to browse a feed of recommended productsmeet new brands and make purchases directly in the application.
The stores can integrate the Shop Pay payment system that allows consumers to pay with just one click. With this they can improve customer experience and reach new potential consumers. Under the “Stores” tab, consumers can find a personalized shopping feed, displaying product selections, special offers and new products to discover. This feed is powered by the purchase history of consumers and the brands they follow in Shop.
Shop also shows if the online store is physically close to the user, and if you offer a store order pickup option. In this way customers can find local businesses in case they prefer not to wait for the service of…
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