Shopify Provides Small Businesses an Alternative to Amazon

Shopify, BigCommerce and Magneto are companies that offer online sales solutions for small- and medium-sized businesses that don’t want to do business via Amazon, eBay or Walmart or go it alone and try to attract buyers via advertising. With Shopify and others, the merchant can retain her branding and customer relationships while taking advantage of established cloud-based payments and fulfillment services. These companies can also list merchandise on the dominant e-commerce sites, a time-consuming effort for the smaller businesses.

The Wall Street Journal reports that, “by becoming hubs for managing sales through multiple channels, including social-media platforms, they represent real competition for Amazon and its ilk.” Digital Commerce 360 reported that, “in 2020, e-commerce spending grew 44 percent compared with 2019, or about three times as fast as its average annual growth rate over the past decade,” with Amazon capturing 38 percent of all e-commerce spending in 2020.

At Shopify, founded 14 years ago, revenue grew 86 percent in 2020, to $2.9 billion,” with 1.7+ million merchants selling $119.6 billion in goods, “which represents 40 percent of the total value of goods sold on Amazon’s third-party marketplace.” Shopify charges customers “a flat monthly fee of between $30 and $2,000, depending on features, and an additional 0.5 percent to 2 percent of each transaction if they use a payments processor other than Shopify’s own.”

Shopify, BigCommerce and Webflow offer cloud-based services that make it “easy to build and operate a web store” whereas Magneto offers open-source software but no web hosting. New York-based seller Eunice Byun has no plans to ever sell on Amazon because, she said, it means “giving up vital customer data like email addresses, and ceding control over returns and complaints to Amazon.” Amazon also costs more; one seller reported he pays an average of 14 percent of an item’s price to Amazon.

BigCommerce chief executive Brent Bellm, whose company will list its clients’ products on Amazon, suggests that, “the vast majority of businesses need to look at the marketplaces, like Amazon, as an opportunity and not as a competitor.” “We view our role as leveling the playing fields so that retailers can, rather than rent customers from these platforms, own the relationship with customers,” said Shopify president Harley Finkelstein.

Shopify is building its own “nationwide network of fulfillment warehouses,” has its own one-click payment system, and has lent $1.7 billion via Shopify Capital. The company currently is valued at around $130 billion; its next-largest competitor, BigCommerce, is valued at about $4 billion. WSJ reported earlier that Amazon has created a “secret team,” dubbed Project Santos, to “create its own version of some parts of Shopify.”

TechCrunch states Adobe’s e-commerce division released a report that the COVID-19 pandemic “boosted U.S. online shopping by $183 billion,” from March 2020 through February 2021. U.S. consumers spent $844 billion online, and “$813 billion was spent during the calendar year 2020 alone, up 42 percent over 2019.”

Adobe stated that the pandemic produced a “rare step change in online spending, equivalent to a 20 percent boost,” and predicted that, “the impacts will continue even as the pandemic comes to an end in the months to come.”

Related:
The Great Amazon Flip-a-Thon, The New York Times, 3/17/21