- Shopify’s Q4 was uplifted by small merchants coming online during the pandemic.
- And this is a benefit Amazon might be looking to replicate.
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Shopify’s Q4 revenue grew 94% year over year (YoY), reaching a total value of $977.7 million—significant growth compared with Q3, when it reported $767.4 million. Meanwhile, Shopify’s gross merchandise value (GMV) nearly doubled from 2019, reaching $41.1 billion in Q4 2020.
The surge in entrepreneurship during the coronavirus pandemic helped drive up Shopify’s Q4, especially since the majority of the company’s more than 1 million sellers are classified as first-time entrepreneurs, Harley Finkelstein, president of Shopify, told The Wall Street Journal.
Meanwhile, Amazon might be looking to replicate Shopify’s success with its recent purchase of ecommerce platform provider Selz. The ecommerce giant recently closed a deal to acquire Australia-based Selz, which provides omnichannel ecommerce and digital payments support to help small businesses build online stores, similar to Shopify.
The Selz acquisition might be a way for the etailer to test out non-Amazon-branded online merchant stores to diversify its ecommerce offerings and appeal to a variety of different sellers. This might take the form of a paid premium seller service that allows merchants to customize their Amazon.com storefronts—similar to Amazon’s Luxury Stores concept, except for small sellers.
Shopify and Amazon are likely looking to leverage the recent online shopping surge—though it’s unclear how long both firms will benefit from pandemic-driven ecommerce growth.
- Ecommerce skyrocketed in 2020 and may continue to swell as the pandemic stretches on—enabling both firms to grow their businesses even further. Many consumers shifted to online shopping in 2020 due to pandemic lockdowns and restrictions, helping grow ecommerce sales 32.4% YoY, according to eMarketer forecasts from Insider Intelligence. As 2021 begins and the pandemic stretches on, there could be further ecommerce growth, which might drive more sellers to Shopify and Amazon’s Selz as merchants continue to digitize their businesses.
- But ecommerce might slow down post-pandemic, calling into question whether Shopify and Amazon will continue their respective growth trajectories. Overall ecommerce growth is expected to slow down in 2021, likely because growth in 2020 was unprecedented and pandemic conditions are expected to improve, with brick-and-mortar foot traffic predicted to start bouncing back. This could limit the pool of merchants interested in launching with them, potentially affecting Shopify’s and Amazon’s growth potential once the pandemic subsides.
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