Blush
Today is Amazon ($AMZN) Prime Day.
Or, more accurately, it’s day one of a two-day Amazon Prime cyber holiday.
Shopping on Amazon is no new endeavor for anyone unless they missed out on the Internet this past couple of decades.
But over that same time, retail competitors have emerged outside the Walmart ($WMT) and Target ($TGT) incumbent sphere.
When I looked at my portfolio at the end of the second quarter, I noticed how well Shopify ($SHOP) has performed.
Through today, my stake is up +420% with the latest buying of shares taking place over 2 years ago.
At the start of this third quarter, Barron’s commented on Shopify’s growth:
“So why has Shopify thrived?
Famed venture capitalist John Doerr once said about winning in business: ‘Ideas are easy, execution is everything.’ Shopify has executed. The company uses cloud computing to offer better reliability, lower upfront costs, and scalability to more than 820,000 merchant customers, generating revenue through a combination of monthly subscription and transaction fees.
The company’s revenue has grown an annualized 80% over the past five years. Since its initial public offering in May 2015, Shopify stock has risen 1,100%, versus the market’s 40% gain.
The company has expanded [CEO Tobias] Lütke’s original online-store-creation offering with payment products, point-of-sale hardware, shipping services, and bricks-and-mortar inventory management. It is now part-Square, part-Amazon, part-back-office operations, and part-financial services.
Shopify says its online platform — the aggregated sales of its U.S. customer base — ranks as the third largest in the country after Amazon and eBay. Moreover, the company’s point-of-sale systems are in more physical stores than Walmart, Apple, and Target have combined.
‘Shopify’s ascent corresponds to the rise of direct-to-consumer brands, and the shift of [small businesses] to online storefronts,’ Andrew Lipsman, principal analyst at eMarketer, wrote in an email. ‘Shopify has dramatically lowered the barrier to entry for merchants, allowing them to traverse geographic boundaries and go direct to their customers.’”
And last week, Ben Thompson at Stratechery chimed in with optimism:
“At first glance, Shopify isn’t an Amazon competitor at all: after all, there is nothing to buy on Shopify.com. And yet, there were 218 million people that bought products from Shopify without even knowing the company existed.
The difference is that Shopify is a platform: instead of interfacing with customers directly, 820,000 3rd-party merchants sit on top of Shopify and are responsible for acquiring all of those customers on their own.
…
Unlike Walmart, currently weighing whether to spend additional billions after the billions it has already spent trying to attack Amazon head-on, with a binary outcome of success or failure, Shopify is massively diversified. That is the beauty of being a platform: you succeed (or fail) in the aggregate.
To that end, I would argue that for Shopify a high churn rate is just as much a positive signal as it is a negative one: the easier it is to start an e-commerce business on the platform, the more failures there will be. And, at the same time, the greater the likelihood there will be of capturing and supporting successes.
This is how Shopify can both, in the long run, be the biggest competitor to Amazon even as it is a company that Amazon can’t compete with: Amazon is pursuing customers and bringing suppliers and merchants onto its platform on its own terms; Shopify is giving merchants an opportunity to differentiate themselves while bearing no risk if they fail.”
It felt like yesterday that Shopify’s market cap was under $10 billion.
Today, it is around $36 billion.
Last week, I bought Parachute Home linen bed sheets (blush color) for my parent’s Summer home and, at checkout, the store rep used Shopify:
I didn’t even bother to browse for sheets on Amazon.
