Shopify: The Invisible Selling Machine
The Granite Bay Shopify Report, entitled “Shopify: The Invisible Selling Machine” is in excess of 100 pages long and provides a thorough view of the current global e-commerce landscape, Shopify’s position in it, key opportunities, and key threats.
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A link to download the full report is at the bottom of this page.
Executive Summary
E-Commerce Adoption - E-commerce, as a proportion of total retail sales, will continue accelerating this decade. Whilst the biggest e-commerce markets will continue to dominate in Gross Merchandise Value (GMV), a significant shift in e-commerce adoption (and GMV) will occur in emerging regions such as India, Southeast Asia and Latin America. Shopify, as a global 'agnostic' end-to-end e-commerce platform, is uniquely positioned within this ecosystem.
The Shopify Product - Each year, Shopify builds a stronger business model, underpinned by its core subscription solutions, and enhanced by a growing suite of products and channels that continues to drive merchant GMV. Core to these is Shopify Payments, which now accounts for over 50% of GMV. This product not only drives more GMV (and revenue for Shopify) but unlocks multiple other solutions for the merchant. Further, Shopify is actively building out the Shopify Fulfilment Network (SFN) to enable two-day delivery to 90% of the US population. SFN is likely to expand to other core markets following successful early phases in the home market.
Product Investment - Key to the success of SFN is Shopify's recent acquisition of Deliverr which, in conjunction with Flexport (in which Shopify is invested), aims to offer a seamless end-to-end logistics solution covering first mile (manufacturer to fulfilment hub) and mid-last mile (fulfilment hub to consumer) delivery. This solution enables an expansive network of first and third-party fulfilment centres powered by Shopify's autonomous fulfilment solution 6 River Systems. Other investments that are core to Shopify's success include Stripe (underpinning Shopify Payments), Affirm (BNPL) and Global-E (cross-border commerce and payments).
Risks – There are ongoing macroeconomic headwinds over the short term, which has seen inflation surge and consumer confidence collapse. Further threats include competitive pressures (i.e. Amazon's 'Buy with Prime') and potential challenges in geographic expansion and product rollouts which are incredibly capital-intensive.