
Shopify goes after Amazon with new Walmart deal - elsewhen
https://www.axios.com/shopify-amazon-deal-walmart-c5a76abf-5d5f-44eb-88ad-9d1c5e6428ad.html
======
holidayacct
I hope shopify understands the extremely long history of how walmart has dealt
with their corporate partners in the past. Walmart typically extends a
friendly hug and then slowly squeezes their corporate partners to death. They
had better be ready to unravel the relationship at any sign of trouble and be
working on a parallel plan to replace walmart. It seems like an unnecessary
shorcut that may backfire.

~~~
dannyw
Shopify* has three non-merchant-driven discovery channels now: Walmart,
Facebook, and their own Shop app.

I think Shopify is in a much better bargaining position than Walmart.

~~~
thirdsun
I don't think Shopify really needs discovery or awareness among
customers/buyers.

Shopify's customers are merchants, businesses and manufacturers, each
advertising their very own store and sales channels. For them it's hard not to
consider Shopify as their ecommerce platform of choice. Meanwhile I'd argue
that end customers couldn't care less about which ecommerce platform their
store of choice is using. Therefore I think the Shop app isn't all that
important actually. Or do people really seek out Shopify stores in particular?
That seems ridiculous to me.

~~~
hef19898
As a fun fact, a former Directo of ine from Amazon, ops side, joined Shopify a
while ago. A couple of years ago, I started to wonder what an ideal
Amazon-"killer" would look like. And came to the conclusion it would something
with aPOS-system, a rudimentary inventory management for bric and mortar
shops, a webshop solution, the possibility to interface with fulfillment
software and other marketplaces. That would transform every single brick-and-
mortar shop using that POS software into a fulfillment center. It would create
abasically global dropshipping network. Withou any real fix costs, while
Amazon is building fulfillment centers by the dozens.

Amazon could have done so, but they didn't. Shopify can do so building upon
there Webshop and POS environment. And they seem to do.

~~~
reaperducer
_That would transform every single brick-and-mortar shop using that POS
software into a fulfillment center._

That's how thousands of businesses have operated for decades or more.

~~~
hef19898
Sure, locally. Combined with a global E-Commerce platform, that is pretty
powerful.

~~~
reaperducer
Not locally. Globally. My wife works with this sort of thing every day and has
for her entire career.

------
12bits
In all honesty who is buying from these third parties, if something on Amazon
isn’t fulfilled via Amazon, I’m not buying. If I’m looking for something on
Best Buy the first thing I’m doing is looking for the Best Buy only toggle. Is
it strictly to make points on the vendors sales? To give a false appearance of
massive inventory? Could a third party vendor list “Item A” on eBay, Amazon,
Best Buy and Walmart and have access to cross site APIs that when “Item A” is
sold it’s removed from all market places? As a Canuck I’m happy for Shopify,
as consumer I’m losing interest in online shopping, which might be futile with
how everything is trending.

~~~
kevin_thibedeau
I opened a Wal-Mart account precisely because I needed to buy a specialty tool
from a vendor that was on Amazon but I couldn't purchase because of "reserved
for Prime" BS. The same vendor magically had it available via Wally world.
Amazon doesn't have everything in house.

~~~
12bits
That's fair, I personally avoid those third party sellers for the off chance
you get ripped off or get a bootleg/knock off.

I hope your experience(s) had neither of those?

~~~
kevin_thibedeau
I vet the sellers that seem legit but I don't want my financials and contact
info lingering in their sketchy backend systems. There are plenty of good
businesses out there with poor IT skills where Amazon/Wal-Mart/Shopify can be
a trusted middleman.

------
donogh
(Disclaimer: I work in the e-commerce space.)

I have to say I'm concerned about Shopify's growing dominance in the
e-commerce market. They're selling a 'David vs Goliath' story about taking on
Amazon, while at the same time becoming a Goliath themselves.

They are gradually building what seems to be an unassailable lead:
preferential card processing rates with Stripe, hard-to-match discounts on
shipping with the major logistics companies, warehousing to help retailers
fulfil products, an anti-competitive app only for Shopify retailers, an
exclusive arrangement with Facebook for Facebook Shops, and now a partnership
with Walmart.

They are rapidly becoming the next FAANG.

~~~
adventured
> They are rapidly becoming the next FAANG.

Shopify isn't remotely close to joining the big tech club, outside of their
comically inflated bubble valuation (trading for 56 times sales).

Let's compare, trailing four quarters.

Amazon, $296b sales, $14b operating income

Apple, $268b sales, $65b operating income

Alphabet, $166b sales, $35b operating income

Microsoft, $138b sales, $52b operating income

Facebook, $73b sales, $26b operating income

Netflix, $21b sales, $3b operating income

Shopify, $1.7b sales, negative $178m operating income

One of these is very much not like the others. Investors think they've found
the next Amazon, it's not. It's a slightly better Etsy as a business, and if
they're really lucky, in 10 years they might be an eBay. Amazon is only what
it is today, thanks to the AWS margins and op profit (not because of its
retail business, which has very low growth and terrible margins). There's no
evidence of stellar margins hiding in Shopify's business. 14 years, zero
profit, and a weak gross profit margin (eBay's gross profit margin is 2x that
of Shopify, and was even better in years past; even Etsy has a far better
gross profit margin).

Compare Square to Shopify to further amplify the obviousness of the context:

Square has $5.1b in sales (3x larger, trading for 8 times sales), an operating
profit for 2019, still growing fast, and is worth about 2/5 what Shopify is.

SHOP's valuation is obviously lunacy, which is quite common in this market at
the moment (the Dave Portnoy market). See: Nikola or most any cloud company.
It'll end in tears or a decade-long stagnation in the stock, there are no
other possibilities. How long will it take SHOP to generate a $3b annual
profit? That's the future stagnation clue, their market cap represents a
decade or more of returns pulled forward (if everything goes right for them).
The only thing qualifying SHOP for consideration among big tech, is their
market cap.

If we were going to spread the insanity around more evenly, ETSY, adjusting
for its slower growth rate relative to SHOP, should have a $25-$30 billion
market cap. Every investor generation thinks their bubble is the one that is
different and is going to last.

~~~
leviathant
Shopify is _incredible_ at marketing themselves, and so far they've been able
to churn their way out of the bubbles this creates, but it's going to catch up
with them.

------
jasonlingx
Amazon is likely grateful for the “competition” amid greater scrutiny from
regulators around the world.

~~~
alharith
I am not sure why people think Amazon is such a dominate force on the commerce
front, especially with respects to Walarmt. It isn't even close between the
two. I am more worried about the cloud technology space being down to
basically two choices now.

~~~
flyGuyOnTheSly
Not sure where you live, but in Ontario Amazon delivery trucks outnumber all
other delivery trucks combined.

Seemingly 50% of every package sitting on anyone's doorstep has the familiar
Amazon branded packing tape surrounding it as well.

They're definitely dominant.

~~~
WrkInProgress
Amazon.ca and Amazon.com accounted for about 10% of all e-commerce sales in
Canada for 2019.

I wish i had some stats for the raw # of total packages/shipments, because
that's where I think Amazon's marketshare would match the picture of "50% of
every package"

~~~
alexashka
Can you provide a link for your stat?

Link I found for 2018 e-commerce net sales in Canada [0] has amazon and
amazon.ca combined for 4.7b, costco at 1b, walmart 0.9, apple 0.79, the bay
0.47 etc.

So amazon eclipses the other other 7 competitors all on its own.

[0] [https://www.statista.com/forecasts/871090/canada-top-
online-...](https://www.statista.com/forecasts/871090/canada-top-online-
stores-canada-ecommercedb)

------
codecamper
Wow, Hacker News now used for stock pumping. nice.

Now that the longs had their say, here is the short side.

Shopify has an API. Someone wrote a plugin to allow a shop keeper to publish
inventory into the Walmart API. When sellers sell on Walmart's platform,
Shopify sees zero transactional revenue.

That's the actual technical story.

The linked "article" which actually included a quote from the COO includes a
page of bullet points about how Shopify is really knocking it out of the park.
Including the "Facebook deal".

Actually the Facebook deal is FB pulling the cart & payments features into
their FB & Instagram apps. So, effectively killing Shopify web store use.
Apparently FB is doing something special for Shopify so that Shopify can
charge 2% on top of FB's 5% fee. But sellers can also just make their shops
directly on FB and skip the 2% Shopify surcharge.

I would have expected fellow programmers to understand a bit of math & show
some constraint with bubble valuation stocks!

~~~
thaway757383884
So sellers will create a different FB shop, a different Walmart shop, a
different website shop, download and pay for a whole bunch of software to keep
all the inventory in sync, and have to merge different interfaces and APIs to
try and figure out what their final sales, revenue, etc are.

Or they can use Shopify and get all of those, and manage their inventory, and
pricing, and shipping rules, etc all from one place and pay Shopify a few
hundred dollars a year, when they would have paid thousands in software
annually to replicate the same anyways.

Yeah, I can totally see why they would go the non Shopify route.

------
jpm_sd
I wonder if Shopify is going to help Walmart with warehouse automation as part
of this deal. Last year, they purchased 6 River Systems
([https://6river.com/](https://6river.com/)), a company very similar to Kiva
(Amazon Robotics).

[https://xconomy.com/boston/2019/09/10/shopify-
buys-6-river-s...](https://xconomy.com/boston/2019/09/10/shopify-buys-6-river-
systems-for-450m-to-boost-new-fulfillment-centers/)

------
yegle
Dealing with third-party sellers is no fun. Newegg is probably the only major
e-commerce website whose search feature can exclude third-party sellers.

~~~
pottertheotter
You can do it on Walmart. In fact, I was just about to post that this
announcement is a negative for me. I have such a hard time shopping on Amazon
these days and tend to try Walmart first but always select Walmart.com from
the retailer filter. I don't want to see a bunch of random junk that I have no
desire to purchase.

~~~
yegle
Ah right, it was under the "retailer" filter (was looking for "Seller").

------
aritraghosh007
Shopify clearly announced its intentions when it went ahead with Google Cloud
couple years back and the bets placed are lining up pretty nicely with recent
partnerships with Facebook and now Walmart. Although it also begs the question
if Walmart's discontinuance of Jet.com might have prompted this deal? [1]

1\. [https://techcrunch.com/2020/05/19/walmart-says-it-will-
disco...](https://techcrunch.com/2020/05/19/walmart-says-it-will-discontinue-
jet-com-which-it-acquired-for-3b-in-2016/)

------
jellicle
Amazon has a "good" part: high quality goods of known provenance delivered
quickly. Consumers love this part. And they have a bad part: random sellers
with zero vetting selling garbage from an infinite number of procedurally-
generated storefronts (love buying from Cayzzzqq, that's the store for me!).
Consumers hate this part. (I ignore the human costs of Amazon's warehouses and
look only at consumer perception.)

Walmart sees this and decides: let's double down on the bad part!

------
chirau
Shopify is really going all out. Good for them. First the Facebook deal, now
this.

------
mtnGoat
I am not sure why this is getting much attention. Walmart is selective about
which merchants they will take and Shopify is estimating only 1.200 will be
onboarded by years end. Shopify claims to have 500,000 stores so this
penetration is so minuscule its really not worth mentioning. In the same vein,
this was all already possible using a couple of third-party Shopify Apps and
merchants have already been doing this for years. All I see is PR being
created to drive stock price?

------
dmalik
This expands what merchants can do with the Shopify platform. Both Facebook
and Walmart are channels for Shopify merchants to post their merchandise.
Amazon has been one for a while. There are a lot more in their app store -
[https://apps.shopify.com/collections/sales-
channels](https://apps.shopify.com/collections/sales-channels)

------
duud
If well executed, Facebook Shops has the potential to crush both Shopify and
Amazon. FB Marketplace already has 800 million monthly users, more than Amazon
and eBay combined.

~~~
bitxbit
It’s really Instagram right? I want to say something like 95% of small shops
selling under Shopify market under Instagram. It’s just that Facebook never
took e-commerce seriously enough. If they spent _some_ capital in more useful
endeavors oppose to Zuckerberg’s flavor of the year projects such as Libra, FB
would be as big as AMZN. They have all the infrastructure already in place to
pull it off.

------
brianwawok
Crazy time to be in e-commerce!!

------
delfinom
O great, yet another site that'll be filled with fake reviews, shitty support
and the like.

