
Now Bigger Than eBay, Shopify Sets Its Sights on Amazon - tim333
https://www.ft.com/content/c72ae0f0-c036-11e9-b350-db00d509634e
======
scabbycakes
As someone who worked developing Shopify apps (NOT a Shopifyt employee to be
clear), I can attest to the incredibly high percentage of shops that evaporate
from the platform on a nonstop basis.

Something like 80% of the people that would install our apps in their shops
would be gone or in limbo after a couple months. (Not an app uninstall, their
shops actually no longer existed.)

The charts we see from Shopify like this always say "Number of merchants" and
the number climbs up towards a million, but at what point do they start
excluding their delinquent/disappearing merchants? I'm not convinced they're
factoring in churn.

~~~
martco
This explains how I got scammed on Shopify last summer. I’m not talking about
a missing product label or receiving a counterfeit item. I paid $1200 for a
Shopify product (drone) and received a box with a poster tube inside of it
that said “the world is yours”. Nothing else. The merchant was gone that day.
The real scammers live on Shopify.

~~~
peach
Da fuq? Did you manage to get anything back?

~~~
tehlike
Credit card chargeback would bring everything back.

------
lunaru
I just want to make a note that Tobi (Shopify's CEO) has made great
contributions to Rails open source ecosystem with projects like Liquid and
ActiveMerchant, which he started:

\-
[https://github.com/Shopify/liquid/commits?author=tobi](https://github.com/Shopify/liquid/commits?author=tobi)

\-
[https://github.com/activemerchant/active_merchant/commits?au...](https://github.com/activemerchant/active_merchant/commits?author=tobi)

We leverage these projects daily, so it's awesome to see his company doing so
well. In addition, we're on Shopify's platform as a app developer, so his
company has added a lot of value, both commercially and non-commercially to
developers, not just e-commerce merchants.

Kudos to them.

~~~
dwd
Liquid is awesome and documentation first rate.

I was pretty much able to dive straight into Shopify templating and leverage
the docs as I went without even having a background in Rails or Ruby.

~~~
matallo
I can't agree more with this comment, for anybody using Jekyll, it's worth
noting it is the templating language it uses, and my experience pretty much
resembles this.

------
DavidAdams
I know that a lot of activity on Shopify is from ambitious but deluded people
setting up dropshipping businesses. Shopify is just selling picks and shovels
to a lot of prospectors in a particularly unfruitful gold rush. I'm wondering
whether they'll see a contraction as the enthusiasm wears off.

~~~
blairanderson
Your point is accurate, but they also power some massive eCommerce businesses
and growing number of enterprise shops.

Their biggest investments are for their subscribers that ACTUALLY sell stuff.
Dropship-dreamers are super scared of actually subscribing but they are the
vocal majority because of guru's and such.

Its all about growing GMV / PLUS / CAPITAL / FULFILLMENT and those are all
hitting +50% YOY

~~~
markdown
> but they also power some massive eCommerce businesses and growing number of
> enterprise shops.

This makes no sense. Why would any company that starts making serious money
continue to give SquareSpace money for a template. There's nothing you can do
in SquareSpace that you can't do better in a custom app running on one of the
many free software CMS's out there. I don't get this.

~~~
grandmczeb
For lots of brands, the core competency is marketing and every other aspect of
the company is outsourced. E.g. Kylie Cosmetics which has 360M+/yr in revenue
and uses Shopify.

~~~
askafriend
A more provocative example is Tesla. Literally their whole car buying
experience is powered by Shopify.

They did ~$21B in sales last year.

~~~
gavinballard
I don't think this is true - I believe it's only their merchandise store
that's on Shopify. Car purchases are done through their own, custom platform.

That said, there are definitely plenty of huge merchants running on Shopify
turning over hundreds of millions of dollars through the platform - we work
with quite a few of them.

------
masko
I might be drinking the amazon koolaid but Shopify’s online service and
physical product distribution can’t even come close to what amazon has
developed. They’re not a real threat. Amazon is really at least 15 years ahead
in distribution and operations. We’re using robotics to automate a ton of
processes. Jeff Wilke revolutionized the fulfillment centers. Shopify’s
platform mainly sells niche things at low throughputs. Amazon is about how can
we sell more in the same amount of time so we can continue lowering prices to
get more customers and keep selling more.

~~~
amelius
Third-party sellers at Amazon don't have robots, and I suppose they fulfill a
considerable amount of the volume.

~~~
jonknee
Sure they do, Amazon fulfillment is a giant business.

[https://services.amazon.com/fulfillment-by-
amazon/benefits.h...](https://services.amazon.com/fulfillment-by-
amazon/benefits.html)

~~~
amelius
Well most of the time when I order something from a third-party vendor, it
doesn't come in an Amazon box, so I suppose it is handled by the vendor, not
Amazon.

~~~
testcase_delta
More than half of the items bought on Amazon and from a 3rd party seller but
fulfilled by amazon. It arrives in an Amazon box in 2 days and most people
don't realize it was from a 3rd party seller.

------
sdnguyen90
I've been working with Shopify for close to 10 years as an owner of multiple
profitable stores and as a full stack developer. If you work on the custom
development side you'll see a lot more successful businesses run on Shopify.

I don't see the churn rate as a big problem for Shopify. Their revenue is
pretty tied into the customer's revenue and expenses, not the amount of unique
subscriptions. On top of subscription revenue, they have credit card
processing and shipping labels which would be higher than the subscription
cost for shops with high revenue.

IMO I don't really see Shopify and Amazon as really being in the same space
unless Amazon makes a real push into curation and I think that would require a
radical change in how Amazon works with sellers. I see Amazon as more of a
competitor to Walmart, Target, etc.

~~~
bduerst
What if Shopify created a centralized e-commerce platform for every merchant
to make their inventory available through?

~~~
subpixel
They did that early on and I'm pretty sure the takeaway was: let Amazon do
that, we're minting money with seller tools.

------
neonate
[http://archive.is/TyStn](http://archive.is/TyStn)

~~~
jonatron
Or click "web" and go via Google to not be paywalled

~~~
dmtroyer
what do you mean "go via Google"? I still get paywalled if I click the search
result.

~~~
mythz
clear cookies or go incognito

~~~
Ninn
Still not working.

------
ZainRiz
Related: Shopify and the power of platforms
[https://stratechery.com/2019/shopify-and-the-power-of-
platfo...](https://stratechery.com/2019/shopify-and-the-power-of-platforms/)

------
sova
Shopify is so expensive and for a small-time shop hosting and paying the shop
fee eat up your first 2-10 sales easily, where is the free platform that only
charges per sale?

~~~
thrownaway954
Wordpress + WooCommerce

You can say all you want about bad the platform is, but the fact of the matter
is that you can setup and start selling on a proven platform for almost
nothing.

~~~
dwd
I would say not. You have hosting and you have to deal with maintenance,
security and backups. Your Shopify fees cover that and the payment processing
fees are comparable.

Unless there is some feature that WooCommerce can throw in for free that would
require paying a Shopify developer an ongoing fee (wishlist functionality is
probably one) your monthly fees are going to be similar.

------
nostromo
Bigger than eBay by market cap, but much smaller by revenue.

~~~
blawson
Shopify grew revenue by 50% in Q2, eBay by 2%.

~~~
chiefalchemist
Yeah. 50% of a small number vs 2% of a much MUCH bigger number. It's a classic
mistake that the statically-blind make.

~~~
webninja
So that means Shopify grew by 500M and EBay grew by 200M. Is that right?

------
noneckbeard
This title is very misleading. Shopify has surpassed eBay in market cap, but
is in a very different business. Same wrt amazon. Conflating market cap with
market ownership is just confusing.

However, I really hope Shopify can figure out a way to make it easy to find
quality sellers and replace Amazon’s dumpster fire of a third party
marketplace. Trying to buy electronics or household products on amazon is a
complete crapshoot these days.

------
kolbe
I don't get it at all. In my model, Shopify spends 75% of Gross Profit on
sales to simply maintain existing customer levels. It doesn't seem like
customers are very sticky, so they constantly have to pay huge amounts for
sales to get new customers.

So, what's the best case scenario? They go from $800m in revenue now to $5bn?
Even if they don't increase R&D, that means they're profiting $500m a year.
That's an 80 P/E for what I consider to be a very optimistic 6x revenue growth
extrapolation. Is there some other huge business (like Facebook's untapped
user data in 2012) that isn't making itself known in their financials?

~~~
blairanderson
\- logistics (shopify shipping)

\- shopify PLUS memberships (+$2K/month)

\- enterprise level products (handshake, etc)

I think the fact that their enterprise sales are growing is a huge indicator.
Its replacing legacy ERP systems in sales organizations because of the
flexibility and value add.

I run a consulting company[0] for Amazon suppliers, and about 90% of our
clients don't have "real time" inventory counts. 50% are someone automated but
100% have to enter at least 1 order MANUALLY each month because outdated
technology. ORders with hundreds/thousands of line items entered manually will
seriously mess up your day.

\- [0]
[https://www.andersonassociates.net](https://www.andersonassociates.net)

------
alaskamiller
eBay started out as a tool to connect you between a seller and a buyer,
evolved to empower merchants, because of competition they became a landlord
mall operator. Their DNA has always been to drive traffic for growth.

Amazon started out as a store to sell you a book, grew selling you other that
can be stocked and packed like a book, evolved to ask others to sell too,
because of competition they became a landlord mall operator. Their DNA has
always been to drive traffic for growth.

Shopify gives you a dumbed down version of a selling tool. It was easy enough,
paired up with Alibaba's rise, a subculture of dropshipping dropsurfing gurus
selling you on how easy it is, they've now convinced most people to give it a
try.

But their DNA has never been to drive traffic for growth. There's been no
indication that's their strategy as they've only unveiled more tooling for
owner operators.

Eventually they'll peak, run out of people wanting to give it a try and the
whole thing collapses.

Shopify is more like Rovio having a hit with Angry Birds, growing rapidly,
then watching sales drop 40% shortly thereafter.

Also, having down Shopify dev back in 2014-2016, their app ecosystem is a
mess, more akin to a medium sized POS company's third party ecosystem.

------
kaiby
This interview with Shopify's CEO about how the company grew / his mindset was
interesting [1]. He said a lot of things that sounds similar to the author’s
quotes in the article.

[1] [https://fs.blog/tobi-lutke/](https://fs.blog/tobi-lutke/)

~~~
hrshtr
+1 to the podcast. He seems to be a calm guy and it is good to hear about his
thought process and the vision he has. Interestingly he loved playing video
games and he owes playing video game to help him in critical thinking.

~~~
dre54673
> he owes playing video game to help him in critical thinking.

I often hear people attribute part of their success to things they already
did, and I think it's usually just a combination of survivorship bias and
other similar effects. I've heard people say similar things of nearly every
substance or activity: "I am successful and doing X is part of the reason"
where X can be anything from illegal substances to something mundane like
coffee. Usually when X is something one likes, one tends to find it
interesting.

This has been on my mind after recently debating with friends whether some
substances like weed or shrooms should be legal and them basically saying they
shouldn't because they know people who have taken them and turned their lives
for the worse. Then I brought up how you can say similar things about video
games (which IMO they are addicted to) and they quickly said it's different
and you need to perform some impossibly complex studies to determine anything.

This is likely part of the reason echo chambers form everywhere. If ideas
confirm our own beliefs, we hold them to much lower standards than when they
don't.

~~~
james_s_tayler
Yup. Everything is ex-post-facto rationalization chock full of survivorship
bias with no way for you to accurately calibrate for the difference in
personal and temporal circumstances and accurately map what outcome you would
have if you do X.

It's not worth listening to anyone's advice. Only experiment with your own
life and find what works for you or die trying.

~~~
tim333
Not everything - sometimes you can filter useful data when things are clear
cut.

------
FreeHugs
"Bigger" as in higher market cap.

How big are Amazon and eBay these days in terms of dollar value sold via their
market places?

If eBay is anywhere near Amazon and Shopify stores outsell eBay, that would be
pretty spectacularely.

Shopify stores live on their own domains, right? No reviews, no central
discoverability, no nothing, correct?

------
iask
I don’t know why they don’t support 3rd party payment tokenization.

~~~
brianwawok
You don’t? They charge a premium over the CC processor as a big part of their
revenue. Why would they give that up?

~~~
mkorfmann
Yeah, but for challenging Amazon, the reason people choose Shopify Payments
shouldn't be raw power.

------
amelius
Why is all the money at sellers like Amazon, and not where the real work is,
i.e. shipping?

~~~
ajcodez
Value is captured at the point of sale for everything, not just ecommerce.
Also, there’s a number of successful publicly traded logistics companies in
the $20b to $70b range.

------
lightedman
Subscription only.

Try getting my interest again when there's a publicly-viewable link.

------
cutler
I wish people would stop linking to paywall sites. What's the point if most of
use here are probably not subscribers?

~~~
LeoPanthera
Click the “web” link underneath. FT lets you read if your referer is Google.

------
xwdv
I’m kicking myself for not investing in Shopify when I saw it in the 100s this
year. Given the size of my average investment I could have made a good $20k in
profit. Wondering if I’m making the same mistake again. Could this be another
$1000 stock?

~~~
mkorfmann
Yes

~~~
mkorfmann
My creds:

Worked in a german shopify partnered agency for ~3 months beginning this year
(latori.com)

~~~
blairbeckwith
So... no creds. Got it.

~~~
tekstar
lol Blair

~~~
blairbeckwith
:) I don’t disagree, but ... crazy experience to draw conclusions from!

~~~
mkorfmann
Everything would be crazy when analyzing how people come to conclusions in
trading.

------
pschastain
Paywall; site wants a subscription to read the article.

------
digitaltrees
But Rails doesn’t scale.

~~~
dcwca
I can’t think of many (any?) other large tech companies that stuck with Rails
at scale. The CEO being a core Rails member makes this an edge case, like
Basecamp.

------
raws
A lot of people seem to be able to read the article which is behind a paywall
for me! (Quite often the case on hn)

~~~
dang
If there's a workaround, it's ok. Users usually post workarounds in the
thread, and there are some in this one.

This is in the FAQ at
[https://news.ycombinator.com/newsfaq.html](https://news.ycombinator.com/newsfaq.html)
and there's more explanation here:

[https://news.ycombinator.com/item?id=10178989](https://news.ycombinator.com/item?id=10178989)

[https://hn.algolia.com/?query=by:dang%20paywall&sort=byDate&...](https://hn.algolia.com/?query=by:dang%20paywall&sort=byDate&dateRange=all&type=comment&storyText=false&prefix&page=0)

