The dramatic e-commerce boom, primarily fueled by the pandemic, is likely to remain as the economy begins to finally open up and show signs of life. Where some have previously feared that the re-opening of brick-and-mortar stores, local boutiques, and restaurants would bring the growth of e-commerce to a sudden end, the reality has been dramatically different.
In fact, one of the most notable examples is Ottawa-based Shopify, Inc. Its first quarter showed unrelenting growth, far exceeding revenue predictions. The higher-than-expected revenue reached $988.6 million, a considerable spike from last year’s $470 million.
Shopify App’s Growth Intensified By Pandemic
By the end of 2020, Shopify’s mobile-shopping assistant, Shop, exceeded 100 million registered users. Included in this number are those who signed up for the app’s Shop Pay wallet. Since its launch back in 2017, Shop Pay Wallet has reached $20 billion in sales. The company reported that, out of the total of Shop app users, 19 million are “monthly active users.”
Shopify’s first quarter also featured Shopify Pay’s integrations with Facebook and Instagram.
Although not the primary driver, the company also capitalized on the radical shift of consumer behavior from offline to online shopping during the pandemic. According to chief financial officer Amy Shapiro, the subsequent stimulus checks did play a minor role in impacting the gross merchandise value (GMV), however, it was already robust without it.
The GMV has grown by more than double from the prior year, reaching more than $37 billion. The acceleration began in January and February, well before the stimulus was issued to consumers nationwide. Interestingly, the acceleration was notably faster outside the U.S.
The company does believe it will see a temperament of growth to happen compared to last year’s frenzy.
Furthermore, in places where there has been a full opening post-pandemic, there is no evidence of a slowdown of sales, where consumers buy directly from merchants.
Shopify’s president Harley Finkelstein has great plans to increase functionality and the Shop app will also undergo further development. Finkelstein adds:
“We plan to invest in building features that will reduce friction for buyers at more points along their shopping journey, from discovery to delivery, creating value for both our merchants and their buyers.”
What’s Next For Shopify?
After several months of investor speculation that online shopping would come to a grinding halt post-pandemic, Shopify has defied the odds. Overall spending has exploded in every geography and type of merchant on Shopify’s platform.
With the windfall of revenue, the Ottawa-based company is setting its sights on investment and expansion. Shopify plans to use these funds in the second-half of the year. This in itself will produce a much lower adjusted operating income for this year as opposed to last year in 2020.
Finkelstein believes that online is now considered “the center of gravity”. He also added that e-commerce has a lot of room to grow. Furthermore, he is a big proponent of payment technology like Shop Pay, where customers are able to check out faster and without any disruption.
Although Shapiro is skeptical that Shopify will experience a repeat surge in eCommerce as seen in 2020, she believes that the next trend will be the rise in the adoption of their many merchant solutions.