Massive Growth Continues for Shopify: The Marketplace is Betting on E-Commerce. Should You?
Question: What has a market cap of $3.2 billion, e-comm sales of $3.4 billion, and over 300,000 customers?
Answer: Shopify. They are the biggest e-commerce platform in the world. Here’s why you should care.
Shopify.com has become the choice of small business (Read: your business) e-commerce systems. Tangent/MPSToolbox.com is proud to announce that we have been certified as Shopify Experts. Last year 150,000 businesses opened up a store with Shopify.
Any industry that has a CAGR of almost 100% for three straight years is something worth learning more about. If you are curious, look up the stock information for SHOP on the Nasdaq. Shopify is being valued at 18x its revenue (You read that right; not earnings, REVENUE). Now investors have been known to hype stock over the years, but a bet on Shopify is a bet on e-commerce. Specifically, it is a bet on small businesses jumping on board with e-commerce. I don’t see that as a bet, I see it as an eventuality.
Now some industries, like our own technology or print industries can become too wrapped up in ourselves. We are way behind. You are probably way behind. We tend to see some of the smaller industry specific technology vendors within our space as the big players. They are not big technology companies. Some of them have a vested interest in keeping the status quo. Look around, many technology providers are not innovating, they are harvesting. Harvesting your license fees without significantly reinvesting. While they may be significant to us today, we must be careful that they do not lead our industry astray. The biggest revolution in your business today is not managed services. It’s not managed print services. It’s not seat based billing. It’s e-commerce. Wall Street beat the tar out of Office Depot and Staples. Staples is the 5th largest online merchant in North America. Office Depot is not far behind. Those properties would be worth billions as standalone e-commerce businesses.
Overall the technology and printing industries are in moderate revenue decline, it’s clear that one area that is increasing is online sales. Amazon sold over $100 billion in 2015. That’s a lot of everything, but it’s a lot of technology mixed into it. That’s a 20% CAGR—great for a $100 billion juggernaut.
Though they do not break out online sales, the Staples-Office Depot merger was blocked because the judge was afraid it would create a $15 billion e-commerce monster. Yikes that’s a lot of ink and toner. Interestingly, while those superstores are reporting annual sales decreases of 5%, their online stores are holding steady and even increasing. Considering their major product lines are pens, paper, stationery, imaging supplies, and hardware, that’s pretty darn good!
So back to you and your business. Business-to-business e-commerce sales account for over 14% of all sales. It will account for 20% within the next four years. Are you still trying to decide if e-commerce is a good idea? Maybe we should talk?
Sorry about all the numbers, folks. I just get really excited when I think about this kind of opportunity.