Shopify Inc Investor Relations Material
Shopify is a platform designed for anyone, to sell anything, anywhere, giving entrepreneurs the resources once reserved for big businesses. In no time, you can have a great looking online store that brings your ideas and products to life. Additionally you can have the tools to manage your day to day business and drive sales. This is all possible, without any coding or design experience whatsoever.
The company instantly lets you accept all major payment methods. They also provide thousands of third-party apps, from on demand printing to accounting and advanced chat-bots - basically anything you can imagine.
The company today employs 7000+ people and serves customers in 175 countries. They power millions of entrepreneurs from their first sale, all the way to full scale. Users can use powerful tools to find customers, drive sales, organize the day to day and gain knowledge and confidence with the extensive resources provided by Shopify.
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In 2002, 22-year old Tobi Lütke moved from Germany to Canada to be closer to his future wife. With no degree he was unable to get a job, which led him to starting his own business. Combining his newfound hobby of snowboarding with his interest in e-commerce, he started an online snowboard shop. Lacking knowledge and capital he needed help, and luckily, he met Scott Lake at a family event, who had experience of startups.
When Lütke and Lake co-founded Shopify in 2004, the one grandiose mission was: sell a bunch of snowboards that they already had in the garage. Coming from the dot-com crash, the will to start online stores was small. Despite this, Snowdevil set up shop.
Lütke tried many e-commerce solutions to make it work, but they were all really bad. This led him to build the e-commerce platform himself using the server-side web application framework “Ruby on Rails”. One season of online sales made it clear that selling software was more valuable than the snowboard brand. He realized that helping other people build their stores could be a better business than selling snowboards. The coming year, Lütke gathered more colleagues, turning the snowboard-shop into what it is today Shopify.
The Shop App
Through their Shop app, Shopify takes care of the little extras, from product discovery to package delivery - making it easier for customers to buy. Additionally, it helps boost buyers' confidence with Shop Facts, a feature that highlights relevant signals of trust wherever a business appears in the Shop app.
The digital shopping assistant integrates the best features of Arrive and Shop Pay, allowing customers to have fast checkouts, track their orders, and discover brands they love.
The cost of acquiring new customers has in recent years risen substantially. Focusing on repeat purchases is therefore an increasingly popular business strategy. The app adds a sales channel that automatically recommends products on a platform already used by the customers - the phone.
Through in-app recommendations, the app guides customers to circle back to the Shopify stores. Based on the customer's purchase history and the brands they follow, the Shops tab is personalized to fit each customer's behavior.
Who are their biggest competitors?
Shopify is the most flexible, feature-rich and the most complete ecommerce solution out there. They offer a much wider range of services and are out of the box, everything you need to run an effective business.
Lütke famously said “It’s really hard to build a business when you have no competent competitors”. That was the case in the early years, and the company had to be experimental and eager to test new ideas.
Today however, competition exists, Shopify merchants might want to explore other payment methods than Shopify Payments, have more control over SEO to increase organic search, or have a very complex product catalog which isn't supported by Shopify.
Amazon has been exposed for using the data of their merchants and competing against them by constructing and selling similar products. Lütke defines Shopify as the anti-Amazon, the e-commerce company that gives power to sellers and simplifies the starting of an online store. Unlike Amazon, Shopify is more ethical and has no interest in competing with the companies that use their platform. As of now, customers at Amazon don't have the option to choose, a problem which may finally be solved with Shopify Marketplace.
Other competitors are:
- BigCommerce: a flexible, SaaS ecommerce platform which suits the more advanced business, with extensive SEO capabilities, a competent page builder, and support for over 55 payment gateways without additional transaction fees.
- WooCommerce: an open source plugin designed for transforming WordPress websites and blogs into ecommerce websites.
- Magento: suitable for the Adobe lover with extensive developer skills, offering access to the backend, making it possible to customize everything in the online store.
- PinnacleCart: a shopping cart solution designed for the small to medium-sized businesses with a strong focus on marketing.
- Wix: suitable for merchants with limited experience, who want a very simple web builder.