Beyond the Titans: Shopify Steps It Up

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Walmart persists in its unrelenting cycle of innovation as retail’s battle royale between the mega-retailer and its rival Amazon continues. Yes, but it begs the question that if this duopoly at the top continues, what does this mean for the future of retail? Will tomorrow’s shopper be presented with a consumer landscape dominated by two commercial titans and a few trailing wannabes? Will retail whimsey, kismet, and joy fall only to AI-infused efficiency and algorithmically optimized recommendations? While it is fascinating for industry watchers to observe from the sidelines as one retail Goliath takes on another, it seems that Shopify, which initially relished its status as a possible Amazon slayer, is in stealth mode methodically building an alternative future retail landscape, all while tangentially integrating with both of the retail giants.

Shopify now powers over 10 percent of all ecommerce. It’s not in direct competition with either Walmart or Amazon, but the company is steadily building a robust commerce infrastructure supporting not only small and medium retailers but also leading brands looking to tool up for long-term independence in a future retail landscape.

Table Stakes

 The ever-expanding tech stack that fuels today’s adaptive retail era is staggering. Amazon and Walmart are optimizing warehouse robotics, digital twins, retail media networks, generative AI search and personalization, supply chain efficiency, and last-mile delivery — be that by drone, gig delivery driver, or cargo bike. It seems that both consumers and investors are rewarding these efforts as the competitors have seen their sales and stock prices continue to tick up. Walmart is the largest retailer globally and gaining share in ecommerce while Amazon maintains a huge lead in ecommerce sales.

In another corner of the retail ecosystem sits Shopify which now powers over 10 percent of all ecommerce. It’s not in direct competition with either Walmart or Amazon, but the company is steadily building a robust commerce infrastructure supporting not only small and medium retailers but also leading brands looking to tool up for long-term independence in a future retail landscape.

Arming the Rebels

In a famed 2019 Tweet, Shopify co-founder CEO Tobi Lütke shared the company’s unofficial mission statement “Amazon is building an Empire, and Shopify is arming the rebels.” At the time, the statement appeared to support the little guy– small and medium ecommerce brands — but perhaps Lütke had an epic battle on a grander scale in mind.

Recent changes at the company support this theory. Shopify added Bret Taylor, the former President, COO, and ultimately co-CEO of Salesforce to the board of directors in June 2023. The company also reportedly added nearly 40 enterprise software sales specialists from Salesforce to its staff. In an interview, Michael Morton, Senior Research Analyst at MoffetNathanson, discussed these changes and commented on Shopify’s enterprise efforts. “What is a game changer is that Shopify removed the bottlenecks, the things that prevented them from being a solution to, for example, branded apparel companies…They had a variant limit, which sounds immaterial but if you just want to think about men’s pants from size 28 waist to whatever, in a couple of different colors, you quickly blow past the 100-product variant limit.” According to Morton, the company’s efforts to woo enterprise clients appear to be paying off. Shopify’s Gross Merchandise Volume rose to $235.9 billion in 2023, but now half of that business has come from the Shopify Plus enterprise product, which is for larger merchants.

Enterprise Appeal

Beyond loosening limits and revising systems to serve larger clients, Shopify rolled out an enterprise suite in 2023 with key elements:

  • A revamped end-to-end, cross-border commerce platform, Shopify Markets Pro, that better supports international ecommerce transactions for enterprise-level sellers. The platform is a holistic solution serving as a cross-border merchant of record while facilitating international sales processes.
  • The ShopPay point-of-sale system is internationally functional and available both online, and in-store through a countertop payment portal. ShopPay continues to outclass its competitors in the U.S. and globally. Stastia published 2024 data gathered by Dadanyze showing that ShopPay follows third only PayPal and Stripe as the most used payment processing technology worldwide. As a point of comparison, Apple Pay is ranked sixteenth.

Shopify’s efforts in increasing the presence of enterprise-level retail on the platform are making a dent. Research by EMARKETER projects that by 2025, Shopify’s projected enterprise-level ecommerce sales will increase from 5.5 percent in 2022 to 14.4 percent of revenue. During the same period, the percentage of sales from small and medium businesses on the platform dropped from 17.8 to 3 percent in 2023. EMARKETER anticipates only a slight rise to 4.2 percent of overall sales by 2025.

Prosperous Partners

The list of enterprise-level sites powered by Shopify includes digitally native brands, the Kardashian-related brands Skims and Kylie Cosmetics, Tesla, and Allbirds. It also hosts physical natives Mattel, Sephora, Steve Madden, Tapestry-owned Coach Outlets, Taylor Swift’s merchandise catalog, and even Heinz. For many of the omnichannel brands, Shopify’s software and payments platform cross the digital-physical divide, serving all retail touchpoints by offering in-store shoppers the same payment flexibility that is available online.

Shopify’s initial enterprise offering was an all-you-can-eat buffet; one price, all the features, no customization. The platform has evolved as internal Shopify teams have broadened from a technology-first team to one balancing merchant services. Shopify’s new Commerce Components program allows sellers to order à la carte with all or most of the services, or only ShopPay. Morton weighs in on the strategy, “I guess you could use the Trojan horse analogy. It’s going to get their foot into the door…They are going to be looking at Shop Pay and maybe one or two of the other commerce components solutions, and they’re going to ask their team, ‘Why are we trying to do all these other things by ourselves? Look how good the stuff is that we’re using from Shopify,’ so it’s a great idea.”

The Alternative

For enterprise-level sellers, the exposure available on both the Amazon and Walmart platforms is irrefutable; still, Shopify persists. As retail stakeholders, we are aware that many sellers consider selling on Amazon to be a Faustian bargain with expansive exposure and goodwill, but costly. Walmart’s terms are less onerous, but weighing the costs and benefits for sellers is complicated. Depending on the terms, many sellers lose pricing control, and are subject to advertising costs and high referral fees. Shopify has come up with a Solomonic alternative, striking integration deals with both Walmart and Amazon marketplaces and fulfillment networks. While we are not privy to the specific terms, the impression is that integrated Shopify sellers operate with more autonomy than most first or third-party sellers who deal directly with Amazon or Walmart. Sellers maintain their brand image, pricing control, and some of their data privacy. The Amazon integration processes all Shopify site sales through ShopPay, allowing vendors to retain proprietary sales data. Walmart insists on ringing its own registers.

Retail’s Future?

What makes this triad interesting is the role they play in the current retail innovation cycle and how that might play out in the future. Within that sphere, Shopify is arming not only the rebels but also consumers. This brings us back, in a circuitous way, to where we started as we pondered a future retail duopoly. Perhaps Shopify is building an alternative, independent future retail landscape that is more blessed with whimsey, kismet, and joy. We hope so.



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