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Sales Through Shopify Hit Historic Highs
This year, sales through Shopify reached a historic total of $11.5 billion, marking a 24% increase compared to the previous year. Over 76 million customers worldwide purchased products from various brands on this platform. A record sales volume was achieved by more than 67,000 entrepreneurs, and around 16,500 online stores made their first sales here. In addition to the traditionally strong markets in the U.S. and Canada, Shopify saw growth in the UK, Australia, and Germany. Notably, payments through the Shop Pay service grew by 58% year-over-year. The results from the Black Friday – Cyber Monday weekend confirm Shopify’s ability not only to handle enormous traffic but also to support merchants of all sizes during the critical moments of the year. They also demonstrate that its technology is ready for any challenge.
How Does Shopify Earn Money?
Shopify primarily generates revenue through subscriptions and solutions for merchants. Subscriptions include various levels tailored for small businesses to large enterprises with advanced tools like Shopify Plus. Merchant solutions include fees for payment processing, sales of hardware and software enabling in-person transactions, applications, e-shop themes, discounted shipping services, and financing through Shopify Capital. Additional revenue comes from advertising, partnerships, and logistics services. This combination ensures steady revenue growth as merchants expand. Shopify’s main competition is the giant Amazon, but its focus on small and medium-sized businesses sets it apart.
Collaboration Instead of Competition
This e-commerce platform is not just focused on defeating its competitors – it often collaborates with them, and it seems that this strategy is paying off. Over the last four quarters, Shopify facilitated sales totalling more than $270 billion. The company has also formed significant partnerships that confirm its ability to adapt and expand.
Despite PayPal being a direct competitor to Shopify, the two companies decided to collaborate in September 2024 by allowing Shopify to offer payment options through PayPal. This partnership makes lives of clients much simpler by using PayPal accounts. Removing barriers and payment restrictions is an important factor for customers, as data from PYMNTS shows that 50% of them consider payment ease an important feature when choosing an online store, and 91% say it influences their willingness to return.
Even more unconventional is the partnership with video game company Roblox, which will allow players direct access to online stores without having to leave the game. This partnership was also announced in September, with the service launch scheduled for early 2025. This could be a significant move for Shopify, potentially expanding its reach to a customer base in a new sector.
Additionally, Shopify has expanded its collaboration with YouTube, owned by Alphabet. Since 2022, Shopify merchants have been able to embed YouTube videos directly onto their online stores. Starting in August this year, merchants subscribing to Shopify Plus and Advanced programs can use the YouTube Affiliate program, which makes it easier for content creators to promote products directly in their videos.
Stock Supported by Financial Results and Partnerships
Shopify’s stocks, traded on the New York Stock Exchange (NYSE), have been quite volatile in recent months. After a sharp rise in 2020–2021 during the pandemic-driven e-commerce boom, there was a significant correction. This year, the stock had been in decline until August, but after announcing the partnerships, it began to recover. This culminated on November 12 when the company reported its Q3 2024 financial results.* These results showed a 24% increase in gross merchandise volume (GMV), which surpassed market expectations. The company is expected to maintain growth in GMV and merchant solutions during the upcoming holiday season.
Source: investing.com*
Conclusion
Shopify has once again confirmed its strong market position by achieving record sales on its platform during the year’s biggest shopping frenzy. The company stands out with its focus on small and medium-sized businesses, differentiating it from the competition. This segment has proven highly sensitive to changes in consumer behaviour related to macroeconomic conditions, with the pandemic resulting in a massive e-commerce boom. However, Shopify has a clear strategy in place that could ensure steady growth, now backed by sustainable results and promising partnerships. [1]
David Matulay, analyst of InvestingFox
* Historical data is not a guarantee of future performance.
[1] Forward-looking statements are assumptions and current expectations that may not be accurate or are based on current economic conditions that may change. These statements are not guarantees of future performance. Forward-looking statements by their nature involve risks and uncertainties related to future events and circumstances that cannot be predicted and actual results and outcomes may differ materially from those expressed or implied in other statements.
Caution! This marketing material is not and should not be construed as investment advice. Historical data is not a guarantee of future performance. Investing in change may affect returns due to fluctuations. All securities transactions may result in both profits and losses. Forward-looking statements are assumptions and current expectations that may not be accurate or are based on current economic conditions that may change. These statements do not guarantee future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
Sources:
https://www.retaildive.com/news/shopify-youtube-expand-partnership/724954/
https://finance.yahoo.com/news/shopifys-growth-picking-back-just-011200773.html
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