Amazon has displaced many traditional retailers, leading everyone to wonder how anyone can compete. According to Shopify Cofounder and CEO Tobias Lütke, they really can’t.
Speaking at Startupfest in Montreal, Lütke said Amazon is creating the industry standards in retail instead of following them, making it harder for traditional retailers to compete. What’s more, Amazon is often ahead of the crowd when it comes to technology advancements, forcing retailers to play copycat or catch up. Lütke pointed to Amazon’s plans to use drones to deliver packages as one example of how it is able to be an industry leader. Amazon does it, so everyone has to do it, too, says Lütke.
But while competing with Amazon is an uphill battle for traditional retailers, Lütke said it may not be necessary to compete with it at all. Instead, the head of the Canadian eCommerce platform argues retailers can partner with Amazon, as well with others. Amazon’s dominance has been a growing concern and not only among competing retailers. Money managers are also having a hard time finding retailing companies to invest in that can compete with Amazon.
Shopify already has an existing relationship with Amazon that has helped boost its sales. The company is on pace to hit revenue of $337 million–$347 million, thanks in part to its Amazon relationship. Shopify first helped Amazon transition sellers from Amazon’s web store and now offers clients the ability to make sales through Amazon.
During the Startupfest event, Lütke was asked if online retailers really need Shopify’s software to make transactions. He said that, while they might not need it for that, Shopify does much more than enable transactions. Lütke noted the back office of an online store is complicated and its software manages that. It’s that part of the Shopify offering that is most appealing to clients, said Lütke.
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