Shopify Outlines Expanded Services As Growth Rates Normalize

At a time when so much attention has been paid to the unprecedented digital shift toward online shopping, the giant eCommerce platform Shopify said on Wednesday (April 28) that it is focusing on navigating the next phase of the process: the rotation back to so-called offline retail, better known as traditional brick-and-mortar stores.

In releasing its first-quarter results for the three months that ended March 31, the Ottawa-based outfit unveiled a list of growth superlatives: revenues were up 110 percent to $988 million, subscription revenues were up 71 percent, merchant solutions were up 137 percent, payment volumes were up 42 percent and gross merchandise value (GMV) increased by $20 billion, marking a 114 percent increase from last year.

While most companies can only dream of delivering metrics like that, Shopify is going out of its way to let investors know that what has happened over the past 12 months was not normal or likely to repeat itself. That’s not to say that the business is in any way shrinking — rather, it’s just expanding less rapidly.

“Our full-year 2021 outlook is guided by assumptions that remain unchanged from February: that as countries continue to roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve; some consumer spending will likely rotate back to offline retail and services; and the ongoing shift to eCommerce, which accelerated in 2020, will likely resume a more normalized pace of growth,” the company said.

If that wasn’t blunt enough, Shopify also said it “expected to grow revenue rapidly in 2021, but at a lower rate than in 2020,” and that subscriptions would cool down.

“Subscriptions solutions revenue growth will be driven by more merchants around the world joining the platform in a number lower than the record in 2020, but higher than any year prior to 2020,” Shopify said, noting that it also “did not expect the surge in GMV that drove merchant solutions in 2020 to repeat.”

The Shift To New Services

This coming shift is hardly new news. For at least six months now, Shopify and virtually every other entity involved in digital commerce and the connected economy have been calculating, contemplating and postulating about what changing consumer dynamics will actually look like post-pandemic — in short, how much of the new online behaviors will actually stick and how much of them will cede back to traditional stores.  

To be sure, there’s been widespread reporting that brick-and-mortar is undergoing a bit of a renaissance, as retailers from Amazon to Walmart rethink the role and best use of physical locations, and as cooped-up consumers simply want to get out again. While that reversion will require some real estate adjustments, it in no way will slow the pace of digital innovation and omnichannel retailing that was already in place and growing before the pandemic even existed.

For Shopify specifically, new and existing merchants of all sizes will continue to sell goods and services online and will seek out the best, most seamless way to do so. As a result, the eCommerce platform said it is rounding out its suite of services, which include Shopify Payments, Shopify Shipping and Shopify Capital and, most recently Shopify Fulfillment.

“2020 catapulted commerce into a period of incredibly rapid change, presenting Shopify with unprecedented opportunities in 2021 to accelerate innovation,” the company said, noting its plans to aggressively reinvest in the business while warning that full-year 2021 adjusted operating income will likely be below the level achieved in 2020.

Entrepreneurialism Is Thriving

In speaking to investors and analysts on the company’s conference call, Shopify President Harley Finkelstein said that in spite of the macroeconomic trends that are beyond its control, the company was singularly focused on helping businesses and individuals to migrate online.

“We are here to make it easier for anyone with an idea and ambition to launch a business. Entrepreneurship is thriving, and trends like omnichannel shopping and direct-to-consumer selling offer even greater opportunities,” Finkelstein said. “But entrepreneurship is still harder than it needs to be, and by building a future-proof retail operating system, we are more committed than ever to leveling the playing field for entrepreneurs and making commerce fair for everyone.”

In fact, the company’s loyalty metrics remain strong, as more than 45,000 existing merchants referred someone else to Shopify last quarter. In addition, its social commerce efforts are also growing globally. The number of actively selling Facebook shops has more than quadrupled in the past year, its marketing partnership with TikTok has expanded to an additional 14 countries and it brought its Pinterest channel into 27 additional markets.

“We are focused on building a commerce operating system that will help shape the future of retail,” said CFO Amy Shapero.