Digital-first commerce boosts Shopify’s earnings

The Ottawa-based global ecommerce platform yesterday announced striking financial results, with Q4 revenue up 94% YoY. Merchant Solutions revenues grew 117% (these are solutions Shopify offers in addition to its subscription platform, like payments and shipping).

Sales on the Shopify platform surpassed $5 billion during the holiday period. Full year revenue for 2020 showed an 86% YoY increase.

Major changes in consumer behavior. These results for a high-profile ecommerce enabler, while striking, are unsurprising given major changes in consumer behavior caused by the pandemic. Research from Publicis Sapient shows almost three-quarters of consumers purchasing online more than usual last summer (a trend likely to have persisted: 48% interviewed said they would continue to shop online in the future).

The research also indicates an opportunity for brands to acquire new customers through ecommerce experiences, with 74% purchasing products from retailers new to them.

Shopify responds. Shopify launched a number of initiatives in 2020 to promote digital transformation for merchants. In Q2 2020, it extended its free trial period from 14 to 90 days. It incorporated gift card capabilities in all its plans, as well as introducing buy-online-pickup-curbside and local delivery.

It also launched Shop, a free all-in-one mobile shopping assistant.

Meanwhile, Walmart falters. In contrast to Shopify’s success, Walmart saw a fall in shares in today’s pre-market trading as it reported Q4 earnings which fell short of Wall Street expectations.

Walmart has traditionally been a big-box retailer with almost 5,000 physical locations in the U.S. alone. It does, of course, have an ecommerce presence too, but it showed disappointing growth in Q4 (69%, the smallest increase since the pandemic hit).

This came against the backdrop of extra expenses involved in running physical locations during the pandemic, including sanitization, cleaning, and bonuses to staff.

Why we care. For the present, and for much of the foreseeable future, there’s a strong case for digital-first commerce. As consumers become accustomed to online shopping and delivery for products they would have previously purchased in-store, it’s in doubt whether they will revert to pre-pandemic habits once it’s safe to do so.

This story first appeared on MarTech Today.

About The Author

Kim Davis is the Editorial Director of MarTech Today. Born in London, but a New Yorker for over two decades, Kim started covering enterprise software ten years ago. His experience encompasses SaaS for the enterprise, digital- ad data-driven urban planning, and applications of SaaS, digital technology, and data in the marketing space. He first wrote about marketing technology as editor of Haymarket’s The Hub, a dedicated marketing tech website, which subsequently became a channel on the established direct marketing brand DMN. Kim joined DMN proper in 2016, as a senior editor, becoming Executive Editor, then Editor-in-Chief a position he held until January 2020. Prior to working in tech journalism, Kim was Associate Editor at a New York Times hyper-local news site, The Local: East Village, and has previously worked as an editor of an academic publication, and as a music journalist. He has written hundreds of New York restaurant reviews for a personal blog, and has been an occasional guest contributor to Eater.

Leave a Comment