shopify logo on bag

Shopify is giving online voice to the retail multitudes — and gaining real scale and clout in the process. 

By offering businesses e-commerce tools and services, the company is perched at a hot spot in fashion right now. 

The company’s fourth-quarter net income shot up to $123.9 million from $800,000 a year earlier as revenues increased 94 percent to $977.7 million. Shopify enabled sales with a gross merchandise volume of $41.1 billion. 

That worked out to a GMV for the full year of $119.6 billion — giving it a hand in sales that exceed the total revenues of Target Corp., where analysts expect to see a top line of just under $93 billion for the year.

On a conference call with analysts, Shopify president Harley Finkelstein declared: “2020 was the year of the entrepreneur. Entrepreneurs worldwide demonstrated grit, meeting the challenges presented by a global pandemic that forced businesses to think completely differently, which also pushed more buyers online.

“Our merchants inspired Shopify to level up and pursue our mission of making commerce better for everyone with even greater energy,” Finkelstein said. “I’m proud to say that entrepreneurship is in a better state, and more businesses are surviving the pandemic because of the work that we do here at Shopify.”

Shopify works with more than 1.7 million merchants around the world and together its merchants would amount to the second largest e-commerce retailer in the U.S.

As a platform, the company specializes not in designing product or owning inventory, but in selling services to those who do and then growing alongside them. Shopify has helped brands do everything from raise money to get their start with Shopify Capital to delivering products to consumers with Shopify Shipping. 

Last year, the company brought more brands into its Shopify Plus subscription service, which includes about 3,000 merchants and is targeted at larger, more complex businesses. Among those joining in the fourth quarter were skin care brand Dermalogica, designer Elie Tahari and surfwear brand O’Neill.

Shopify has grown into a giant itself with a market capitalization of more than $175 billion, but has done so in its own way and by working with the little guy. 

Last year, the company said its employees would work from home permanently, raising some question of just how that will change the business in the long run. 

On the call, Thomas Ferris Forte, an analyst at D.A. Davidson & Co., noted: “One of the many things I appreciate about Shopify is your culture, the notion that you’re empowering rebels to overthrow the Empire as you scale the business, for example, adding engineers from across the globe in 2021. What gives you confidence you can continue to add talent while maintaining your culture?”

Tobias Lütke, chief executive officer, spoke about the weekly town halls the company holds and the care with which it hires people, but harkened back to his own experience building up a business, offering a peek at his own leadership style.

“Speaking as an entrepreneur in general rather than CEO of Shopify right now, the trick is, don’t try to hold on to previous culture,” Lütke said. “Just evolve your culture to be better than it was before, bring forward your strengths, double down [on] your strengths, try to leave some of the weaknesses behind and just make sure that the next version of your company is a better version. 

“The way cultures end up bad [is that] people hold onto things that were appropriate in previous times.…And I see this as a path that doesn’t lead to anything. Personally, I’m the one person looking at Shopify, who has seen every single version of Shopify. And this one is the best one. So far so good and intending to keep it this way.”

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