Shopify positions itself as a kind of power company for e-commerce — an infrastructure and service player that helps merchants connect with consumers.
And Tobias Lütke, founder, chairman and chief executive officer, said the company was helping companies keep the lights on and the machinery humming in spite of the delays and dislocations that have plagued shipping in the age of the coronavirus.
“The challenges are, of course, real,” Lütke said on a conference call with analysts after the company reported third-quarter gains. “There are pressures in supply chain, increasing logistics costs and things like this. And inflation is harder for us to judge. There are probably some inflationary things going on. We have no idea if they are short term or long term.”
But he doubled down on the company’s proposition and said its size can help face down troubles in the supply chain.
“The role Shopify plays is even more important,” he said, “because there are over 1 million small businesses on the platform. The nice thing is we can show up as a unit. And we can help our customers through these times in a lot of surprising ways that we tend to find and that’s what they’re doing. So, so far, the good news is that there’s more margin in the part of the segment that we are in. I do think a bunch of people are buffering some of the increases in costs in their margins. And we’ll just work with the community to see how this is going to continue and how we can help.”
Shopify does a little bit of everything, including fulfillment, but also pay, marketing and more. It’s a platform approach that has drawn many small brands and, increasingly, some bigger names as well. Recent launches include Spanx, Frank & Oak, American Eagle’s Unsubscribed and Kenneth Cole.
There are a lot of different platforms today, but Shopify is gathering real scale — making it a rapidly evolving and much more potent force in commerce.
Third-quarter revenues rose 46.4 percent to $1.1 billion, representing a gross merchandise volume of $41.8 billion for the three months.
President Harley Finkelstein noted that it took 15 years for the company to get to $200 billion in total cumulative GMV — and then just 16 months to double that, showing how dramatic the e-commerce increase has been during the pandemic, particularly at the company.
The idea now is to keep the momentum up.
“We believe the future of commerce is going to be everywhere,” Finkelstein told analysts. “And the demand for more services to conduct commerce will continue to grow. And so as entrepreneurs grow and succeed, they will need multiple channels. We are seeing more commerce happen through Shopify on social channels. That includes Facebook channels, Pinterest, TikTok, Snap as well. And actually, the GMV contribution from social channels grew year-over-year. GMV attributed to social channels grew several times out of online channels, and more shops were successful in making sales to those channels in the third quarter this year versus the third quarter of last year.”
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