Everyone has heard of Amazon, but there’s less talk about Canada’s Shopify Inc., even though the fast-growing, Ottawa-based commerce platform now ranks second to Amazon in share of retail e-commerce sales, with 8.6% versus 39% for the Seattle-based giant, according to eMarketer. On Wednesday, Shopify issued an update on just how far it has come and its strategy in payments.
Shop, the company’s mobile-shopping assistant, claimed more than 100 million registered users by the end of 2020, the company reported during a conference call to discuss its first-quarter results. This number, the latest available, includes users who have opted into the app’s Shop Pay wallet, which by year’s end had accounted for almost $20 billion in total sales since its 2017 debut, Shopify reported (the company reports results in U.S. dollars). Of the Shop app’s user count, the company considers 19 million to be monthly active users.
Shopify expects to deepen Shop Pay’s involvement in its shoppers’ lives through its first-quarter integrations with Facebook and Instagram. Shopify’s top executives hint at more to come for Shop Pay. “You’re going to see us add more functionality,” said Shopify president Harley Finkelstein during the earnings call, without being more specific.
The payment app is also benefiting from a general shift to e-commerce, which was accelerated during the pandemic. “The center of gravity was offline, [but] it is now online, and there’s no going back,” Finkelstein said. “There’s so much room for e-commerce to grow.” But technology like Shop Pay matters, he added. “You’re able to check out faster and more seamlessly,” he said.
The company also intends to continue developing the overarching Shop app. “We plan to invest in building features that will reduce friction for buyers at more points along their shopping journey, from discovery to delivery, creating value for both our merchants and their buyers,” Shopify said in a release accompanying its earnings news.
Overall, while executives downplayed the possibility that the pandemic-fueled momentum of 2020 could continue far into 2021, the company still enjoyed a significant increase in gross merchandise volume in the first quarter. Volume totaled $37.3 billion, more than doubling the performance of the year-ago period. “Every 28 seconds saw a new entrepreneur get their first sale on Shopify. We’re not just growing our piece of the pie, we’re growing the pie,” Finkelstein said.
In part, that increase was fueled by federal stimulus payments to U.S. consumers, conceded chief financial officer Amy Shapero, though she added, “our [gross merchandise volume] growth was strong even without it.”
Revenue for the quarter followed suit, more than doubling year-over-year to $988.6 million. While the consumer shift to online shopping will remain a strong factor, “We don’t expect the surge we saw in e-commerce we saw in 2020 to repeat,” Shapero said, though she added, “we fully expect increased adoption of our merchant solutions.”