Shopify Poised To Become Canada’s Amazon

Photo shows Shopify's CEO Tobias Lutke Photographer: Richard Drew/AP.
Shopify now a major player in the e-commerce world. Photo shows Shopify's CEO Tobias Lutke Photographer: Richard Drew/AP.

Shopify is a Canadian Software Company providing cloud-based e-commerce solutions designed for small and medium-sized businesses. The Company offers subscription based merchant solutions. The Company’s software platform is used by merchants to run their online business across all of their sales channels, including Web and mobile storefronts, physical retail locations, social media storefronts and marketplaces.

Why Shopify Over Amazon?

In plain English, Shopify helps entrepreneurs, business people and anyone that wants to sell online to sell online. We know what you are thinking, they could just use Amazon for that, but the problem with Amazon is that the company doesn’t allow you to have your own customers. Amazon strictly states that all customers acquired on Amazon.com are Amazon’s customers and sellers are strictly prohibited from taking their business off the Amazon platform. On top of that, Amazon treats their sellers unfairly and almost always ends up booting them off the platform if they do not become large players (10+ million in annual revenue). This is where Shopify becomes the best alternative to Amazon.

 

 

With Shopify, you can build your own real estate on the web without having any technical knowledge. From an e-commerce website to a web application, from a POS System to an Online/Mobile payment system, all for just $79/ month. Would you say no to that? Most people wouldn’t and as a matter of fact, Shopify’s growth continues to blow analysts estimates year after year. We are going to go in depth as to how Shopify can be the right solution for e-commerce when Amazon doesn’t quite fit.

Major Competitors:

Before we continue, its important to note that Shopify is not alone in the self-hosted e-commerce platform space. There is also Bigcommerce and Volusion, but both are still relatively small compared to Shopify. Shopify has been growing annually at a rate of 67 percent (in terms of sales) and has enjoyed a large share of the market they compete in. Some estimates put the market share of Shopify at roughly 11%. The other major players in this market are Magento with 29%  and WooCommerce with 26.5 %. In this paper, we make the argument that Shopify is the best solution for customers  and that Shopify would eventually overtake both WooCommerce and Magento.

Open-source Legacy Software No Longer A Good Fit:

Starting with WooCommerce– a plugin-based solution found on WordPress, we see an opportunity for Shopify to eat into their market share. WooCommerce has enjoyed a large share of the e-commerce market, mostly due to its connection with WordPress. WordPress powers nearly 74 million websites and has been the only solution for people that want to build websites without having to know/learn any programming. This has had made the platform very attractive for people that just want to get online, and if you wanted to get online for the purpose of e-commerce, then WooCommerce was the only solution available.

Fast forward to 2016,  Shopify introduced a plugin that can be used directly on any WordPress site. This is a major move against Woocommerce as Shopify is competing with WooCommerce directly on their own platform. This is only one strategy that Shopify is using to extract market share out of WooCommerce, the other strategy is to provide a superior alternative to WordPress that is solely focused on e-commerce. WordPress is not made for e-commerce, it’s built for bloggers and content creators, so it loses the speciality advantage against Shopify.  On top of that, WordPress uses PHP– a legacy programming language that lacks established patterns laid by more complete languages and has several problems with language design and core implementations. Moreover, WordPress’s software is open-source, which makes it inherently prone to attacks as anyone has access to the source code empowering any WordPress website. Once customers realize this fact, they would eventually look for a better solution to their e-commerce needs. This is where Shopify would step in.

What About Magento?

We didn’t forget about Magento, but we are going to keep the discussion on Magento short. Magento is another PHP written Open-Source software built as an e-commerce solution. Aside from using legacy software, the platform is immensely resource intensive. As one blogger put it,  You’ll be lucky to run this on a shared hosting account, it almost demands an entire server to itself and for bigger installations, several with a load balancer to boot.

What Does Shopify Use?

Shopify uses Ruby on Rails , with Rails as their framework and Ruby as their main language. Shopify’s CEO Toby Lütke is a great Ruby developer who made Shopify from his own personal project. As for Shopify’s Frontend, it’s built in their own language which is Based on Ruby. The language is basically a templating engine/language known as Liquid.

Are We Saying That Shopify Will Have 66.5% Market Share?

We project that Shopify will work towards domination of the entire self-hosted e-commerce platform market, going even beyond the ultimate destruction of both WooCommerce and Magento. Shopify will lead the way into the future, allowing millions of entrepreneurs to move their businesses online. As more and more people shop online, Shopify will be getting a bigger share of the pie. Amazon won’t always be the the big beast eating everyone’s food. There will be a day when Shopify will be eating a larger share of the pie, possibly even a share of Amazon’s pie.

Aside From All That, What Are The Analysts Saying?

Analysts have a mean 12-months price target of $108.5/share. This is slightly below the current share price of $113.36 (NYSE: SHOP). The lowest analyst price target stands at $88/share, with the highest analyst target set at $127/share. The consensus recommendation for Shopify amongst analysts currently stands at Moderate Buy. There are currently 24 Analysts reporting:

 

Moderate Buy Recommendation For Shopify Inc.
Data provided by Quotemedia.

 

 

 

 

-- Written And Consolidated By Judi Alan & Staff ©

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