Shopify handled $41.1 billion in sales volume in 2018 on its platform that helps other retail businesses operate online. An increase of 56% over 2017. A retailer or a brand can setup their own store on Shopify for as little as $29 a month.
On the other side of the ring, eBay handled $89.83 billion in sales volume last year, an increase of just 7%. In 2018 Shopify sales volume was already 45% of eBay’s. A percentage which has rapidly increased from 31% in 2017, 19% in 2016, and 9% in 2015.
According to our estimates Shopify will be bigger than eBay in worldwide sales volume by as early as 2021. While Shopify growth is slowing, it will take a long while before it drops to eBay’s single-digit-percent growth.
Shopify, of course, isn’t a marketplace and eBay is one. But they are both part of the same online retail market. They both compete for the same customer wallet and while one is growing faster than the overall market, the other is lagging.
Yet in many ways Shopify is more of a platform than the other marketplaces are. Bill Gates said “A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. Then it’s a platform.” This isn’t true for eBay or Amazon, but is true so far for Shopify. Both in terms of retailers on its platform and partners - the people who build apps for the platform or run agencies, consultancies and other Shopify-related services.
“To build a Shopify-like e-commerce platform is not hard to do. What’s very hard to do is replicate the partnership ecosystem and the value they drive. It’s their moat. It’s not the software - their competitive advantage is the partnerships.”
– Jay Myers, the Co-Founder and VP of Growth at Bold Commerce
It was only last year that Amazon launched the app store with tools created specifically to help its sellers manage their inventory, orders, advertising, and other. Shopify had one since 2009. Shopify is ahead in realizing the importance of a partner economy.
There are more than 820,000 merchants on Shopify (not accounting for inactive stores), increasingly many of which are Direct-to-Consumer (DTC) brands. As well as serving as the base layer for “an emerging ecosystem that solders digital advertising through Facebook onto the world of Asian manufacturers and wholesalers who rep their companies on Alibaba and its foreigner-friendly counterpart, AliExpress,” as Alexis C. Madrigal wrote in The Atlantic.
Ben Thompson of Stratechery wrote “the only way to build a thriving business in a space dominated by an aggregator is to go around them.” Shopify is built for that, it’s a platform to go around Amazon. “We think the marketplaces are really great, but we think ultimately makers and entrepreneurs and merchants want to have a direct relationship with the people buying their products,” said Harley Finkelstein, COO at Shopify.
