Shopify clicks with merchants who seek Amazon alternative

TORONTO • The pandemic has forced businesses worldwide to pivot online to survive, and many have turned to Shopify, a Canadian company that has emerged as a thriving alternative to Amazon.

Founded 15 years ago in Ottawa, Shopify allows businesses to create an e-commerce site in just a few clicks. Already growing with more than one million e-stores at the end of last year, its user base has exploded.

"The retail world that would have existed in 2030 has really been pulled back into 2020," Shopify president Harley Finkelstein said.

"It feels like Covid has permanently accelerated the growth of online commerce."

Amid a lockdown of physical stores, online commerce has boomed this year.

Consumers have grown accustomed to buying over the Internet, and industry giants, led by Amazon, have seen sales rocket.

At the same time, many businesses that did not have a presence or a direct online sales channel took the plunge as the pandemic took hold.

Popular with entrepreneurs, Shopify saw the number of new stores created on its platform jump by 71 per cent in the second quarter, compared with the previous one.

One of these new e-merchants is Mr Tariq Al Barwani, creator of Plentea, a tea bar in Toronto that remained open in March at the start of the lockdown.

But with only a handful of customers a day, the situation quickly became untenable, forcing him to go out of business in May.

In the same month, supported by a municipal programme helping small businesses affected by the crisis to go digital, he opened a store on Shopify.

"It took us a week," he recalled from his living room, overlooking Lake Ontario, where he now works.

"If you are used to going on the Internet, it is easy to understand."

Shopify has become a resounding success far from Silicon Valley.

It was co-founded in 2006 by Mr Tobias Lutke, a young German who had moved to Canada for love and designed the software originally to sell snowboards over the Internet.

Hailed for its simplicity, it has seen the number of stores on its platform grow from 150,000 in 2014 to more than one million - in 175 countries - last year, asserting itself in the eyes of many independent merchants as an alternative to Amazon.

"For retail to thrive, it has to be in the hands of the many, not the few," Mr Finkelstein said.

"We need to have as many retailers, as many brands, as many entrepreneurs and small businesses selling, so that we don't all look the exact same, (and) so we don't buy the exact same stuff."

'ARM THE REBELS'

More bluntly, Mr Lutke, now 40, said on Twitter last year: "Amazon is trying to build an empire. Shopify is trying to arm the rebels."

When they created their clothing line in 2015, the Toronto-based founders of Kotn, a brand that emphasises traceability, went straight to Shopify.

With C$10,000 (S$10,300) in start-up funds, they could not afford to hire an agency.

And unlike Amazon's marketplace, Shopify allowed them to "tell (their) own story" and control their relationship with customers, said Ms Mackenzie Yeates, one of the co-founders.

Shopify is also enjoying growing success with established brands looking to sideline intermediaries who sell their wares and build direct relationships with customers.

Pepsi, Unilever and Mondelez have all opened storefronts on Shopify in recent years. Ketchup maker Heinz and Lindt chocolates recently followed suit.

Celebrities like Kylie Jenner and Victoria Beckham also use it to sell products to their fans.

As a result, the volume of sales handled by the platform has increased quarter after quarter.

In the United States, Shopify merchants are now the second-largest grouping of online merchants in the country, behind Amazon.

Investors have taken note too.

On the Toronto and New York stock exchanges, Shopify's share price has tripled since March. With a market capitalisation of around C$170 billion in the middle of this month, it has become Canada's most valuable company.

Toronto e-commerce expert Chris Silvestre said it is "a fantastic company" but considers its stock overvalued, in part because it is still largely unknown how the e-commerce sector will evolve once the pandemic has peaked.

As for Mr Al Barwani, his online store sales have exceeded expectations but still remain well below takings at his former tea bar. While it was easy to launch his site, building new customers will take time, he conceded. Above all, he will have to get used to his new virtual life.

"I do miss my tea bar," he said.

"It was nice to see locals come by and saying 'hi', asking how you're doing... what are you up to this weekend, or how's your family doing. Those kinds of interactions are really hard to replicate online."

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on October 19, 2020, with the headline 'Shopify clicks with merchants who seek Amazon alternative'. Print Edition | Subscribe