Shopify (NYSE: SHOP) is a rising behemoth of e-commerce, with over a million companies using its platform to start selling online. The stock value has skyrocketed in recent years, but Shopify continues to grow rapidly and continues to invest in new opportunities to expand its staves.
Recently, Shopify introduced its new shopping app, called Shop. This indicates a change of pace for a business that has focused primarily on helping small online businesses grow. With the Shop app, Shopify brings its expertise to the merchant’s service to help consumers discover products and place orders for these products via Shop Pay.
It seems Shopify continues to roll out new features and services that could undermine Amazon.com (NASDAQ: AMZN). Last year, Shopify acquired 6 River Systems, a provider of cloud-based software and mobile robots that will significantly improve Shopify’s processing operations.
But I don’t think Amazon has anything to worry about. Here’s why.
A tool to boost sales for small businesses
The Shop app is not new. The app is essentially a new branding and enhancement of the Arrive app from Shopify, which allows consumers to track orders placed with online merchants who use Shopify services. Arrive has been used by 16 million customers. The new app integrates Shop Pay, which has processed more than $ 8 billion in sales, and will serve as a payment method for processing orders placed through the app.
The timing of the app’s release during the COVID-19 crisis illustrates what Shopify really thinks about this decision. In a press release, Shopify said: “Due to social distancing and home support measures, customers have become more dependent on online orders than ever before, as it becomes more difficult to stay connected to brands than ‘they like.”
In this environment, small businesses suffer. The big companies that sell branded products through Amazon are doing well, but there are countless small business owners who would like people to shop right now and provide additional money to help finance expenses. short-term operation, in particular pays.
The Boutique application is designed to help these merchants increase their sales, because it recommends new products to customers based on purchase history. It is a different system from Amazon, which uses advertising and recommendation features to direct customers to new branded products that they might not have thought of otherwise.
As it stands, the Store app is essentially a tool to help generate repeat purchases with merchants that you have purchased in the past. However, it is possible that this app will recommend new brands over time, depending on the growing network of companies that are on the Shopify platform. In the press release announcing the app, Shopify said: “Shop makes sure that merchant customers are constantly rediscovering the windows of their favorite brands, as well as new brands. “(I underline.)
If the Boutique app becomes a more robust discovery tool for finding branded products you’ve never heard of before, there is still a reason why Amazon should be able to protect its turf.
The Shop app cannot replace Prime
Amazon’s ultimate asset is its Prime subscription program, which not only offers members fast delivery on unlimited orders for a fixed price, but also provides other extras like Prime Video and Music. Amazon’s entertainment services aren’t the most popular in the industry, but they do provide additional benefits to the more than 150 million people who subscribe to Prime.
Millions of customers use Amazon for specific purposes, such as Whole Foods Prime delivery or fast shipping on millions of other items. For those special items that can’t be found on Amazon, many small merchants connect with customers with their own websites, and the Shop app will help these merchants increase visibility to customers.
Shopify’s satisfaction efforts will help merchants meet the demand for fast shipping that Amazon Prime has helped popularize.
It could be possible that Shopify overlaps some of the categories sold by Amazon. But in retail, it’s about selling at a competitive price. Amazon beat Walmart to e-commerce 25 years ago, but Walmart is still there and growing. There is obviously plenty of room for several large players in the vast world of electronic commerce.
The Shop app is not an Amazon killer
The Shop app is a tool to help increase connections between merchants and their former customers. But that won’t replace Amazon’s 272 million square feet of processing and data center capacity worldwide and the wide selection and fast shipping it offers to Amazon Prime members.