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Shopify goes after Amazon with new Walmart deal

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Re: Shopify goes after Amazon with new Walmart deal

#51

Post by donogh »

ramraj07 wrote: post #48
donogh wrote: post #44

(Disclaimer: I work in the e-commerce space.) I have to say I'm concerned about Shopify's growing dominance in the e-commerce market. They're selling a 'David vs Goliath' story about taking on Amazon, while at the same time becoming a Goliath themselves. They are gradually building what seems to be an unassailable lead: preferential card processing rates with Stripe, hard-to-match discounts on shipping with the major…

Why is that a bad thing? The point of capitalism is that a company will grow if it can grow. We let Amazon do it why not this? Anyways it's better that Amazon has competition minimally, right?

True that it’s good to see competition for Amazon. So long as they don’t have exclusivity with Walmart and Facebook Shops, I don’t see a problem.

Re: Shopify goes after Amazon with new Walmart deal

#52

Post by donogh »

goatherders wrote: post #49
donogh wrote: post #44

(Disclaimer: I work in the e-commerce space.) I have to say I'm concerned about Shopify's growing dominance in the e-commerce market. They're selling a 'David vs Goliath' story about taking on Amazon, while at the same time becoming a Goliath themselves. They are gradually building what seems to be an unassailable lead: preferential card processing rates with Stripe, hard-to-match discounts on shipping with the major…

WooCommerce still powers more eCom sites than Shopify. Shopify is definitely growing, but this is a place where OSS is and will continue to be a quality alternative that owns a lot of the market.

That’s a fair point. It is still a healthy market. I hope Facebook and Walmart don’t preclude other platforms and non-Shopify retailers.

Re: Shopify goes after Amazon with new Walmart deal

#53

Post by adventured »

donogh wrote: post #44

(Disclaimer: I work in the e-commerce space.) I have to say I'm concerned about Shopify's growing dominance in the e-commerce market. They're selling a 'David vs Goliath' story about taking on Amazon, while at the same time becoming a Goliath themselves. They are gradually building what seems to be an unassailable lead: preferential card processing rates with Stripe, hard-to-match discounts on shipping with the major…

> They are rapidly becoming the next FAANG.

Shopify isn't remotely close to joining the big tech club, outside of their comically inflated bubble valuation (trading for 56 times sales).

Let's compare, trailing four quarters.

Amazon, $296b sales, $14b operating income

Apple, $268b sales, $65b operating income

Alphabet, $166b sales, $35b operating income

Microsoft, $138b sales, $52b operating income

Facebook, $73b sales, $26b operating income

Netflix, $21b sales, $3b operating income

Shopify, $1.7b sales, negative $178m operating income

One of these is very much not like the others. Investors think they've found the next Amazon, it's not. It's a slightly better Etsy as a business, and if they're really lucky, in 10 years they might be an eBay. Amazon is only what it is today, thanks to the AWS margins and op profit (not because of its retail business, which has very low growth and terrible margins). There's no evidence of stellar margins hiding in Shopify's business. 14 years, zero profit, and a weak gross profit margin (eBay's gross profit margin is 2x that of Shopify, and was even better in years past; even Etsy has a far better gross profit margin).

Compare Square to Shopify to further amplify the obviousness of the context:

Square has $5.1b in sales (3x larger, trading for 8 times sales), an operating profit for 2019, still growing fast, and is worth about 2/5 what Shopify is.

SHOP's valuation is obviously lunacy, which is quite common in this market at the moment (the Dave Portnoy market). See: Nikola or most any cloud company. It'll end in tears or a decade-long stagnation in the stock, there are no other possibilities. How long will it take SHOP to generate a $3b annual profit? That's the future stagnation clue, their market cap represents a decade or more of returns pulled forward (if everything goes right for them). The only thing qualifying SHOP for consideration among big tech, is their market cap.

If we were going to spread the insanity around more evenly, ETSY, adjusting for its slower growth rate relative to SHOP, should have a $25-$30 billion market cap. Every investor generation thinks their bubble is the one that is different and is going to last.

Re: Shopify goes after Amazon with new Walmart deal

#54

Post by reaperducer »

hef19898 wrote: post #37
thirdsun wrote: post #35

Earlier quoted context omitted.

I don't think Shopify really needs discovery or awareness among customers/buyers. Shopify's customers are merchants, businesses and manufacturers, each advertising their very own store and sales channels. For them it's hard not to consider Shopify as their ecommerce platform of choice. Meanwhile I'd argue that end customers couldn't care less about which ecommerce platform their store of choice is using. Therefore I…

As a fun fact, a former Directo of ine from Amazon, ops side, joined Shopify a while ago. A couple of years ago, I started to wonder what an ideal Amazon-"killer" would look like. And came to the conclusion it would something with aPOS-system, a rudimentary inventory management for bric and mortar shops, a webshop solution, the possibility to interface with fulfillment software and other marketplaces. That would tran…

That would transform every single brick-and-mortar shop using that POS software into a fulfillment center.

That's how thousands of businesses have operated for decades or more.

Re: Shopify goes after Amazon with new Walmart deal

#55

Post by jpm_sd »

I wonder if Shopify is going to help Walmart with warehouse automation as part of this deal. Last year, they purchased 6 River Systems (https://6river.com/), a company very similar to Kiva (Amazon Robotics).

https://xconomy.com/boston/2019/09/10/shopify-buys-6-river-s...

Re: Shopify goes after Amazon with new Walmart deal

#56

Post by KWD »

pottertheotter wrote: post #19
yegle wrote: post #11

Dealing with third-party sellers is no fun. Newegg is probably the only major e-commerce website whose search feature can exclude third-party sellers.

You can do it on Walmart. In fact, I was just about to post that this announcement is a negative for me. I have such a hard time shopping on Amazon these days and tend to try Walmart first but always select Walmart.com from the retailer filter. I don't want to see a bunch of random junk that I have no desire to purchase.

Having to do this is why Walmart is down my list of places I shop online. I'm not looking for third party sellers when I'm looking for a trusted company to buy from.

Re: Shopify goes after Amazon with new Walmart deal

#57

Post by hef19898 »

reaperducer wrote: post #54
hef19898 wrote: post #37

Earlier quoted context omitted.

As a fun fact, a former Directo of ine from Amazon, ops side, joined Shopify a while ago. A couple of years ago, I started to wonder what an ideal Amazon-"killer" would look like. And came to the conclusion it would something with aPOS-system, a rudimentary inventory management for bric and mortar shops, a webshop solution, the possibility to interface with fulfillment software and other marketplaces. That would tran…

That would transform every single brick-and-mortar shop using that POS software into a fulfillment center. That's how thousands of businesses have operated for decades or more.

Sure, locally. Combined with a global E-Commerce platform, that is pretty powerful.

Re: Shopify goes after Amazon with new Walmart deal

#58

Post by jellicle »

Amazon has a "good" part: high quality goods of known provenance delivered quickly. Consumers love this part. And they have a bad part: random sellers with zero vetting selling garbage from an infinite number of procedurally-generated storefronts (love buying from Cayzzzqq, that's the store for me!). Consumers hate this part. (I ignore the human costs of Amazon's warehouses and look only at consumer perception.)

Walmart sees this and decides: let's double down on the bad part!

Re: Shopify goes after Amazon with new Walmart deal

#59

Post by vgchh »

donogh wrote: post #44

(Disclaimer: I work in the e-commerce space.) I have to say I'm concerned about Shopify's growing dominance in the e-commerce market. They're selling a 'David vs Goliath' story about taking on Amazon, while at the same time becoming a Goliath themselves. They are gradually building what seems to be an unassailable lead: preferential card processing rates with Stripe, hard-to-match discounts on shipping with the major…

Serious question, What do you recommend that they do instead?

Also, as for Facebook Shops, I don’t think that’s a good thing for Shopify. It’s a forced marriage, with a divorce planned for future.

Re: Shopify goes after Amazon with new Walmart deal

#60

Post by atwebb »

flyGuyOnTheSly wrote: post #10
alharith wrote: post #7

Earlier quoted context omitted.

I am not sure why people think Amazon is such a dominate force on the commerce front, especially with respects to Walarmt. It isn't even close between the two. I am more worried about the cloud technology space being down to basically two choices now.

Not sure where you live, but in Ontario Amazon delivery trucks outnumber all other delivery trucks combined. Seemingly 50% of every package sitting on anyone's doorstep has the familiar Amazon branded packing tape surrounding it as well. They're definitely dominant.

Only anecdotal but Amazon has to deliver most goods, Walmart and other physical retailers can provide pickup services for online purchases (which I prefer for some goods).
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