Shopify gives a multichannel commerce platform which allows merchants to set up their shops and display, manage, and market their merchandise across multiple sales channels. The business utilizes a SaaS system with applications that offers one integrated back-end infrastructure.
Using Shopify, merchants can sell online in several ways:
- On their own site.
- With a purchase button on a blog or other site.
- In person at retail locations.
- On social networking websites.
- And through online marketplaces such as Amazon, eBay, and Etsy.
In most cases Shopify provides back-office infrastructure. Shopify executives think that merchants prefer to have a direct relationship with their clients and Shopify’s solutions enable them to integrate that into their own sales.
Shopify has two revenue streams: (I) a recurring subscription part named Subscription Solutions and (ii) Merchant Solutions that improve the subscription with payment solutions (Shopify Payments), shipping (Shopify Shipping), and working capital (Shopify Capital). Over two-thirds of Shopify’s merchants have empowered Shopify Payments, which eliminates the requirement for a third party payment gateway.
Merchant Solutions now generate more revenue than Subscription Solutions.
Shopify believes a significant reason for its success is that it provides different strategies to accommodate its customers. As merchants upgrade to the higher-priced possibilities, they get more powerful tools.
Most merchants are on subscription plans that cost less than $50 a month, based on Shopify’s yearly report. “Fundamental” Shopify costs $29 per month. Normal Shopify costs $79 per month and includes customer information reports. “Advanced” Shopify for bigger businesses costs $299 per month and features a sophisticated report builder and third-party shipping tools.
While most merchants subscribe to the Fundamental and Shopify plans, most the provider’s gross merchandise volume stems from merchants subscribing to the Advanced and Shopify Plus plans. Merchant retention rates are also higher among merchants on these higher-priced offerings, according to the firm.
U.S. merchants comprise 55 percent of readers, followed by the uk at 8%, and Canada and Australia at 7 percent each.
- Total earnings in the fourth quarter was $343.9 million, a 54 percent increase from the fourth quarter in 2017.
- Subscription Solutions revenue grew 42 percent from 2017 to $133.6 million.
- Growth was driven primarily by an increase in the amount of merchants joining the Shopify platform.
- Merchant Solutions revenue grew 63 percent to $210.3 million, attributable primarily to the development of gross merchandise volume and increased adoption of Shopify Capital and Shopify Shipping offerings.
- GMV for the fourth quarter was $14.0 billion, an increase of $4.9 billion, or 54 percent over the fourth quarter of 2017.
- Shopify Payments processed $5.8 billion in sales, a 65 percent growth year over year, and accounted for approximately 41 percent of the business’s GMV.
- Shopify Capital issued $71.8 million in merchant cash advances and loans in the fourth quarter of 2018, an increase of 81 percent over the $39.7 million registered at the 2017 fourth quarter.
- Total earnings for the complete year 2018 was $1.1 billion, up 59 percent over 2017. Subscription Solutions revenue grew 50 percent to $465.0 million while Merchant Solutions grew 67 percent to $608.2 million.
- Gross merchandise volume for 2018 was $41.1 billion, an increase of 56 percent over 2017.
- The net loss for 2018 was $64.6 million compared with $40.0 million for 2017. This is due to increased costs for support offerings.
- The amount of merchants on the Shopify platform reaching more than $1 million in gross merchandise volume grew by 58 percent in 2018.
- Merchants selling on the Shopify platform for 12 months or more increased their gross merchandise volume year-over-year at an average monthly rate of 24 percent.
- In the fourth quarter, Shopify merchants added almost 40 million goods to their stores.
- Shopify opened a brick-and-mortar location in Los Angeles. It showcases Shopify’s goods and services and acts as a hub for merchants who seek in-person service and advice.
For the whole 2019 year, Shopify expects revenue of $1.5 billion. Recreational marijuana sales became legal in Canada in October 2018, and lots of Canadian provinces have selected Shopify for their ecommerce sites. The business has also signed marijuana growers as clients, and such earnings are expected to contribute substantially to Shopify earnings.