Why Shopify is so killing?


Readers are interested in this company

Most mentioned stock in my book release party

In my new book release party “New book releases ‘The Rules of 10 Baggers’, free shipping to Taiwan“, many people discussed this company with me after the party. Whether last year or this year, Shopify was the most talked-about company after my book release party, and too many treaders have mentioned this well-known company over and over again, wishing I could talk about it again. I can speculate that the possible reasons are as follows:

  • In my last two books, I’ve used this company as a prime example of a growth stock, and one of the reasons I’ve mentioned it again and again is that “this company is really a good example to explain how to discover a growth stock, the high growth potential of growth stocks, high volatility of their share prices are characteristic of most growth investments.” Add to this the fact that there is only one company in the world that can challenge the ubiquitous Amazon and its unique business model.
  • The Chinese-language media in Taiwan, whether physical or online, have begun to largely discuss it when the company’s share price has exceeded US$ 1,000 in recent years. That is to say, for most Taiwanese investors, it is a new spot show on their radar suddenly. Most of what the Chinese media in Taiwan can find are news releases, business-embedded articles, and introductory articles that translate news from international news agencies. However, these articles are of limited help to investors who really want to invest. But the most important thing is that few people analyze the factors behind the success of this company from the perspective of US stock investors.
  • I did invest in this company at a very early stage. I am familiar with this company, which arouses the interest of readers. How did I discover it in the first place? How to make investment judgments? What exactly is its competitiveness? And the possible development in the future, these typical investors will have questions.

Shopify mentioned in my latest two books

I have discussed this company in my recent two books; including:

  • In “The Rules of Super Growth Stocks Investing“, specifically 3-6, pp. 222-224, and 4-3, pp. 292-295. include:
    • 3-4, page 198
    • 3-6, pp. 218, 219
    • 3-6, pages 222-224
    • 4-1, page 260
    • 4-3, pages 292-295
  • In “The Rules of 10 Baggers“, especially subsections 5-8, especially 7-2, pp. 358-368. include:
    • 1-1, page 23
    • 2-3, page 89
    • 3-2, pages 116-117
    • 4-2, page 196
    • 6-5, pp. 293, 294
    • 6-5, page 312
    • 6-7, pp. 328, 331, 332
    • 7-2, page 355
    • 7-2, pages 358-368

Let’s discuss Shopify again

Introducing Shopify

Shopify (ticker: SHOP) is a Canadian e-commerce company. The founder Tobias Lütke is a German. He is a software engineer. He started with a friend of his inspiration from a small website he set up to sell skateboards. Gradually expand to the current scale. It is currently the largest publicly listed company in Canada by market capitalization, and it is dual listed and traded in Toronto and New York at the same time. It went public in May 2015, and it has only been more than six years.

Why is it favored by investors?

In my book “The Rules of Super Growth Stocks Investing”, section 3-6 and section 4-3. Both parts talked about how this company rose and how to obtain Wall Street investment. What has been discussed in the book will not be repeated here; for investors who really want to study this company, I suggest to read the contents of these two sections in my book, you will be very rewarding.

How is it different from other e-commerce companies?

When most of the media introduced Shopify, they always said that it is an online e-commerce company that allows small businesses to open a shop online, then there is no more information, and they can only keep drawing graphics to show that the eyes-popping stock price trending.

The problem is to provide online e-commerce companies that allow small businesses to open stores online, from completely free to paid, there are hundreds of listed e-commerce companies in the world (BigCommerce (ticker: BIGC) estimates that there are more than 500), but why only Shopify can suddenly emerge. And let Bezos of Amazon (ticker: AMZN) publicly point out in words, in the media, and even in Congress, that Shopify is the only (big enough) competitor of Amazon. Below I will resolve all doubts in your mind for you all.

Shopify’s direction and strategy

Company positioning is clear

Shopify’s corporate positioning is very clear:

  • The chief executive officer stated in 2019 that “Arm the rebels against the Amazon empire.”
  • The chief operating officer said in 2020, “We are the brand behind brands.”

This clearly defines its market and competitors, and of course it also raises its position and value. But it’s useless to declare. The problem is that Shopify did it, it executes and delivers. Moreover, the founder was very low-key, only obsessed with strengthening the company’s competitiveness — widening its moat.

During the period, there were also several merger offers from all parties, which were strictly rejected by the founder. I remember that he said at the time; Shopify can grow at least dozens of times more, now it seems to be true — the most famous of which is that it was recently disclosed that Alphabet (ticker:s: GOOG and GOOGL) also planned to acquire it, but the CEO hesitated and definitely messed up. This is one of the worst decisions Alphabet has ever made. For details, please refer to my other blog post “Alphabet’s urgent crisis“.

Focus on merchants

Almost all e-commerce companies target “all people” as their customers, because this industry is highly competitive and difficult to survive. Most customers cannot survive if they only list customers from a specific group of people. But Shopify’s positioning was very clear from the beginning, it only deals with the merchants (i.e., sellers). Another important point is that Shopify itself does not compete with customers. In other words, Shopify itself is not involved in the field of end consumers–this is one of the biggest differences from Amazon. Shopify’s only goal is to fully assist its only customer, that is, to assist merchants in selling things, holding that Shopify’s success comes from the customer’s success.

Only consider from customer’s position

Shopify is not a typical software vendor, typically ignore customer after buys its website framework software platform, it will continue to promote and provide any services that are beneficial to customers, including the following important and famous investment case:

  • In 2019, spent a lot of money to acquire 6 River Systems and build its own logistics system in North America.
  • In 2020, it will acquire 10% of the shares of Affirm (ticker: AFRM), a major player of BNPL.
  • In 2021, it acquired approximately 6.5% of Global-E (ticker: GLBE), which will greatly enhance the local customer experience of customers all over the world.
  • In 2021, it spent US$1 billion to invest in Stripe (not yet listed).

As well as countless other large and small mergers and acquisitions, as long as any company and cooperation case that is beneficial to its customer experience, Shopify will leave no stone unturned, and make it happen.

Business considerations

Refusing to invade customer site and fast monetization

Refusing to quickly monetize. For example, until now, it has refused to place advertisements on the platform. It is reasonable to say that advertising is the fastest, high profitable, and easier business decision, and almost all companies will make such decision for sure, but Shopify refused. Just because Shopify believes that advertising will destroy the independence of customers’ websites, and will also affect the final consumer use experience of merchants’ customers. Shopify regards the customer’s website as the customer’s private domain, not the property of Shopify. This decision requires great courage and a major attraction to revenue growth, which is difficult for normal companies to refuse.

Incredibly low rates

Shopify basically uses software rental service (SaaS), and merchants subscribe to Shopify for various levels of products and services provided by Shopify for a period ranging from month to years according to their needs. The merchants rent its software, sets up a website belonging to his company’s domain name, and the rental rate is fixed.

No matter how successful the customer’s business is, they will not collect commission from the customer’s transaction amount. It is another one of the biggest differences between Shopify and Amazon. Even if merchants rely on Shopify’s cash flow payment, the rate is terribly low. You must know that Amazon’s commission averages as high as 26.7% to 15%, and even eBay (ticker: EBAY) is as high as 11.7%, but Shopify’s rate is only 2.63% on average, which is ever lower than that of Sea Ltd’s Shopee (ticker: SE) e-commerce commission rates 4.5% charged to sellers in Taiwan.


Unfair Amazon platform

Not only that, Shopify’s biggest rival, Amazon:

  • The chargeable items Amazon collects from merchants can be described as numerous. For example, another advertisement must be placed on Amazon (advertising fee is very high), in order to strive for a better ranking.
  • The other is more fatal. Amazon itself sells products and directly competes with merchants.
  • Amazon interferes merchants, as small as how to describe the auction item, the size or resolution of the auction photos, it’s all Amazon say. However, Shopify believes that the website that the merchants rented from it is the merchants’ private property and will not interfere, and should not interfere.

Put aside the consideration of traffic and customers gathering; if you are a seller, would you choose Amazon or Shopify?

Main rivals

Although there are many competitors in the market that claim to be Shopify’s rivals, except Amazon; the others are actually not a big threat to Shopify:

  • Amazon (ticker: AMZN)
  • Electronic Bay (ticker: EBAY)
  • Magento under Adobe (ticker: ADBE)
  • WooCommerce for WordPress
  • BigCommerce (ticker: BIGC)
  • Wix.com (ticker: WIX)
  • Demandware from Salesforce.com (ticker: CRM)
  • PrestaShop
  • Weebly under Block (ticker: SQ)
  • Dynamics 365 Commerce under Microsoft (ticker: MSFT)
  • Squarespace (ticker: SQSP)
  • 3dCart
  • OpenCart


Try best to help merchants exposure

As long as it comes to your mind, almost all the platforms with the highest Internet traffic around the world, Shopify has been exhausted, using various means to establish various business partnerships with each other, and to sell products for merchants using Shopify platform. Various levels of publicity and exposure on various platforms increase the reach of end-consumer buyers. These platforms include:

  • Apple (ticker: AAPL)
  • Amazon (ticker: AMZN)
  • Alphabet (ticker:s: GOOGL and GOOG)
  • TikTok
  • Facebook (ticker: META)
  • EBay (ticker: EBAY)
  • PayPal (ticker: PYPL)
  • Pinterest (ticker: PINS)
  • WalMart (ticker: WMT)
  • Roku (ticker: ROKU)
  • Tres
  • Alipay (ticker: BABA)

Who are using Shopify?

According to the BuiltWith survey, the number of users of the e-commerce program used by the top 10,000 worldwide e-commerce websites is as follows:

  • Shopify: 424
  • WooCommerce: 182
  • Magento: 180
  • Other else has only two digits

Shopify currently has 1.7 million merchant users. Maybe everyone thinks they are self-employed or small businesses, then you are very wrong! Self-employed or small businesses do account for the bulk, but it also has many very large customers including:

  • Amazon (ticker: AMZN)
  • Alibaba (ticker: BABA)
  • Apple (ticker: AAPL)
  • Letter (ticker: GOOGL and GOOG)
  • Facebook (ticker: META)
  • Procter & Gamble (ticker: PG)
  • Johnson & Johnson (ticker: JNJ)
  • Unilever (ticker: UL)
  • Nestlé (ticker: NSRGY)
  • Colgate-Palmolive (ticker: CL)
  • Hennessy (ticker: LVMHF)
  • Louis Vuitton (ticker: LVMHF)
  • Pepsi (ticker: PEP)
  • Anheuser-Busch InBev (ticker: BUD)
  • Tesla (ticker: TSLA)
  • SpaceX
  • Ford (ticker: F)
  • Visa (ticker: V)
  • New York Stock Exchange (ticker: ICE)
  • Ubuntu
  • Fitbit (ticker: GOOGL and GOOG)
credit: shopify

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