Shopify powers the e-commerce revolution
The most obvious impact of the pandemic was that it accelerated the shift to e-commerce. Consumers began shopping online in lieu of trekking to retail stores. Far too many merchants were ill-prepared for the sudden change in consumer behavior and the groundswell toward online shopping. Luckily for them, Shopify (NYSE:SHOP) was there to answer the call.
Many brick-and-mortar retailers with no online presence were forced to add a digital component to their business on the fly if they wanted to survive. Shopify saw unprecedented demand for its services, which include helping merchants set up and manage e-commerce operations. The company also provides access to other critical business services, including inventory management, payment processing, and discounted shipping and fulfillment.
Shopify was already in an enviable position. Total revenue for 2019 grew 47% year over year, driven by more than 1 million merchants. Fast forward to Q1 and Shopify maintained its impressive growth rate at 47%, even in what has historically been a slower quarter. New stores created on its platform grew 62% between March 13, 2020, and April 24, 2020, compared to the prior six-week period, as merchants scrambled to offer their goods online.
It's unlikely that the majority of retailers will forego these new revenue streams as the momentum from these additional sales carries into the coming quarters. This gives investors a sneak preview into Shopify's future, lockdown or not.
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