For payments platforms, big retail’s eCommerce efforts beckon as a growth market.
For Shopify, big retail may be a tailwind for top-line momentum. To that end, Shopify said on Tuesday (Jan. 3) that it had launched a new tech stack service available in a la carte fashion — dubbed Commerce Components by Shopify — for larger enterprises with gross merchandise volumes of more than $500 million annually.
The announcement noted that the offering represents that Components is part of the eCommerce platform provider’s “next era of growth,” which we contend is a nod to the fact that big retail is where significant transaction volumes lie in the years ahead. The move also heralds a broadening beyond Shopify’s traditional base of smaller, direct-to-consumers (D2C) and SMB sellers and an extension of its platform model beyond the confines of subscription-based offerings.
For Shopify, the broadening comes as revenue growth has slowed, from 86% in 2020 and 57% in 2021 to about $4.6 billion to 22%, as measured in the most recent (third) quarter.
The runway is being paved for enterprise clients to expand the adoption of Shopify’s offerings to customize their digital storefronts. Drilling into the company’s most recent results, on a segment level, Merchant Solutions revenue increased 26% to $989.9 million compared to the prior year, per company reports, driven primarily by merchants continuing to utilize the platform to “run greater parts of their business.”
During the conference call with analysts, Shopify President Harley Finkelstein, president at Shopify, noted that larger sellers had been gravitating toward Shopify Plus. He said that “large, established brands are migrating to Shopify …from existing … enterprise solutions or their own stack they’re running in-house. Shopify Plus is becoming a very, very compelling solution for them.”
Improving the Checkout
The offering (with Mattel already signed up across the global toymaker’s brands ) allows larger retailers to select individual functionalities and APIs and integrate those features into their own online platforms. Those choices include, for example, digital checkout as brands build out their online storefronts. In its online page detailing Components, Shopify noted that enterprises have access to the platform’s 100 million “Shop-verified customers who can buy with one click. We guarantee Shop Pay will improve your checkout conversion by 5% over your standard checkout.”
The build vs. buy debate is a perennial one in technology and in eCommerce. Checkout remains a key area that is rife with friction, particularly when offering consumers payment choices. Consumers are indeed demanding a broader range of payments options. As noted by PYMNTS, via its “Deal Or No Deal: The 2022 Holiday Shopping Report,” use of Apple Pay for online transactions grew 63% year over year, while the use of Google Pay and Venmo doubled.
