Do you ever wonder how many small businesses or even hobbyists sell their products and services online? Unlike larger organisations who have the resources to develop an integrated website (and possibly a mobile app) with the back-end inventory management and order processing and payment systems, these small businesses or even hobbyists are likely to lack the resources and the technical expertise to properly bring their businesses online.
One such business is helping small businesses or even hobbyists do just that and are doing so on a global scale.
This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.
What is Shopify?
Shopify (SHOP CN) is a Canadian company that provides a cloud-based service for businesses to design and personalise their own multi-channel commerce platform. Shopify provides a comprehensive service offering merchants products and inventory management, search engine optimisation (“SEO”), order and payment processing and order shipping as well as data and analytics relevant to their own business – all from one integrated back office. The platform allows sales from multiple online marketplaces, social media channels or traditional brick-and-mortar locations.
Shopify is a Software as a Service (“SAAS”) business model and includes two revenue streams
- “Subscription solutions”, which include the sale of subscriptions to use the platform and the revenues from the sale of themes, apps and registration of domain names. The bulk of its customer base currently enter the lower-end plans starting at US$29 per month.
- “Merchant solutions”, which include revenues from payment processing fees, transaction fees, referral fees from partners, and sales of point-of-sale (“POS”) hardware. These revenues are primarily generated from payment processing fees from Shopify Payments, a Shopify service allowing merchants to accept and process payment cards online and offline.
In 2016, subscription solutions constituted 48.4% of Shopify’s total revenues of US$389 million, whilst merchant solutions held the remaining 51.6% share. In the previous year, the revenue mix was 54.6% subscription solutions, and 45.4% merchant solutions.