Shopify: simplified shopping, a Case Study

Shopify is an eCommerce platform that allows anyone to set up an online store and sell products. Merchants can also sell their products in person with Shopify POS. Shopify is a b2b platform working on the SaaS model. Providing small and medium-sized businesses worldwide, Shopify caters to a user-friendly and cost-effective eCommerce platform.

Shopify user flow is simplified into four steps:

Business Model

The Shopify business model works on two aspects:

1. Subscription model
2. Merchant solution

Subscription model:

The Shopify subscription model works on three levels:

1. Basic Shopify
2. Shopify
3. Advance Shopify

Shopify Plus is for larger business owners.

Merchant Solution:

Each subscription plan charges varying payment processes, becoming a revenue model for the company.

Customers:

Large-scale businesses like Heinz, Lindtz, Budweiser, Sephora, Tesla, Nestle, Nescafe, etc. are customers of Shopify Plus.

“The whole reason to go Shopify Plus was to best serve our customers. It was not about reaching a certain turnover, it was about providing a seamless experience. We wanted a custom checkout. We wanted automation tools and with the Plus platform you have that out of the box.” -Adison Rudall, Co-founder of P & Co.

Shopify responds swiftly to customer needs and proactively understands and addresses customer needs for business sustainability and growth.

Shopify Features for Merchants:

Shopify Balance: Business account, similar to what the traditional banks offer but with no monthly fee and minimum balance.

Shopify Card: For merchants to buy inventory track and spend on ATM withdrawals, physical and virtual cards for merchants.

Shopify Capital: Shopify offers cash advances between 200k dollars to 500k dollars in Canada, 200k USD and 1M USD in US, and 1B USD to date.

Collect Tips: Merchants can collect tips from customers online.

Shopify POS: Offering merchants contactless payment hardware in physical retail locations post-COVID.

For Customers of Shopify Merchants:

1. Buy now and Pay Later option.
2. Shopify POS.
3. Local pickup.
4. Gift cards.

“Shopify’s success stems from its focus on customer satisfaction. The company strives to offer a convenient, user-friendly solution to business owners at reasonable cash.”

Competitive comparison of Shopify based on the market cap:

Comparison on the basis of the market cap and its current valuation by the leading companies in Canada and its eCommerce peers to justify its current valuation.

Valuation is based on:

1. EV to Revenue.
2. EV to EBITDA.
3. Price to Earning.

EV/Revenue- Canadian Peers

EV/Revenue Ecom Peers

EV/EBITDA Canadian Peers

EV/EBITDA Ecom peers

P/E Canadian peers

P/E Ecom peers

Pros and Cons of Shopify:

Pros of Shopify:

1. Easy to use.
2. Available customer support.
3. Multiple payment processors.
4. Support different categories of eCommerce businesses.
5. Variety of themes.
6. Apps and plug-ins.
7. SEO and marketing.
8. Hosting and security.
9. Customization.
10. Uncheckered growth.

Cons of Shopify:

1. Difficulty with content marketing.
2. Limited customization.
3. No email hosting.
4. Difficult exit.

Principles of Shopify:

At Shopify, commerce is empowered at a global scale. It builds products, tools, and services for people to start, manage and scale their businesses.

Their Approach:

Considerate: Above all also, Shopify care for people who use their tools and products. Shopify is there to improve the user’s day-to-day and long-term work, no matter who they are or what platform they are using.

Empowering: Shopify wants its users to feel they can accomplish whatever they are trying to do. The company’s experience should give the user confidence that they are capable of achieving their goals no matter their level of experience.

Crafted: Shopify experiences should feel like they were created with the highest level of craftsmanship. Through thoughtful details and small touches, Shopify combines the power of professional tools with the simplicity of consumer products.

Efficiency: Shopify experiences should help people achieve their goals quickly, accurately, and with less effort. Shopify value speed and simplicity and also value productivity even more.

Trustworthy: Shopify constantly works to recharge the user’s trust batteries, they dig into the details. The company is genuine and transparent to show users that they are always acting in their best interest.

Lessons learned:

1. Listen, observe and analyze carefully.
2. Go diverse, and dig into every domain and sub-domain possible to get the most out of the company.
3. Have an open mind and be ready to learn whatever new comes on the way.