E-commerce providers are now processing trillions of dollars in transactions every year. Helping over two million merchants make this happen, Shopify has become a critical tool for businesses in more than 175 countries around the world. With its cloud-based, multi-channel commerce platform that lets small and medium enterprises start, grow, and manage a business with a store, both online and in brick-and-mortar locations, Shopify is now a leading provider of essential commerce infrastructure.

With an extensive offering of products and services that are engineered for reliability and ease of use, the company’s software allows merchants to design, manage, and sell their products across multiple sales channels, including web and mobile storefronts, social media, physical retail locations, pop-up shops, and marketplaces. It also enables merchants to manage products and inventory, establish customer relationships, process orders and payments, ship orders, and leverage analytics and insightful reporting.

In addition to millions of small and medium businesses, Shopify is trusted by brands such as PepsiCo, Heinz, Tupperware, Netflix, Staples, and many more. As a result, it is now responsible for processing over $175 billion in gross merchandise value for its customers. And that number is only getting bigger as the company extends its reach with further international expansion, continuing to build buyer relationships, and investing in global partnerships to expand the Shopify ecosystem, whilst simplifying logistics and fulfillment.


In 2004, friends Tobias Lütke, Daniel Weinand, and Scott Lake took to the internet to begin selling snowboarding equipment by opening a store called Snowdevil. Not happy with existing e-commerce platforms, Lütke, a computer programmer, took it upon himself to build one of his own. After two months of development, Snowdevil was launched. Then two years later in 2006, the platform hosting Snowdevil was launched as Shopify.

Thanks to an application programming interface that allowed developers to create applications for Shopify online stores and then sell them on the Shopify App Store, the company’s position in e-commerce blossomed quickly. By 2010, Shopify was expanded to mobile, allowing business owners to view and manage their stores on their favorite devices.

In one of the company’s biggest impacts, the launch of Shopify Payments in 2013 redefined the point of sale for e-commerce, as it removed the necessity of third-party payment gateways, allowing merchants to completely bypass them. The platform soon hosted over 100k online retailers and following the company’s IPO in 2015, Shopify went a step further into brick and mortar, producing iPads with a point-of-sale system that directly accepted debit and credit card payments. This iPad POS is still widely used, especially by those on the smaller side without large-scale POS systems.

Additional services including Shopify Capital, a cash advance product, and integration with Amazon that would allow merchants to sell on Amazon from their Shopify stores, along with Shopify Studios, a full-service television and film content and production house, among many other new services have further bolstered the company’s offerings over the years.


To this day, founder “Tobi” Lütke remains the chief executive officer of Shopify. As a programmer, Lütke has served on the core team of the Ruby on Rails framework and has created many popular open-source libraries. However, his ability to help empower entrepreneurs globally to manage one of the major administrative burdens in business has allowed Shopify to grow into a juggernaut and one of Canada’s biggest companies. His efforts have earned him a position on Profit’s “The Fabulous 30” list, while the Globe and Mail named him “CEO of the Year” in 2014.

Lütke is joined by Harley Finkelstein who serves as president at Shopify and oversees Shopify’s commercial teams, growth, and external affairs. Prior to his current role, Finkelstein was Shopify’s COO and has founded numerous start-ups and e-commerce companies. While chief technology officer, Allan Leinwand, leads the company’s innovative engineering teams, following senior roles with Slack and ServiceNow.


Shopify offers various services and features for everyone from beginners to large businesses. Although its simplicity is particularly focused on entrepreneurs and SMBs, giving them the ability to create and operate their own website selling products, without requiring any specialized programming or technical knowledge; and freeing them from the high costs of web developers, ongoing support, or even middlemen like Amazon. The platform offers all the tools needed to manage a storefront, products, inventory, and shipping, as well as accept payments and engage with customers. It is completely cloud-based, removing the need to maintain software or web servers, and giving owners the flexibility to run their business from anywhere with an internet connection.

Shopify’s business model has two revenue streams – a recurring subscription component and a merchant success-based component. Subscription Solutions revenues are generated primarily through the sale of subscriptions to the platform, including variable fees, as well as through the sale of the company’s POS Pro offering which enables brick-and-mortar merchants to seamlessly bridge online and offline commerce operations and offer their buyers a smooth shopping experience, along with themes, apps, and the registration of domain names.

While a variety of merchant solutions are offered to augment those provided through a subscription to address the broad array of functionality merchants commonly require. Merchant Solutions revenue is principally generated from payment processing and currency conversion fees within Shopify Payments. However, it is also derived from an extensive list of other complementary services including the sale of POS hardware, transaction and referral fees, and advertising revenue on the Shopify App Store. Shopify Capital helps eligible merchants secure financing to accelerate the growth of their business with simple and convenient working capital, and Shop Pay Instalments enables merchants to sell their goods to buyers on an interest-free payment plan. Shopify Balance provides merchants with a no-fee money management account, Shopify Shipping and Fulfillment Network facilitates both in-house and 3rd party collaborative warehouse fulfillment solutions, while Shopify Email and Shopify Markets make cross-border commerce and comprehensive email campaigns easier for merchants.

Shopify’s customers represent a wide array of retail verticals and business sizes, from aspirational entrepreneurs to companies with large-scale, direct-to-consumer operations, at all stages of their business life cycle. While a direct sales team addresses the needs of large merchants, marketing efforts primarily focus on selling to SMBs and entrepreneurs, the large majority of which are on subscription plans that cost less than $50 per month, in line with a focus on providing cost-effective solutions for early-stage businesses. However, when customers grow their sales and become more successful, they consume more merchant solutions, upgrade to higher subscription plans, and purchase additional apps, making merchants’ success one of the most powerful drivers of Shopify’s business model.


Shopify is currently placing the highest importance on opportunities that it expects will significantly expand merchants’ businesses, accelerate its product roadmap, or have strong paybacks from improved operational efficiency. It is in a transitional period in which it is investing in several core themes to ensure long-term success. While profitability may be impacted in the near term, the company anticipates that these investments will allow it to emerge from the current macroeconomic cycle stronger and will position it well for long-term growth and sustainable profitability.

In light of the significant opportunity to increase the size of its current merchant base, Shopify intends to continue inspiring entrepreneurship through marketing programs and awareness-driven campaigns aiming at educating new prospects. While investments in direct sales efforts will focus on acquiring larger merchants, as well as brick-and-mortar retail merchants seeking to innovate.

Given the close alignment of merchant success with Shopify, improvements to the platform to help customers sell more will continue with initiatives such as the Shopify blogs digital community, the online business training platform, Shopify Learn, global events and meetups, as well as exclusive learning and engagement initiatives to educate merchants on how they can be even more successful with the platform.

In addition to the suite of merchant solutions Shopify has added over time, they are continuously advancing tooling and infrastructure so merchants can not only keep pace with the rapid changes in commerce, but be among the earliest adopters of commerce innovation. Most recently, the company launched its new first-in-class mobile hardware device, Point-of-Sale Go. POS Go was developed to allow merchants to meet consumers wherever they are, making it possible to close sales anywhere and take payments securely and smoothly. Also of particular focus, is localizing the platform for international expansion, while making it easier for merchants to accelerate their own global expansion.

With a thriving third-party ecosystem that includes app developers, theme designers, and other partners, the company continues to make its terms more favorable to these partners to ultimately bolster the functionality of the Shopify platform. It recently reduced its revenue share on the first $1 million in earnings for partners to further increase the appeal of Shopify as a platform on which to build, enabling partners to reinvest in their own growth and innovation. The company expects that by growing this ecosystem and making the Shopify platform more attractive and stickier, it will further expand the merchant base, and in turn drive additional growth.

Shopify has also partnered with industry-leading, multinational professional services corporations, like Deloitte, Ernst & Young, and KPMG, to encourage the adoption of Shopify’s commerce solutions across their client bases. This strategy enables the acquisition of new, large-sized merchants through endorsements by professional consultants, extending the company’s ability to deeply embed its solutions into large enterprises’ core operations, creating higher and more sustainable revenue streams.


In the last decade, Shopify’s revenue has exploded, surging from $24 million in 2012 to exceed more than $5 billion in 2022, with the company posting record sales each and every year. That trend has continued in the latest quarter after total revenue again jumped 22% on the prior year to $1.4 billion, taking the trailing twelve months’ revenue to $5.24 billion. Subscription Solutions grew modestly by 12%, while the Merchant Solutions businesses increased by 26%, driven by higher gross merchandise volume and by merchants utilizing solutions to run greater parts of their business in an inflationary environment.

While gross profit growth was impacted by a greater mix of lower-margin Merchant Solutions revenue, lower margins in Shopify Payments due to merchant and card mix shifts and industry-wide network cost increases, along with increased investments in cloud infrastructure, adjusted gross profit still increased by 11% to $681.8 million. The company’s adjusted operating loss of $45.1 million in the quarter down from income of $140.2 million a year ago was largely driven by increased headcount and a new compensation framework.

Looking ahead, consensus estimates have Shopify closing out the full year with expected revenue of $5.5 billion representing year-over-year growth of almost 20%, while 2023 is forecasted to add a further 22% to $6.7 billion. Full-year earnings per share estimates for 2022 are forecasted to drop to a loss of $0.05 per share, down from $0.64 in 2021, as the company focuses on its long-term investments.


Shopify faces an extensive list of competitors across the spectrum of web development and e-commerce offerings catering to both small and large businesses from the likes of Wix, Squarespace, Shift4Shop, WooCommerce, BigCommerce, and Ecwid, along with many more. Some of these merchants may be able to piece together technology that covers e-commerce software, marketplaces, content management systems, payment processors, POS solutions, cross-border services, domain registrars, shipping and fulfillment service providers, as well as lending and financial service. However, Shopify believes no other challengers currently offer an integrated, multi-channel, cloud-based commerce platform with comparable functionality, pricing, or reliability.

The greatest commercial risk for Shopify is that ongoing inflationary pressures could weigh on consumer spending and affect the company’s prospects for platform growth in the near term, yet with so many growth drivers focused on expansion, this appears largely mitigated.


Despite its stock price tanking over 75% in 2022, Shopify’s expansion into new businesses and geographies coupled with its standout comprehensive offerings provide an enormously broad ecosystem and scale that gives the company a unique advantage in the e-commerce industry that has it well placed for long-term, sustainable growth.

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