Remember, I told you in the last week's newsletter that we need to study Shopify Plus deeply to understand the medium-term outlook for Shopify? Shrikanth, my co-founder, did just that. But we both are travelling and could manage just 50% of what we planned to get to. So here is our deep dive.
I notice that the merchant count growth rate for Shopify Plus is 20% (give or take) between the onset of the pandemic and now. So the pandemic seems to have increased eCommerce adoption, but enterprise usage has had lacklustre growth so far.
There are two other dynamics we will explore:
More stats following up:
The long tail of eCommerce is a platform moat for Amazon and Shopify, but they are not where the revenue is. The best sellers on Amazon and the top merchants on Shopify are the ones who would spend on solutions that turn the flywheel of revenue growth for these platforms. Advertising, payments, fulfillment, lending, and you name any such revenue stream – the long tail is the stalk. The real meat comes from the users who go beyond the $25M GMV mark.
Why would Shopify consolidate fulfillment? Why would they do payment processing themselves? Every question can be answered through the lens of keeping more the revenue from the pie of a market where they are not the dominant player. Benevolence at the bottom and monopoly at the top is how I'd think the Shopify App Marketplace will evolve.
If you are an operator in this space and have insights on why the enterprise segment market shares are the way they are, I'd love to host you on our podcast.
On that note, expect a new episode drop within the next two weeks.
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