Shopify (NYSE: SHOP) was one of the biggest losers. If you were to pull a chart of Shopify’s stock performance since the start of 2020, you’d be faced with a worrying scene. Since hitting a pandemic high of more than $1,600 a share at the end of 2021, stocks are back to where they were before the pandemic, forming the dreaded inverted parabola.
But Shopify may have found an incentive that can offset those losses. On Wednesday, the e-commerce giant announced more than 100 new product releases, including the addition of a business option.
The updates are part of a new biannual Shopify initiative called Editions, which the company will use to showcase new product launches and features. In its inaugural editions, Shopify highlighted a suite of e-commerce tools, including click-to-pay for iPhone, NFT-based shopping and integration with Twitter Shopping that brings it to social commerce.
But perhaps the most important addition is B2B on Shopify. Armed with a full suite of B2B trading tools, a company can kick-start its recovery by entering a market it sees as having “billions of untapped revenue.”
“It’s an opportunity for us to expand (total addressable market),” Harley Finkelstein, president of Shopify, told the Financial Times. “Not only to pursue consumer-oriented businesses, large and small, but also to pursue wholesale business, which is a huge untapped market.”
Experts generally agree. A 2021 Wunderman Thompson Report found that nearly half of all B2B purchases are made online, while a 2021 survey from PwC revealed that about two-thirds of companies consider digital marketing and sales implementation a business priority. Four out of 10 considered it a major commercial challenge.
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However, a survey from BigCommerce did highlight some of the concerns with B2B e-commerce, among them the fulfillment. It found that more than three-quarters of B2B companies use Amazon Marketplace to sell or advertise, likely due to integration with Amazon’s fulfillment service.
But fulfillment may not be much of an issue for Shopify either and that could be the key to turning B2B e-commerce into a profit engine. In May, Shopify completed the largest acquisition in its history when it bought integrated logistics provider Deliverr for $2.1 billion. The deal came after months of criticism from analysts, who criticized the e-commerce giant for ending several contracts with fulfillment centers.
The acquisition of Deliverr came right after Amazon released Buy with Prime, which sounds like a game-changer in the market. Buy with Prime allows merchants – including those not on the Prime platform – to offer their customers Prime benefits such as free and next-day delivery.
Adding Deliverr wasn’t the trending move that Buy with Prime seemed to be, but it did quite a bit in Shopify. Using Deliverr’s nationwide fulfillment network, which has warehouses within 100 miles of half the US population, the platform can offer perks like two-day shipping and easy returns.
Notably, Deliverr handles B2B deliveries. This means that while Shopify’s B2B offering may not be as fast as Amazon’s, it may be fast enough to entice enough merchants to turn a profit.
This is something Shopify needs right now. In its latest earnings report, the e-commerce giant frequently missed analysts’ earnings per share expectations, and also slightly missed revenue. The company’s shares fell more than 15% during the news.
“While investors have been bracing for the shortage, especially after weakness in other e-commerce companies, Q1 SHOP remains below the low,” Samad Samana, an analyst at Jefferies, said in a note to clients.
Adding to recent pressures, Mawer Investment Management, a Shopify investor, bailed out the company this month over concerns about slowing e-commerce growth. Mauer has held her stake in Shopify since 2017.
But investors seem to be regaining confidence in Shopify after this week’s announcement — at least early on. The company’s stock opened at about $325 the day B2B was introduced on Shopify, but by noon on Thursday, it had hit $360. That’s still a far cry from Shopify at the end of 2021, but shares are up 20% in value since June 15.
In order to avoid becoming the new WeWork, Shopify will need to steal some market share from Amazon, which generates $470 billion in annual revenue compared to Shopify’s $4.6 billion. But with Buy with Prime in the opposite corner, B2B on Shopify has entered the ring — and it could have a fighting chance.
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