Amazon plans to launch its own independent website to challenge Shopify

Amazon plans to build its own independent website to compete with Shopify

According to a report by Bloomberg on the 24th , Amazon insiders said that Amazon is developing a product similar to Shopify , which will help sellers set up independent online stores.

In response, Shopify CEO Tobi Lütke said that Amazon is a worthy opponent and Shopify is ready for the competition .

The battle between Amazon and Shopify over independent websites seems to be imminent. In fact, as early as 2015, Amazon handed over its independent website business to Shopify .

Sellers who have been overseas for a long time may know that Amazon once operated a service called " Webstore ". This business mainly helps small and medium-sized enterprises to establish their own online retail stores. Bang & Olufsen, Fruit of the Loom, Lacoste and 80,000 other companies have been its customers.

However, Amazon executives at the time believed that Webstore's service was not very good, and its sales were dwarfed by those on Amazon's shopping site . At the same time, competition in this market was becoming increasingly fierce, with new technology companies including Shopify and Bigcommerce emerging , which received strong venture capital investment and began to improve their product lines and compete for customers.

In 2015 , Amazon announced the closure of its online store building service Webstore. Not only that, Amazon recommended its customers to Shopify , publicly announced that the Canadian company was its preferred partner for overseas online stores , and sold its website building department to Shopify for $1 million. In exchange, Shopify agreed to provide Amazon Pay to merchants .

A business that Amazon once didn’t think highly of has since grown rapidly. A former Amazon executive said: “ Shopify made us look like fools . ”

Shopify is gaining momentum and challenging Amazon

The rise of Shopify has given Amazon an opportunity.

Shopify 's development in recent years is obvious to all. According to MarketplacePulse data, the number of merchants on the Shopify platform reached 1.749 million in the fourth quarter of last year.

Not only merchants, but also consumers have increased accordingly. In September this year, Similarweb data showed that Shopify's average monthly unique visitors exceeded Amazon for the first time in the second quarter of this year. In the three months ending in June, Shopify's average monthly unique visitors reached 1.16 billion, while Amazon's was 1.10 billion.

Shopify has become popular, and its revenue has increased accordingly. In 2020, Shopify's total annual revenue was US$2.9295 billion, an increase of 86% over 2019. Among them, subscription solution revenue increased by 41% to US$908.8 million, while merchant solution revenue increased by 116% to US$2.007 billion. In addition, GMV reached US$119.6 billion, an increase of 96% over 2019.

The latest data shows that in the third quarter of this year, Shopify's revenue was US$1.124 billion, a year-on-year increase of 46.5%. Net profit was US$1.148 billion, compared with US$191 million in the same period last year, a year-on-year increase of 501%, and it has remained profitable for six consecutive quarters.

During the entire Black Friday and Cyber ​​Monday period, Shopify's sales reached US$6.3 billion, a 23% increase from global sales of US$5.1 billion in 2020.

Shopify's growth has also posed a challenge to Amazon. Between 2015 and 2020, Shopify's compound annual growth rate (CAGR) reached 70.2%, while Amazon's CAGR during the same period was only 29.3%. Not only that, Shopify's stock price has soared 4,460% in the past five years, while Amazon's has only risen by nearly 400%.

As for Amazon, it has always been criticized for pursuing "customer first " and ignoring the feelings of sellers. Shopify's services focus on sellers , providing them with technology and templates for building online stores, and managing omni-channel marketing, sales, payment, logistics and other services. For sellers, it is relatively free and they can also build their own brands.

Shopify releases new features frequently, catching up with Amazon

However, Shopify's market value of $182 billion is still less than one-tenth of Amazon's $1.86 trillion . So Shopify's ambition to catch up with Amazon is not just a pipe dream.

Before the holidays, Amazon launched a Send a Gift feature for Prime members , which allows Prime members to buy gifts for family or friends even without a delivery address.

Shopify "quietly" launched a "Gift Shop " function in the United States two days ago , which can be said to be a direct target for Amazon.

Users can send gifts via text, email or direct messaging on social media. Users browse the gift selection through labels such as " sweet treats " and " gift under $50 " and choose from a list of products from Shopify -related merchants. After consumers have made their selections, the system will prompt them to enter the relevant information of the recipient and sender and provide a custom link. After that, consumers send the link to the gift recipient.

The system does not charge consumers anything until the recipient accepts the gift and enters their information. The recipient is also provided with some details of the merchant who sold the product.

The Gift Shop function not only protects consumers’ money and money, preventing them from suffering unnecessary losses due to the recipient not accepting the gift, but also allows merchants of related products to get as much exposure as possible.

Gift Shop is not the only feature that Shopify has launched for its "evolution". Shopify is currently testing a new search feature that allows consumers to display related products from multiple merchants at the same time when searching for products. However, many merchants have stated that such a search feature may cause disputes between competing brands and harm the interests of merchants.

Because the algorithm used in the search results will determine which indicators will affect the ranking. In the end, it is likely that the ranking of search results will be determined by the amount of payment.

Therefore, many sellers participating in the test are worried whether this search function will eventually become a "victory of capital."

Amazon is in crisis, and many platforms want to get a piece of the pie

Not only Shopify , but also SHEIN , TikTok and more and more platforms are eyeing the Amazon market. In particular, Amazon's frequent account blocking has caused many sellers to turn to small and medium-sized e-commerce platforms such as independent sites, which have higher degrees of freedom and are less restricted by the platform.

According to data from OnlineCasinoMaxi.de , SHEIN has been downloaded 17.52 million times in the global Google Play Store and Apple Store , more than twice the total number of Amazon app downloads. SHEIN 's revenue has also been rising steadily, from 4 billion yuan in 2016 to nearly 10 billion yuan in 2020. This growth rate has also given many corporate sellers high hopes for it.

In addition, in the eyes of some senior cross-border e-commerce people, TikTok 's e-commerce is also a "potential stock". According to the latest data released by TikTok , its global monthly active users have exceeded 1 billion, and the TikTok Shopping launched integrates marketing and advertising functions. The multiple product promotion functions included can bring huge traffic and exposure to merchants.

Shopify and TikTok are also "joining forces" and continuously deepening their collaboration.

In the third quarter of this year, Shopify and TikTok worked together to develop a feature that allows shoppers to purchase items directly from the social application, and also provides product links for Shopify merchants to tag products in TikTok posts. TikTok users can shop directly from the merchant's storefront or click on the tag in the merchant's TikTok video to enter the merchant's store to make a purchase.

This method increases the exposure channels for merchants' products and stores, and can also provide consumers with product usage scenarios and dynamic details before deciding to buy, providing a more favorable trading environment for both buyers and sellers.

In the Chinese market, JD.com has also accelerated its overseas layout, shutting down JoyBuy and launching the "one-stop product selection platform" JDSourcing for Shopify sellers .

In addition to investing in cross-border e-commerce platforms, JD.com is also actively building its own logistics system to expand its global business. According to public data, JD.com's global sales business increased by 251% year-on-year in 2020. Among them, JD.com Thailand's GMV increased by 170% year-on-year in 2020 , with 5.1 million registered users and an 82% year-on-year increase in the number of orders .

Although Amazon's market has been gradually eroded by various "up-and-coming players", if no changes are made, it is difficult to guarantee whether Amazon will still be the "only one" in the future. But overall, Amazon's position as a global e-commerce giant is still relatively stable. Coupled with the development of platforms such as Shopify , SHEIN , and TikTok e-commerce, sellers have more choices and layout ideas, which is not a bad thing.

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