Magento software

Shopify’s major competitors include Amazon, BigCommerce, and Magento

  • Shopify is constantly launching new services with the needs of its merchants in mind.
  • Its new services put it in competition with more companies than before.
  • Others are also leaning more into e-commerce, as the business opportunity remains significant.

A year after Shopify reported explosive growth amid the COVID-19 pandemic, the e-commerce giant is plotting its next moves — and taking on new competitors in the process.

Shopify’s main storefront product has benefited from lockdowns that have forced many small and medium-sized businesses to sell online for the first time. The e-commerce platform is now growing at a more normalized rate after increasing revenue by 86% in 2020 and nearly doubling sales made on its platform.

In recent earnings calls, Shopify highlighted the strength of its services that help its merchants combine their online and offline offerings, including its revamped POS system, as many shoppers have become more comfortable to go back to the stores.

Last year, Shopify also rolled out a social commerce integration with TikTok, made key updates to its Shop app, and launched Shopify Markets, a service hub that makes it easier for its merchants to sell their products online. international.

These product updates and the shift in strategy to promote its omnichannel services put Shopify in more direct competition with payment companies like Square and Lightspeed, as well as open-platform players like BigCommerce.

Other companies that previously focused solely on building websites, like Squarespace and Wix, are leaning more into building transactional tools as the opportunity for e-commerce continues to grow.

But analysts told Insider they’re still largely optimistic that Shopify will continue to dominate the field.

“Our view is that Shopify’s laser focus is what really sets them apart,” Jefferies analyst Samad Samana told Insider. “They methodically examine all weak points of a trader and try to solve them.”

Here are the companies that analysts say could be Shopify’s biggest challengers in e-commerce, payments, and website building, from legacy tech companies to startups:

BigCommerce

BigCommerce provides eCommerce software for all kinds of online businesses. Like Shopify, it offers customers a variety of services ranging from building online storefronts to omnichannel selling.

BigCommerce’s biggest differentiator is its focus on an open platform that allows merchants to combine services using application programming interfaces.

While Shopify’s ambitions are to appeal to merchants of all sizes, BigCommerce’s customers are typically mid-sized businesses or enterprises, like Ben & Jerry’s and Skullcandy, whose businesses are more likely to be complex enough to benefit. a more flexible technological approach.

BigCommerce raised $216 billion in its IPO in August 2020.

“Now they have the resources to invest in a take-to-market, invest in their product,” Guggenheim Securities analyst Ken Wong told Insider.

Adobe

Adobe acquired Magento, an open-source commerce platform, for $1.68 billion in 2018. Wong said Adobe was one of the few legacy players that remained significant competitors to Shopify.

Like Shopify, Magento has tools for brands to build websites, manage inventory, and sell through business-to-business, business-to-consumer, and direct-to-consumer channels.

While Shopify is known to be popular with fledgling businesses, Magento caters more to big, established brands like TiVo and Rossignol.

In another similarity to Shopify, Magento has a robust app store with thousands of extensions that sellers can install.

Selling power

Salesforce acquired cloud-based e-commerce software provider Demandware for $2.8 billion in 2016, marking its entry into e-commerce. The acquisition led to the creation of a business unit that the company calls Commerce Cloud.

Like Shopify, Commerce Cloud provides services to online merchants, including tools for business-to-business and business-to-business selling, as well as order management and headless commerce.

Commerce Cloud also has a marketplace for integrations that sellers can use, though it’s not as robust as Shopify’s app store.

Speed ​​of light

Lightspeed serves retail stores, restaurants and golf courses with a set of business tools. Its cloud-based point-of-sale system is the centerpiece of its offerings.

In addition to payments, Lightspeed offers native loyalty, accounting, and analytics products. Shopify gives its merchants access to analytics and many other services, but it also outsources some functions like loyalty programs to third-party apps in its store.

Compared to Shopify, Lightspeed is a smaller player – it has around 156,000 customers in 100 countries, while Shopify has around 1.7 million merchants in 175 countries on its platform.

Square

Like Lightspeed, Square originally focused on payments, but has since expanded into other aspects of e-commerce. In 2018, it acquired Weebly, a website builder, for $365 million and then integrated those tools into its own platform.

“What they wanted was for their existing customers to be able to use it. But also when potential new customers signed up, they would also use Square as their payment processor,” said Samana of Jefferies.

Square now offers products for sellers to set up an online store, monitor their business bank accounts, and manage employee payroll and benefits.

Square’s tools are for small and large vendors, from SoFi Stadium in Los Angeles to local food trucks.

square space

Screenshot of Squarespace's Social Selling Tools


square space


Previously known primarily as a website builder, Squarespace has leaned more into e-commerce over the past year.

In September, she launched a brand vision called “Anything to Sell Anything”, focusing on the launch of a product video app – which allows sellers to show off products – as well as tools social selling and marketplaces and updated design features.

In its last reported quarter, which ended Sept. 30, the business accounted for $59.8 million of Squarespace’s $210 million in total revenue.

Wix

Similar to Squarespace, Wix was known for its website building tools, but leaned more towards e-commerce.

Its business services include online stores, appointment scheduling and restaurant ordering products.

“They’re starting to look like Shopify was like five or six years ago,” Wong said, referring to both Squarespace and Wix. “You’ll likely see them take on the kind of micro-retailer that was where Shopify started.”

Amazon

Although it’s more of an adjacent competitor, in that it sells through a marketplace, Amazon’s dominance in the e-commerce world means it’s consistently a priority for Shopify.

In February, Amazon acquired Selz, an Australian startup that builds e-commerce sites and payment tools. The acquisition came just a few years after Amazon sold its own website building service, Webstore, to Shopify for $1 million.

The two companies will likely continue to compete for sellers’ attention with services like fulfillment, shipping, and payments.

“Shopify is arguably the biggest threat to Amazon, and I would say it’s kind of the same on the receiving side,” Wong said.