Since the start of the pandemic, Shopify has emerged as a leading ecommerce platform for merchants large and small. Its growth will continue to outpace that of competitors, despite rising headwinds that pose a challenge to online retail.
Shopify’s pandemic boom was unprecedented. Between 2020 and 2021, it nearly tripled its revenues, more than doubled its GMV, and nearly doubled its merchant count since 2019, according to the company. Wary of relying on Amazon, many digitally native vertical brands (DNVBs) have instead run with Shopify—including some, like sneaker label Allbirds and healthcare apparel brand FIGS, that rode their direct-to-consumer (D2C) success to IPOs.
Shopify's strong gross merchandise value (GMV) growth has been turbocharged by an influx of enterprise merchants (defined as those with an annual GMV of over $50 million). This cohort will make up nearly a quarter of Shopify’s total merchant count in 2024, nearly doubling its share from 2020’s levels.
Even major brands needed to rapidly develop D2C strategies during the early days of the pandemic. By expanding into headless commerce, Shopify has become more competitive against other ecommerce platforms like Adobe Commerce (formerly known as Magento), Salesforce, and Oracle.
Payments are the key growth engine for Shopify—and a potential hub for its developing flywheel. Shopify’s suite of merchant solutions—chief among them its payment processing service, Shopify Payments—accounted for close to three-quarters of revenues in Q1 2022. This is a reversal from Shopify’s early reliance on charging merchants recurring fees to use its digital commerce platform services, which accounted for around two-thirds of revenues in 2015, at the time of Shopify’s IPO.