Shopify is now one of the world’s biggest eCommerce platforms for merchants looking to have their own website. 2019 saw an overall increase of 47% revenue for the company and a 49% increase in revenue for Shopify merchants. That’s huge! So, what were the key financial and development trends of the Shopify throughout the year?
We’re going to go over these developments, quarter by quarter, to give you an idea of just how far Shopify has come since the beginning of 2019. Hold your jaw – or some of these numbers will have it hitting the table.
Shopify Q1 2019 – Innovation & Creativity
The first quarter of 2019 was a busy one for Shopify. Having walked out of 2018 with total revenue of $1.073 billion (59% increase over 2017), the company was celebrating breaking the billion mark and becoming a major player in the eCommerce world.
“Shopify is meeting a need that is not only global and growing, but that is likely to continue growing for the foreseeable future.” – Tobi Lütke, Shopify CEO
No time was wasted in pushing for further innovation and in the first quarter of 2019, Shopify Studios was launched with the aim of sharing inspiring entrepreneurial stories in the form of short films, documentaries, and mini-series.
Shopify Studio is a significant development of Shopify in the creative field. Source: Shopify Studio
In February, a multi-currency payment option was also launched primarily for Shopify Plus, allowing merchants to provide more payment options on their stores and receive payments in their local currency. You can find all the supported currencies here.
How a product is displayed in different options if the store uses the multi-currency system.
Other trends carried over from the previous year, such as the dominance of mobile traffic and sales on the platform – which account for 79% and 69%, respectively, by the end of Q1.
Brick and mortar POS system
As well as continuing to bump up sales online, Shopify has also been busy helping out those with brick and mortar stores, too. The Shopify Retail Kit was launched at the end of Q1. It includes useful tools for merchants with physical stores, such as the Tap & Chip Reader and a new POS system.
Shopify Retail Kit signifies a great move of Shopify to brick-and-mortar commerce development.
The Kit is compact and modern, suitable for all offline transactions. Source: Shopify
It’s actually really nice to see that Shopify continues to respect the brick and mortar store. Even when eCommerce is fast becoming the dominant marketplace in today’s world, the traditional shop front will always have a place in society. For example, in the fashion industry, more than 70% of purchases are still made in person, rather than online.
Shopify merchants had a great start to 2019. And things only get better from here.
Shopify Q2 2019 – Visibility & Communication
If you thought that Q1 got off to a great start, wait until you hear about Q2. The second quarter of 2019 was about much more than just crunching numbers.
Spring is a time where new life blooms and new ideas come into fruition. That’s exactly what happened in the spring of 2019 with merchants and Shopify Partners coming together for the fourth annual Unite conference in Toronto, upgrades to the Shopify design, and the platform’s first-ever integrated brand campaign.
“Our job is to keep innovating on behalf of entrepreneurs so they can compete in an ever-changing retail landscape.” – Tobi Lütke, Shopify CEO
Let’s Make You a Business
You know that Shopify is awesome, but does everyone else? What about the young lady who’s craft business doesn’t have a proper online presence? Or the guy who had an awesome business idea while in the shower three months back?
On April 15th, Shopify launched its first-ever integrated brand campaign. It’s called ‘Let’s Make You a Business’, and the idea was to introduce Shopify to all the people out there with an idea in their head, a product to sell, and an ambition to do better.
The campaign was launched in 12 North American countries and reached millions of people. It was no doubt a catalyst for Shopify surpassing the one million merchant count just a few months later.
Shopify got around 40,000 to 50,000 new merchants each quarter in 2018 and the first half of 2019. The third-quarter of 2019 saw 60,000 new merchants join Shopify - much more than usual. This is likely due to the success of the “Let’s Make You a Business” campaign.
Annual Unite conference
The fourth annual Shopify Unite conference was held in Toronto in June, towards the end of the second quarter of 2019. The conference brought together Shopify Partners, merchants, and others to announce innovations on the platform.
All partners and merchants were excited by the announcements made at Unite. They included:
- Shopify Fulfilment Program: Gives merchants access to a network of Fulfilment Centers to allow for cheaper and faster deliveries.
- Updates to Shopify Plus: Helping large businesses to have even greater organizational control over their stores.
- Enhancements to online stores: Allows merchants to manage content easier - including removing the need to re-import content after theme update.
- 3D and AR: Allowing merchants to upload 3D and AR pictures of products so that users can get more of a grasp on how each detail will look and - perhaps more importantly - how the product can be used in real situations.
- Custom checkout: Merchants can now do more to customize their checkout page - something that has traditionally been difficult to play around with. This makes checkout quicker and more unique to each store. It also allows you to upsell to customers in the shopping cart.
- Multi-currency support: Customers can now pay in their preferred currency of choice out of ten different currencies. This is great news seeing as those who were previously using this feature (when it was limited to Shopify Plus) saw up to 60% higher conversion rates.
Shopify also expanded the number of languages the Admin Dashboard can be viewed in. They now support more than 20 languages, including Chinese, Korean, Hindi, Dutch, Swedish, and more. This reflects the growing global community of Shopify merchants and opens the door for hundreds of millions more people to use the platform.
Shopify Capital also grew substantially, allowing merchants to take out loans to expand their businesses.
Shopify Q3 2019 – Sustainability & Milestones
Going into summer, Shopify continues to hit milestones, reaching one million merchants on the platform for the first time. This milestone shows just how far Shopify has come, with the list of the top countries using the platform about as diverse as the products you can buy on it.
“These merchants chose Shopify because we’re making entrepreneurship easier, and we will continue to level the playing field to help merchants everywhere succeed.” - Tobi Lütke, Shopify’s CEO.
The countries Shopify will be aiming at in the future go hand-in-hand with the countries expected to take the lead in global eCommerce sales in the coming years. Based on Shopify’s projections of five-year growth in eCommerce sales (2018-2023) there are ten countries that stand out (and one behemoth at the top of it all). The name that makes the top of the list is undoubtedly China - and others are familiar too. They are:
Shopify Sustainability Fund
The summer of 2019 saw some catastrophic natural disasters, including massive fires in the Amazon rainforest, lethal heatwaves in Japan and India, and more which resulted in widespread protests in major cities around the world.
It was against this backdrop that Shopify announced the Shopify Sustainability Fund, pledging at least $5 million every year to help fight climate change. The fund supports making Shopify operations carbon neutral and LEED certifying all of their offices.
Shopify Sustainability Fund marks a great milestone of Shopify to a more eco-friendly path.
Shopify also closed all of its energy-munching data centers in 2019 and instead moved their entire platform to Google Cloud. Google replaces all the energy consumed by the Cloud with renewable energy, making it a more sustainable choice.
Allowing CBD products for the first time
In another major shift in policy, Shopify began allowing most US states to sell hemp-derived cannabidiol (CBD) products like CBD oils, creams, and pet treats. So long as the stores run their operations in accordance with FDA standards, they can sell CBD products on the Shopify platform.
Improvements to the Shopify ecosystem
In the true spirit of endless innovation, Shopify Chat was launched in the summer of 2019 to make it easier for merchants to chat directly with customers via their store. This allows them to answer questions about products and address issues in real-time.
Shopify Chat allows customers to communicate with you directly.
Shopify Payments reached even more countries, such as Italy, with more languages being supported, including Turkish, and the Shopify Capital program gave out a whopping $141 million in cash advances to merchants on the platform.
Shopify Q4 2019 – Fulfillment and Growth
The final quarter of 2019 – October to the end of December – marks the buildup to the holiday season and the biggest consumer spending-frenzy of the year: Black Friday.
“Shopify’s merchants had a tremendous fourth quarter, powered by our ongoing efforts to help them sell more and manage their businesses more effectively.” - Amy Shapero, Shopify’s CFO.
The Shopify Fulfilment Network continued to increase towards the end of 2019 in preparation for the busiest shopping period of the year.
The fulfillment system
Towards the end of the third quarter, Shopify completed their acquisition of fulfillment specialist 6 River Systems, Inc. - a provider of collaborative warehouse fulfillment solutions - for the total sum of $450 million. This massively increases the scope of the Shopify Fulfilment Network and sets the stage for a shopping end of year GMV.
The acquisition of 6 River Systems will help Shopify boost the growth of its Fulfilment Network
Shopify Fulfilment Network is now a $1 billion investment that seeks to directly address one of the key pain points of merchants. Merchants can take advantage of advanced machine learning strategies for inventory, as well as fast shipping times, low rates, and a focus on the merchants brand when the package arrives to the customer. In short, packages arrive quicker, without mistakes, and in perfect condition.
The new fulfillment system is arguably Shopify’s biggest innovation in a long time. Whereas sellers on Amazon have their product delivered in an Amazon box – basically stamping out their own brand in favor of the online commerce giant – customers using Shopify won’t even know that it came from Shopify. All the packaging, paperwork, and labeling is from the merchant’s own brand, allowing them to look more professional and build stronger relationships with customers.
Shopify 2019 - A great leap forwards
Shopify had a great year in 2019. With successful events and campaigns, innovative advancements to help merchants, and massive increases in sales and revenue, the sky appears to be the limit.
Shopify Payments is in more countries and more languages are now supported by the platform, making it more accessible than ever before. This will likely cause 2020 to be an even better year for the ever-growing platform as it climbs to the top of the eCommerce ladder.
But not let’s get down to the nitty-gritty. Here is the raw data to measure Shopify’s growth in 4 quarters of 2019.
Q1 – a great start to the year
You can find a more detailed outline of Q1’s finances here.
- Shopify revenue: $320.5 million – a 50% increase over Q1 2018
- No. of merchants: 860,000
- Shopify Merchants (GMV): $11.9 billion – up $3.9 billion over Q1 2018
Q2 – keeping up the momentum
There’s so much to write about the second quarter of 2019 that we simply can’t include it all here. You can find even more detail about it here.
- Shopify revenue: $362.0 million – a 48% increase over Q2 2018
- No. of merchants: 900,000
- Shopify Merchants (GMV): $13.8 billion – up $4.6 billion over Q2 2018
Q3 – onwards and upwards
With milestones in merchant numbers, new products on the platform, and environmental incentives to boast, Shopify’s third quarter of 2019 was a resounding success. Now, here are the numbers you’ve been waiting for. For more detailed information on the numbers, click here.
- Shopify revenue: $390.6 million – a 45% increase over Q3 2018
- No. of merchants: 960,000
- Shopify Merchants (GMV): $14.8 billion – up $4.8 billion over Q3 2018
Q4 – the most impressive yet
Black Friday and the holidays following it saw a massive boost in sales for Shopify merchants. This means that the fourth quarter managed to pull in significantly more than the rest of the year. For a more detailed breakdown of the finances of Q4, check here.
- Shopify revenue: $505.2 million – a 47% increase over Q4 2018
- No. of merchants: 1,000,000+
- Shopify Merchants (GMV): $20.6 billion – up $6.6 billion over Q4 2018
Merchants continue to use the Shopify Shipping options, with more than 45% opting for it by the end of Q4. Shopify Capital has opened doors for businesses to gain much-needed funds for expansion. The platform has taken positive steps toward being more environmentally sustainable.
Broken down into main categories, Shopify revenue comes from 3 sources:
- Monthly Recurring Revenue - Core
- Monthly Recurring Revenue - Shopify Plus
- Apps, Themes, Domains, Shopify Plus Platform Free Revenue
While Monthly Recurring Revenue - Core gradually has been shrinking steadily from 70% to above 60% since 2017, Monthly Recurring Revenue - Shopify Plus and Apps, themes, Domains, Shopify Plus Platform Fee Revenue have slowly increased roughly 5% in 3 years. This apparently shows that while there is a steady climb in each revenue stream, the percentage doesn’t make any substantial difference throughout the years - meaning no category has made significant growth. Shopify seems to be in a rough battle with other eCommerce platforms - and it’s only getting harder from here.
Shopify Subscription Solutions Revenue witnessed an increase in diversification.
On the other hand, the report of Shopify Investment in 2019 shows a slight downward trend. Since 2015, Shopify has spent less and less money on Sales & Marketing, which appears to be surprising to gigantic efforts in marketing we saw recently.
The chart shows Operating Leverage - the adjusted operating Expenses of Shopify as a Percentage of Revenue.
The final numbers
Here are the numbers you’ve been waiting for: the big ones. The final numbers for Shopify in 2019. Ready?
- Shopify revenue: $1.578 billion – a 47% increase over 2018.
- Gross profit: $856.6 million – up 45% from 2018.
- Operating loss: $141.1 million – 9% of revenue (the same percent as 2018).
- Shopify Merchants (GMV): $61.1 billion – up 49% over 2018.
Let’s cheer to another year of hard work, measurable improvement, and happy merchants. Now that deserves a very big smiley face :D