Harley Finkelstein Explains What Makes Shopify “Incredibly Resilient”
When the world was locked down amid the spread of coronavirus, small merchants were forced to sell their products online. Shopify became their first choice as it provided them with the right platform, tools and support to easily sell across the internet. It not only helped the merchants but also the Canadian e-commerce company as its stock rallied to an all-time high of $213 by November 2021.
According to globalnews.ca, Shopify employed 2021 in 2021, a bet which misfired when customers returned to in-shopping behavior after restrictions were lifted. The stock of Shopify slipped to $50 and the company had to lay off 10 percent of its workforce. In July, CEO Tobi Lutke took the responsibility for the overestimated bet, which didn’t “pay off”.
“It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead. Our market share in ecommerce is a lot higher than it is in retail, so this matters. Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” he said in a blog post published by Shopify.
We’ve had to make some tough decisions, obviously, last year, we had (job) losses…which are never an easy thing to go through, but one of the things that we’ve hopefully demonstrated to the world is that we’re a company that is incredibly resilient.
Harley Finkelstein, President, Shopify
Expectations Far From Reality
Senior Equity Research Analyst at MongStar Dan Romanoff believes that Shopify’s expectations were far from reality. “They were planning for this sustained, e-commerce permanent step up in demand and that just wasn’t really reflective of reality,” Romanoff said as quoted by globalnews.ca.
“They’re just adjusting to a new normal,” he quickly added, hinting at how Shopify came out of that struggle so soon.
Shopify President Harley Finkelstein agreed to Romanoff, adding what “incredible changes” Shopify had to go through. “The past few years have been a time of incredible changes not just for commerce and e-commerce but for Shopify,” he said.
“We’ve had to make some tough decisions, obviously, last year, we had (job) losses…which are never an easy thing to go through, but one of the things that we’ve hopefully demonstrated to the world is that we’re a company that is incredibly resilient,” Finkelstein added.
Shopify’s Resiliency
Finkelstein went on to define resiliency as an ability to make retailers believe in his company. He claimed that Shopify has become a one-stop shop for both small and big merchants. “We really want more merchants to use more of our solutions,” Finkelstein said.
The Shopify president was referring to solutions like POS Go, Shopify Capital and Shopify Markets Pro.
- POS Go: In August, Shopify launched an updated version of its point-of-sale (POS) system. Shopify POS Go is a handheld tool that resembles a smartphone. With the launch, Shopify aimed to establish a foothold in the hardware market. POS Go enables retailers to offer wireless checkout anywhere in the store. It doesn’t need to be connected to a computer or mobile phone.
POS Go comes with a card reader, inventory tracker and a built-in bar-code scanner. Merchants are also able to manage staff and payments irrespective of where they are — online or store. Shopify POS Go app can be customised to manage stores and provide better services to customers.
- Shopify Capital: It was launched in 2016 in the United States and later expanded to Canada and the UK in 2020 and 2021 respectively. In August, the company launched Shopify Capital in Australia, giving quick access to funding to Australian merchants selling on its retail platform. By including lending in digital offerings, Shopify aimed at helping retailers boost their online sales. The Canada-based company said that small business owners in Australia can access up to $2.5 million AUD. Sales data from the platform will be evaluated to assess risk and lend off its balance sheet.
Shopify Capital has lent more than $3.8 billion USD in its first three markets since its launch, the company stated on its official website. It claims that merchants who received funds through Shopify Capital witnessed 36 percent higher sales in the next six months compared to others.
- Shopify Markets Pro: In September, Shopify launched Shopify Markets Pro and Shopify Translate & Adapt in a bid to capture the international selling market. Both products are based on the enormous success of Shopify Markets, which allows merchants to online sell their products to anyone across the globe.
The initiative is aimed to democratize small business owners’ access to international commerce. The new Shopify Markets Pro helps them expand their business globally. It covers more than 150 countries. Shopify Translate & Adapt, on the other hand, localizes the customer journey to boost international selling chances for merchants.
Tough Competition From Amazon
Industry expert Romanoff has higher expectations from Shopify, which has acquired several logistics companies but is still to scale its shipping capabilities. The venture mentioned by Romanoff was launched in 2019. The other top option of retailers is Amazon, adds Romanoff.
Amazon offers cheaper prices to consumers with options like same-day shipping. Rick Watson, the founder of RMW Commerce Consulting, believes that “Shopify is never going to try to match Amazon parcel for parcel and speed for speed.”
“There’s always going to be this competition, this sort of natural tug of war between the two, but at the end of the day, they’re both going to coexist,” Romanoff said, hinting at the room for improvement.
New Team At Shopify
However, the team at Shopify is mostly changed from what it was two years ago. Chief financial officer Amy Shapero, chief product officer Craig Miller, chief operating officer Toby Shannan, managing director of revenue Ian Black and director of product marketing Arati Sharma have departed as part of the change.
Finkelstein spoke about “different people, different life plans” at Shopify. “There’s sort of tours of duty and not everyone wants to be on this next tour,” he said.
The Shopify president was hinting at vice-president of product Kaz Nejatian, who took over for Shannan and Jeff Hoffmeister, who assumed Shapero’s role. Talking about Hoffmeister, who worked for Morgan Stanley since 2000, Finkelstein said he was “dreaming of working with since 2014”.