Shopify has launched the beta version of the Shopify Entrepreneurship Index. It is the first such global entrepreneurship index, which aims to provide data and insights on global entrepreneurship. The top findings released by the company say the United States ranks at the top of the index, followed by Lithuania and Romania. Delaware is the number one US State as per the global entrepreneurship index.
Entrepreneurship is at its peak with platforms like Shopify helping merchants set up online stores and sell to anyone across the internet. However, it still remains to be unmeasurable in numbers. One must know the impact of entrepreneurship on global economies. This not only helps one know more about entrepreneurship but also know about the environments that provide entrepreneurs the best chances of success.
The world lacked such a platform until today when the Canadian company launched the Shopify Entrepreneurship Index. The beta version of the platform will provide useful data on entrepreneurship from 40 countries worldwide and all states of the US. It claims to offer a “comprehensive dataset” on global entrepreneurship.
Previously, there wasn’t enough public data showcasing the superpowers and impact of entrepreneurship—and that’s why we’re launching the Shopify Entrepreneurship Index. Our goal is to give decision makers the insights they need to reduce barriers and make entrepreneurship even more accessible to everyone.
Harley Finkelstein, President, Shopify
How Shopify Entrepreneurship Index Helps
The Shopify Entrepreneurship Index will not only measure the economic impact of Shopify merchants but also recommend the solutions for the fastest and greatest growth. “Today’s launch is the beta version of this Index—we’re just getting started. In the future, we’ll add even more data aimed to inspire smart policies and give leaders the insights they need to harness the power of entrepreneurship. We’ll continue to update this Index quarterly,” Shopify said in a statement.
Some of the most interesting data facts shared by the Shopify Entrepreneurship Index from 2022 include:
1. 5.2 Million Jobs
Entrepreneurs based on Shopify supported 5.2 million jobs with the help of their online stores. It is 8.3 percent more than in 2021. Shopify, with plans for all business sizes, aims to promote independent selling and easy entrepreneurship. Recently when Shopify announced the sacking of 20 percent of staff and dissecting its logistics business, CEO Tobi Lutke reiterated the “main quest” of the company.
“Shopify’s main quest is to make commerce simpler, easier, more democratized, more participatory, and more common. I think that we have built the best commerce platform in the world for that. Technological progress always arcs towards simplicity, and entrepreneurs succeed more when we simplify,” he said in a blog published on May 4.
Johannes Lutz, the co-founder of German shampoo brand Duschbrocken, explained how Shopify helped him and his partner create more jobs.
“When we started, it was just the two of us. Christoph lived on my couch. We made 15,000 bars of shampoo with our own hands. Now we’re a team of 24 people. All our manufacturing is local too, in Germany and Austria, which means dozens more jobs. It’s so humbling, to create something that involves so many people, all from a single bar. It’s our customers who make this all possible,” Lutz said.
2. $27.7 Billion Exports
Shopify merchants generated $27.7 billion of exports in the year, which is seven more than the last year. The Canadian e-commerce platform has simplified cross-border trade for its merchant partners with tools like Shopify Markets Pro and Shopify Translate & Adapt.
The tools, launched in September 2022, aim 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.
“Using Shopify markets has been a game changer for us. It has given us transparent, easy-to-digest data that helps inform how we are performing globally,” David Wiggins, Head of Ecommerce at Walk London, said.
“Utilizing this data has also allowed us to make more strategic marketing decisions, such as offering an improved shipping service, more localized payment methods or introducing new languages appropriate to specific markets. This all helps fuel our growth strategy,” Wiggins added.
Walk London is a UK-based footwear brand. Under the shipping page, it claims to deliver products in 33 countries, including one from the Middle East and the rest 32 from Europe.
3. $229.3 Billion to GDP
Shopify merchants have contributed $229.3 billion to the US GDP. This contribution is 8.8 percent more than the last year. The US topped the list of top five countries in the Shopify Entrepreneurship Index. Lithuania, Romania, the United Kingdom and the Czech Republic were other countries in the list.
Within the US, the Shopify Entrepreneurship Index also studied data specific to states. While Delaware was the top-ranked US state, Wyoming, California, Montana and Utah made the cut to the top five performing states.
4. $490.5 Billion in Economic Activity
The Shopify Entrepreneurship Index revealed that Shopify merchants created $490.5 billion in economic activity in 2022. It is 8.6 percent more than the last year. The US, alone supported an 11 increase in job creation since 2021 with the help of e-commerce.
Lithuania sealed the second position in the index, thanks to its financial literacy, technological advancement and entrepreneurship-friendly environment. Romania, in the third position, credits its success to the exponential rise in e-commerce in the recent past. Japan, which is known as the entrepreneurship engine of Asis, came 10th in the list released by the Shopify Entrepreneurship Index.
The government of Japan has its focus set on cross-border trade. Shopify shares this vision as well. In 2021, the multinational e-commerce company launched Shopify Markets to enable cross-border selling options for online merchants. The initiative has helped over 175,000 merchants sell their locally produced articles across the globe.
Talking about the biggest e-commerce market — the United States, Shopify Markets claims to have helped an average merchant to sell products to over 14 other countries.
Japan – The Asian Powerhouse
Japan also motivates small merchants with an easy funding environment. Shopify echoes this thought too. In August last year, 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 aims at helping retailers boost their online sales.
Thanks to this venture, 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.
Launched in 2016 in the United States and later expanded to Canada and the UK in 2020 and 2021 respectively, Australia is the fourth market for Shopify Capital. 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.
Reducing Entrepreneurship Barriers
According to Shopify President Harley Finkelstein, the Shopify Entrepreneurship Index will help reduce barriers in the path of entrepreneurship. “Entrepreneurs are the fuel that drives economies forward. They create jobs. They anchor communities. They make an impact that goes far beyond their own business,” Finkelstein said.
“Previously, there wasn’t enough public data showcasing the superpowers and impact of entrepreneurship—and that’s why we’re launching the Shopify Entrepreneurship Index. Our goal is to give decision makers the insights they need to reduce barriers and make entrepreneurship even more accessible to everyone,” he added.
Finkelstein is an entrepreneur himself, thanks to his side hustle tea store — Firebelly Tea, launched in 2022. He advocates entrepreneurship like no other representative of Shopify. “If you’re a coffee brand, Maxwell House has more money than you, Starbucks has more money than you. They’re going to outspend you when it comes to an ad platform. The one thing that they don’t have is they don’t have you, the entrepreneur,” he said on The Shopify Podcast.
“The brands that are going to be most successful in the future will fundamentally understand exactly how their customer wants to purchase. If you’re overly caught up in one particular channel and that channel disintegrates or goes out of fashion, you’re going to scramble,” Finkelstein added.
For Academics and Policymakers
Dr. Gary Dushnitsky, Associate Professor of Strategy and Entrepreneurship at London Business School, believes that the reports compiled by the Shopify Entrepreneurship Index will not only help business people but also stakeholders, academics and policymakers.
“This new report will be a valuable resource for a wide range of stakeholders, including academics, policymakers, and business leaders who are seeking data on the rising phenomenon of digitally-enabled entrepreneurs,” Dushnitsky said.
“This initiative serves many benefits. The quarterly cadence of release is particularly important, as it reflects the dynamic nature of entrepreneurship. It will further allow for the tracking of trends over time, providing important insights into the state of entrepreneurs,” he added.
United States – The E-commerce Leader
Entrepreneurship is on the boom in the US and the Shopify Entrepreneurship Index will power business based on multiple categories. As mentioned above, the rise of e-commerce supported jobs, left a positive impact on GDP impact and helped increase business activity by 11 percent. Shopify credits this success to the rise of consumer spending, investments and exports.
The Shopify Entrepreneurship Index revealed that the Mountain West performed the best on the Index as five of the top ten US states came from that region. The southern region also witnessed a surge in jobs with export growth exploding in South Dakota (by 336 percent), Montana (135.5 percent) and Nevada (109 percent).
Talking about other states of the US, the Shopify Entrepreneurship Index called California, New York, Texas and Florida as the juggernauts for entrepreneurial success. As many as 134,024 direct jobs were created within California in the last year. The total number of jobs supported in that region was 235,237. The e-commerce in California contributed $26.6 billion to GDP, while global exports accounted for $2.5 billion in 2022.
The Shopify Entrepreneurship Index also hinted at a strong rural presence of entrepreneurship. “The Index shows nearly one third of Shopify entrepreneurs are building their businesses outside major cities, taking advantage of lower costs of living and government incentives offered by some states,” the company states.
European E-commerce
Eastern Europe is performing better than Western Europe as per the Shopify Entrepreneurship Index. “Despite the uncertain macroeconomic environment and the war in Ukraine, European entrepreneurship has proven resilient. Three Eastern European countries earned spots in the Index’s top ten rankings: Lithuania (#2), Romania (#3), and the Czech Republic (#5). This shows that the Shopify entrepreneurial landscape in Europe has traveled from the West to the East.”
Lithuania’s rise to the second position is inspiring for other countries as it witnessed a growth of 14 percent in e-commerce between 2020 and 2021. The International Trade Administration has estimated the country to grow further at a rate of 5 percent annually in the near future.
Japan remains to be a power player in Asia. Despite its 10h position in the list, the impact has been huge. Business activity is increased by 24 percent while 24 percent more jobs are supported in the country. The impact of e-commerce is up by 23 percent in the country’s GDP.
“As APAC continues to grow as a hub for entrepreneurship (representing four of the Index’s top ten countries), Japan is an entrepreneurial country to watch thanks to its pro-business agenda, its government’s focus on cross-border opportunities (with exports up 30%), and its improved funding environment for small and medium-sized businesses,” Shopify said.
How Calculations Were Done?
Shopify partnered with Deloitte to calculate the GDP impact, jobs supported, business activity and exports rate. For the rankings of the countries and the US states, the Shopify Entrepreneurship Index compared the national values compiled by Shopify with public data released by the International Monetary Fund (IMF), the International Labour Organization (ILO), the Organization for Economic Cooperation and Development (OECD) and other government statistical agencies.
“We’ll update the Index each quarter with new data and analysis to offer a comprehensive and ever-evolving benchmark of global entrepreneurship,” Shopify concluded.
