As online shopping takes off during coronavirus pandemic, e-commerce software provider Shopify is shaping up to be one of the pandemic’s biggest winners.
The e-commerce service provider saw its second quarter revenue grow 97 percent year over year. The growth marks the company’s best second-quarter sales growth since going public in 2015.
Shopify lets merchants create a themed online storefront and mobile application. Retailers using the software upload images and details on their products and organize their inventory. The software processes payments and calculates shipping rates.
Sellers typically ship items directly to buyers, but Shopify also offers fulfillment services where merchants can store and ship items.
Shopify charges sellers a monthly fee and takes a percentage of every transaction. Revenue for the company nearly doubled to $714.3 million in the second quarter.
The coronavirus has had a resounding impact on consumer trends during the summer of 2020, and one of the most notable is the rise in online shopping. As businesses were forced to shutter their doors, many retailers turned to online platforms to get their goods to consumers.
According to the U.S. Census and the Commerce Department, millions of small businesses have been forced to adapt to a world where online sales abruptly jumped to levels that weren’t expected for years. Retail e-commerce sales for the second quarter of 2020, adjusted for seasonal variation, were $211.5 billion, increasing 31.8 percent from the first quarter of 2020. In comparison to the second quarter of 2019, e-commerce grew 44.5 percent.
The rise in sales on Shopify’s platform echoes online shopping trends across the industry.
In August, Consumers’ Research reported a surge in online sales for technology superstore Best Buy caused by the coronavirus pandemic.
Shopify has reaped the benefits from the shift to online shopping.
While big brands like Kylie Cosmetics, Vera Bradley, and AllBirds already used Shopify’s software, a large number of smaller brands have joined since the onset of the pandemic. The Wall Street Journal reported that the number of new stores created on Shopify increased 71 percent in the second quarter of 2020 compared with the previous quarter.
In May of 2020, the Canadian-based e-commerce software service provider surpassed Royal Bank of Canada to become the country’s most valuable company. Shopify now has a market capitalization of roughly $124.5 billion.
The company’s share price nearly tripled from its low point in March and moved above $1,000 in August.
“The entire company simply pivoted as quickly as we could to focus on, ‘How do we help small businesses?’” said Shopify’s chief operating officer, Harley Finkelstein. “We play a much more strategic and central role in the day-to-day businesses of our merchants, far more than any software company traditionally would.”
Since the onset of the coronavirus pandemic, the service has offered a multitude of new services. The company introduced a 90-day free trial for new subscribers, online tipping, gift-card options, a curbside pickup option, and a new application that allows customers to search for products within the Shopify universe.