Shopify going head-to-head with Amazon, spending $ 1 billion on service network



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Shopify Inc. executives are reluctant to mention the competition by name, but the Canadian e-commerce service provider is targeting directly at Amazon.com Inc., launching a network of service warehousing and transportation logistics capabilities in the United States .

By the end of this year, Shopify says it will be able to offer two-day shipping to the hundreds of thousands of American dealers on its retail platform.

"We plan to spend more than $ 1 billion to build and operate the Shopify customer service network for years to come," said Craig Miller, product director of the company during the talk at Shopify's annual Unite Developer Conference.

"This is yet another example of how Shopify is democratizing trade by bringing warehousing, machine learning and other technologies that used to be reserved only to the world's largest companies, making them affordable and accessible to all traders, including those just starting to take off.

Miller did not say the word "Amazon," but when he announced the new service network, he was very clear who he was talking about when he referred to other important navigation services.

"Some of these big markets really start picking up customer data and using it in other ways," Miller said.

"Let's admit: you want the package to arrive in a box that has your logo, not theirs. And finally, and probably more frightening is the unfair competition. We recently began to see the marketplaces using data such as order volumes to actually create knock-off products for less money and lower quality, potentially competing with merchants. "

At this time, Shopify will offer early access to merchants who ship between 10 and 10,000 items per day, and by the end of the year, the company plans to offer two-day shipping to 99% of the United States.

In an interview with the Financial Post after the keynote, Miller said that Shopify is planning to run some warehouses directly, but they also want to partner with third-party companies to run warehouses and make actual deliveries.

"I'm sure we will not have trucks in the foreseeable future," he said.

"We're a software company and that's what we do best, and we're going to partner with and work with other people who have trucks and stuff so we do not have to worry about the world of trucks and everything. .

Miller said that a big part of what Shopify will be doing is essentially building the software bridge that connects Shopify's e-commerce platform to call centers and shipping companies.

The service network was the great news, and the final announcement of the Unite presentation, but Ygal Arounian, analyst who covers Shopify for Wedbush Securities, said the other ads for all products tell an interesting story about where the company is. directed.

"The ads for Shopify products today were impressive and a big step forward. The achievement will attract more attention and can potentially be a game turn to Shopify, but many of the product announcements should also not be overlooked, "he said. "Adding personalization to checkouts, allowing multiple sites / brands to be managed under a single administrator in Shopify Plus, better integration with point-of-sale software with online stores and order editing should open Shopify for more business opportunities with over time. "

Shopify has revealed that it now has more than 100,000 merchants in brick-and-mortar retail stores out of a total of 820,000 merchants using its e-commerce platform.

Overall, Arounian said that Shopify is going beyond simple e-commerce to a complete retail solution for small and medium-sized merchants.

"No one is integrating POS into the store with online stores the same way as Shopify. These two things are usually separate solutions, "said Arounian. "Same thing with satisfaction. No e-commerce platform – outside the Amazon – is building a logistics operation. They are moving towards a complete global retail solution. "

Miller minimized any notion of tension between Amazon and Shopify.

"I think we're actually inspired by Amazon. They offer two day delivery for many products, and we said, how can our merchants really offer the same thing? "He told the Financial Post.

"I understand that there will always be certain comparisons between us and them, but I really think Shopify as a company likes to look around and say, who is doing something really great and innovative and pushing the limits, and how can we do something similar ? but kind of makes it accessible to 800,000 merchants who prefer to sell direct and not go through some third party system. "

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