Shopify Inc. posted strong sales and gross merchandise volume growth for the fourth quarter and 2016.
The web-based e-commerce platform provider, which mainly works with small and midsized retailers and other businesses, said Wednesday that its fourth quarter sales totaled $130.4 million, up 85.8% from $70.2 million a year earlier. Gross merchandise volume (GMV) or the value of goods sold via its clients increased 96.4% to reach $5.5 billion for the quarter ended Dec. 31, compared with $2.8 billion a year earlier, Canada-based Shopify said today.
For all of 2016, Shopify grew total revenue 89.7% to $389.3 million, compared with $205.2 million in 2015. GMV for 2016 totaled $15.4 billion, an increase of 99% over $7.7 billion in 2015.
Shopify says its merchant clients had a strong 2016 holiday sales season. GMV during the holiday shopping weekend spanning Black Friday (the day after Thanksgiving) through Cyber Monday (the Monday after Thanksgiving) more than doubled over the comparable period last year. That’s thanks in large part to Shopify’s growing user base. Shopify says the level of shopper activity on its platform reached a peak of nearly 3 million requests per minute during that period.
Mobile traffic to merchants’ stores also continued to grow, reaching 69% of traffic and 55% of orders at the end of 2016, versus 61% and 46%, respectively, at the end of 2015.
“Our work at Shopify is to help entrepreneurs thrive in a space that’s changing all the time, and we did our job especially well this past holiday season,” says Tobi Lutke, founder and CEO of Shopify.
Shopify’s platform launched in 2006 and Shopify went public in 2015. Twelve e-retailers ranked in the Internet Retailer 2016 Top 1000 use Shopify’s e-commerce platform, including BHFO Inc. (No. 470), Bourbon & Boots Inc. (No. 986) and Golfland Warehouse Inc. (No. 976).
Shopify also discussed new pricing for Shopify Plus, which the company launched in November 2014 as a cloud-based e-commerce platform designed for larger merchants. When Plus initially launched, the platform fee was $1,000 a month. However, the vendor says it is now charging merchants with annual online revenue of up to $10 million $2,000 a month for Shopify Plus, while merchants with annual sales greater than $10 million will be charged based on their GMV. The move is a response to “…the evolving size, scope and complexity of Plus Merchants,” a Shopify Plus spokeswoman says.
Shopify in December launched an integration with Amazon.com Inc. (No. 1 in the Top 1000) that enables e-retailers running their shops on Shopify to also list their products on Amazon’s marketplace. Only merchants listing products for sale in U.S. currency can use the service at this time. One-third of the 1,000 largest e-retailers in North America sell through Amazon’s marketplace, according to data available on Internet Retailer’s Top500Guide.com. Shopify also last year enabled merchants to sell via Facebook Messenger.
For the fourth quarter ended Dec. 31, Shopify also reports:
- Subscription revenue for its software of $56.4 million up 63.0% from $34.6 million a year earlier.
- Revenue from what Shopify calls Merchant Solutions, which includes shipping and payment processing services for which it takes a cut of each sale, increased 107.9% to $74.0 million from $35.6 million, mainly driven by the growth of GMV, Shopify says.
- GMV processed through Shopify Payments grew to $2.2 billion, which accounted for 39% of total client GMV processed in the quarter, versus $1.0 billion, or 37%, for Q4 2015.
- The number of merchants on the Shopify platform reached 377,500 in the fourth quarter a 55.3% increase from about 243,000.
- Net loss of $8.9 million compared with a loss of $6.3 million.
For the full year 2016, Shopify also reports:
- Subscription revenue grew 68.4% to $188.6 million from $112.0 million in 2015.
- Merchant Solutions revenue grew 115.1% to $200.7 million from $93.3 million.
- More than 133,000 net new merchants began selling on Shopify.
- GMV per merchant grew by 25% over last year.
- Average revenue per Shopify user grew 15.4% to $1,243, versus $1,077 for 2015, driven by higher GMV per merchant, increased penetration of Shopify Payments and new merchant services.
- The percentage of Shopify merchants using Shopify Payments grew every quarter throughout 2016, with 85% of merchants using Shopify Payments where it is available by the end of 2016, compared with 76% a year earlier. This amounts to 68% of Shopify’s global merchant base compared with 62% in Q4 2015.
- Net loss of $35.4 million, compared with a loss of $18.8 million.
- Monthly recurring revenue as of Dec. 31 was $18.5 million, up 63.7% compared with $11.3 million.
- The number of partners referring at least one new merchant to Shopify in 2016 grew to more than 11,000, compared with more than 8,500.
Other 2016 updates include:
- A new software development kit enables online selling portals to more easily work with Shopify e-retail clients. Home design site Houzz, online shopping mall Wanelo and eBay Inc. have implemented the technology, bringing the number of channels through which a Shopify merchant can sell to more than a dozen.
- It launched Apple Pay for the web and more than 150,000 merchants now offer it. These merchants saw conversion rates approximately double by shoppers who have enabled Apple Pay, the vendor says.
- Shopify purchased Boltmade Inc., a product design and development consultancy based in Waterloo, Ontario. The purchase price was not disclosed. The acquisition will help accelerate the development of the Shopify Plus product.
- 1,000 employees were added in 2016 with plans to add about the same number in 2017.
- It launched Shopify Capital to help merchants secure financing to grow their businesses. Shopify Capital has advanced more than $35 million to merchants.
- Shopify expanded Shopify Shipping beyond USPS by integrating Canada Post. The move enables Canada-based Shopify merchants to buy and print discounted Canada Post shipping labels at up to 40% off retail Canada Post rates.
Shopify and many other e-commerce platforms are outlined and explored in the just-released, inaugural Quintessential Guide to E-Commerce Platforms.
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