News from the Wire

Fulfillment issues hurt Shopify's stock

Monday, August 08, 2022 — 10:09:50 (EDT)

(San Francisco) August 8, 2022 — In the past 12 months, shares of Shopify are down about 50% and are currently hovering around $727. The ecommerce company anticipates revenue growth for the full year to be lower than the 57% achieved in 2021.(1) The rise of e-Commerce 3.0 has been a catalyst for major changes in e-Commerce, precipitated by COVID and the great resignation over the past couple of years. The pent-up demand forced upon e-Commerce by the pandemic and intolerant consumers who are demanding ease and speed of use have been the byproducts of these catalysts. Small- to medium-sized e-Commerce businesses cannot afford to let consumers down, particularly in terms of fulfilment. “A major component of e-Commerce 3.0 centers on fulfilment,” says Mikel Lindsaar, CEO and Founder of StoreConnect, an eCommerce 3.0 system that integrates multiple systems into one solution run from a single platform.

For Shopify, much of the issue lies with how they store and ship their products. While Shopify helps merchants make online sales, it either brokers deal with third-party warehouses and transportation companies or leaves the last mile entirely to the seller when it comes to fulfilment.(3)

Some of the other issues Shopify has been experiencing can be traced to worries about how the Federal Reserve will respond to the ongoing issue of inflation. Future interest rate hikes are anticipated, as the Fed works to slow down the economy and bring inflation under control. The issue lies in achieving the right balance, because should the economy slow down too much, consumers will most likely cut their spending. That possibility could significantly impair Shopify's ability to sell its e-Commerce services to businesses.(2)

B2B e-Commerce Concerns

A survey from BigCommerce highlighted a few concerns with B2B e-Commerce, with fulfilment chief among them. The survey revealed that more than three-quarters of B2B businesses use Amazon’s marketplace to sell or advertise, likely due to the integration with its highly touted Fulfilment by Amazon service.

Consumers expect to find a greater number of goods categories online, and they want their orders filled faster than ever. A recent McKinsey analysis revealed that logistics costs currently represent 12 to 20% of e-Commerce revenues. With current economic trends, logistics costs may increase to 15 to 25% of e-Commerce revenues soon.(5) In terms of e-Commerce 3.0, fulfilment is a factor that can make or break a business.

Fully Integrated e-Commerce Solutions Lindsaar claims that more e-Commerce businesses will be opting for a fully integrated e-Commerce solution as e-Commerce 3.0 heats up.

StoreConnect helps businesses with running multiple stores from one system that offers not only multiple fulfilment options but also the level of integration that is the future of ecommerce. StoreConnect is an e-Commerce, point of sale and content management system built on Salesforce that allows small- to medium-size businesses to consolidate all their marketing, sales, support and fulfillment channels into one system. It offers technology, growth, speed and data ownership to SMBs, allowing them to compete on a global scale.

“[e-Commerce] SMBs can no longer afford to spend the money and time continually integrating multiple systems, including fulfillment — they have to be able to compete with the Goliaths,”” Lindsaar says. “In business time is money.”

About StoreConnect:

StoreConnect is subscription and usage-based eCommerce, Point of Sale and Content Management System built on and within Salesforce, which allows users to integrate Marketing, Sales and Support systems into one platform. StoreConnect targets Small to Medium Businesses who want to provide the same “full service” customer experience that is being provided by eCommerce leaders, but at a fraction of the cost. In business time is money, and StoreConnect is Time. Well Spent. For more information, visit www.getstoreconnect.com. Rosen, Phil; “Shopify sinks 18% after 4th-quarter earnings reveal outlook for slower revenue growth in 2022”; Business Insider; February 16, 2022; businessinsider.in/stock-market/news/shopify-sinks-18-after-4th-quarter-earnings-reveal-outlook-for-slower-revenue-growth-in-2022/articleshow/89624761.cms.

Neiger, Chris; “Why Shopify Stock Fell Hard Today”; The Motley Fool; June 13, 2022; fool.com/investing/2022/06/13/why-shopify-stock-fell-hard-today/.

Stone, Brad; “Shopify’s Stock Tanked 73% This Year. What Happened?” Bloomberg; May 31, 2022; bloomberg.com/news/newsletters/2022-05-31/shopify-s-tobi-lutke-and-the-73-stock-decline.

Bartman, Tom; “The promise and challenge of multi-client fulfillment for e-commerce”; McKinsey; July 5, 2022; mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/the-promise-and-challenge-of-multi-client-fulfillment-for-e-commerce.

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Source: Company press release.